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INDIRA PADMINI

Central Office:
763, Anna Salai, Chennai 600 002

General Manager

25th May 2013

FOREWORD
Banking career, like any other professional career is becoming a challenging one. In this
era of rapidly changing economic scenario, the job of a banker, on the one hand, is
demanding in terms of knowledge updation and technological efficiency. On the other
hand, the career opportunities are enormous with rapid branch expansion, exodus of
senior Officials owing to mass retirement and robust business growth.
Hence to keep pace with this trend in the banking field, it is imperative that skill
development and knowledge updation are given due importance. The fourth edition of
Career Guide for IOBians designed by Shri.S.Rajendran Nair, Chief Manager
(Faculty) at Staff College, Chennai is a handbook for enriching your knowledge for a
brighter and successful career path.
The author has made a sincere and dedicated attempt to cover almost all aspects of
Banking and Finance such that the book would serve as a compact reference book.
I am sure that this Career Guide for IOBians will equip all career aspirants
considerably and ensure success in their future endeavours.
With best wishes,

INDIRA PADMINI
General Manager

Career Guide for IOBians

INDEX
Sl.No

Chapter Name

Page
Number

1. KYC/AML

2. General Banking

12

3. Savings Bank Account

18

4. Current Account & cash credit Account

24

5. CASA Schemes

27

6. Term Deposit

32

7. Deposit Schemes

43

8. Gold Deposit Scheme

49

9. Dormant & Inoperative Accounts

52

10. Special Types of Customers

54

11. Rights of Banker

60

12. Right to Information Act

62

13. BCSBI

65

14. Ombudsman Scheme 2006

67

15. Garnishee Order

71

16. Attachment Order

73

17. Negotiable Instrument Act

74

18. Certificate of Deposits and Commercial Paper

79

19. Collection of Cheques

81

20. Locker

90

21. Mobile Banking

93

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Sl.No

Chapter Name

Page
Number

22. NEFT and RTGS

95

23. Liability Insurance

101

24. Loan Secure

103

25. Health Care Plus

104

26. Sale of Gold coins

106

27. Nomination

107

28. FCRA 2010

110

29. Public Provident Fund

113

30. Credit Card

114

31. Debit Card

116

32. Debit Card - Schemes

120

33. Tax Deduction at source

122

34. KYC/AML Foreign Exchange related

127

35. Foreign Exchange

131

36. NRO Accounts

144

37. NRE accounts

147

38. FCNR (B) Accounts

151

39. EEFC Accounts

155

40. FEDAI Rules

156

41. Exports

160

42. Imports

167

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Sl.No

Chapter Name

Page
Number

43. INCOTERMS

170

44. Letter of Credit

174

45. Remittance - Outward

178

46. Remittance facilities for NRIs in IOB

186

47. General advances

192

48. Ratio Analysis

208

49. Priority Sector Advances - Classification

215

50. MSME advances

225

51. CGTMSE

231

52. Letter of Guarantee

237

53. Rehabilitation of sick Micro Small Enterprises

239

54. SME Schemes

242

55. Financial Inclusion IOB initiatives

249

56. NBFC Micro Financial Institutions

256

57. Joint Liability Group

257

58. Self Help Group

260

59. SGSY

267

60. SJSRY

272

61. PMEGP

275

62. Govt. Sponsored Schemes

279

63. ISHUP

281

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Sl.No

Chapter Name

Page
Number

64.

Subhagraha

283

65.

Vidyajothi

290

66.

Retail Credit Schemes

298

67.

Liquirent

305

68.

Easy Trade Finance

307

69.

DRI Advances

309

70.

Kissan Credit Card

310

71.

Agri- Credit Schemes

316

72.

Takeover of advances

320

73.

Advances- Granting Excess and adhoc limits

322

74.

Joint responsibility for loans and advances

326

75.

Loan Review Mechanism

331

76.

Restructuring of advances

332

77.

Credit Monitoring

335

78.

Restrictions for financing

338

79.

SARFAESI Act

339

80.

Prudential Accounting norms

343

81.

CERSAI

347

82.

Risk Management

350

83.

Valuation of Security

354

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Sl.No

Chapter Name

Page
Number

84.

Significant Accounting Policies of Bank

357

85.

Capital Adequacy

358

86.

Capital Structure of Banks

365

87.

Branch Authorisation Policy

368

88.

Base Rate

369

89.

Security Arrangements

370

90.

ASBA

372

91.

Customer Service

374

92.

Compensation Policy

377

93.

Staff Matters

380

94.

Understanding Terminology - Financing

383

95.

Understanding Terminology - Monetary

386

96.

Miscellaneous matters

390

Disclaimer
This book is designed to provide information on banking topics to promotion
aspirants of Indian Overseas Bank. But the book is also being used as a
reference book in many branches for their routine jobs. This book may serve only
as a general guide and not as the ultimate source of subject information. Every
effort has been made to make the contents of this book as accurate as possible
with latest information. References were made in the Banks Book of instructions,
manuals, circulars, RBI circulars, different Acts etc. to collect details. However,
there may be omissions, typographical and or content errors. The author shall
have no liability or responsibility to any person or entity regarding any loss or
damage incurred, or alleged to have incurred, directly or indirectly, by the
information contained in this book.

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KYC/AML Guidelines
(Some points)
Reserve Bank of India has compiled a set of broad guidelines known as Know your
Customer (KYC) norms taking into account the recommendations of;
Financial Action Task Force ( FATF ) on Anti Money Laundering (AML )
measure and on Combating Financing Terrorism ( CFT )
The salient features of the Customer Due Diligence (CDD) for banks
suggested by Basel Committee on Banking Supervision.
A. Objectives

The objective of KYC/ AML/ CFT guidelines is to prevent Banks branches from
being used intentionally or unintentionally by criminal elements for money
laundering or terrorist financing activities.

KYC procedures also enable our branches to know / understand the customers
and their financial dealings better which helps to guard against fraudsters /
criminals besides facilitating assessment of risk perception prudently.

B. Definition of customer
For the purpose of KYC Policy a customer of our Bank is defined as:

A person or entity that maintains an account and / or has a business


relationship with any of branches

One on whose behalf the account is maintained (i.e.the beneficial-owner) at any


of our branches
Beneficial Owner' means the natural person who ultimately owns or
controls a client and or the person on whose behalf a transaction is being
conducted, and includes a person who exercise ultimate effective control
over a juridical person.
Procedure for determination of Beneficial Ownership (some examples are
given below :)
Controlling ownership interest means ownership of/entitlement to more
than 25 % of shares or capital or profits of the juridical person, where
the juridical person is a company;
of/entitlement to more than 15% of the capital or profits of the juridical
person where the juridical person is a partnership;
Or, ownership of/entitlement to more than 15% of the property or
capital or profits of the juridical person where the juridical person is an
unincorporated association or body of individuals.

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Control through other means can be exercised through voting rights,


agreement, arrangements, etc.

Beneficiaries of transactions conducted by professional intermediaries such as


stock brokers, Chartered Accountants, Solicitors etc., as permitted under Law

Any person or entity connected with a financial transaction, which can pose
significant reputational or other risks to the bank, say a wire transfer or issue
of high value demand draft as a single transaction

a person who receives occasional/ regular cross border inward remittances


under Money Transfer Service Scheme (MTSS);

a person on whose behalf a cross border inward remittance under MTSS is


received (i.e. beneficial owner);

a person who undertakes occasional/ regular transactions (money changing);

an entity that has a business relationship with Branch;

A person on whose behalf the transaction (money changing) is made.

C. Core Components
The Policy on KYC guidelines has been framed on the basis of the following four
core/key elements.

Customer Acceptance Policy (CAP)

Customer Identification Procedure (CIP)

Monitoring of Transactions

Risk Management

a. Customer Acceptance Policy (CAP)

No account shall be opened in anonymous / fictitious /benami name(s).

Based on the level of risk perception, each customer shall be categorised as


Low risk, Medium risk and High risk and shall be assigned codes as RIP
ONE, "RIP-TWO" and RIP THREE respectively.

Customers requiring very high level of monitoring, e.g Politically Exposed


Persons (PEPs), persons having large number of cases filed against them by
Competent Authorities like Enforcement Directorate, Police, Income-Tax,
Monitoring agency for Forex violations, commercial Tax etc., shall be
categorised as "RIP Exceptional".

The bank shall not open an account or close an existing account where it is
unable to apply Customer Due Diligence (CDD).

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CDD aspects:
Unable to verify identity of the customer.
Unable to obtain documents required as per risk categorisation due to non
co-operation of the customer.
Unable to rely on the data / information furnished by the customer etc.

Undesirble Accounts
Accounts in which the balances often fall below the stipulated minimum
balance
Savings bank accounts in which there are large number of operations not
commensurate with the balance maintained
Accounts in which cheques are drawn without adequate funds or
arrangement to cover them and the cheques are returned frequently
Accounts in which cheques are drawn against uncleared effects expecting
the bank to pay the cheques or accounts where the customer remits funds
always at the last moment to meet the cheques already presented
Accounts of customers who are known through reliable sources to be
indulging in illegal activities (Smuggling etc), FEMA violation etc, and the
developments are likely to tarnish the image of our bank.)

Bank shall document / record in clear terms the circumstances in which


customer is permitted to act on behalf of another person / entity in conformity
with the established Law and practice of Banking.
This is to facilitate establishing the correctness of branch /Regional Office
decision when an account,
is opened by a Power of Attorney holder on behalf of principal.
is operated by Mandate holder.
Is opened by an intermediary in the fiduciary capacity.

CROP FORMS (Section A & Section B) are to be obtained

At the end of every year, the forms are to be scruitinised and accounts are to be
re-classified as per risk perception.
Branch shall obtain CROP FORM from Low risk customers, once in 5 years
And once in 2 years in respect of other customers.

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Risk Matrix
Based on the risk perception, following risk matrix is adopted.
RIP One (Low risk)

Individuals and entities whose identities and sources of wealth can easily be
identified and in whose accounts transactions by and large conform to the
known profile shall be categorized under RIP-One.

Example:
Salaried employees whose salary structures are well defined.
People belonging to lower economic strata of the society where accounts
reflect small balances and low turn-over.
Government Departments, and Government owned Companies,
Regulators and Statutory bodies etc.,
NPOs / NGOs promoted by United Nations or its Agencies
RIP TWO

Individuals and entities whose accounts reflect large volume of turnover or


large number of high value transactions in the estimation of branch, taking
into account the relevant factors such as customers background, nature of
business, location of activity, country of origin, source of funds, his client
profile, market reports etc. shall be categorised under RIP Two.

In these cases upon seeking clarifications satisfactory responses shall be


forthcoming from the customers.

Example:
People with range of business activities of smaller modules Share brokers, real
estate people, Auto consultants, interior decorators etc., who have small
means and who tend to route the dealing amounts which do not belong to
them in their account
RIP Three (High Risk)
Customers for whom sources of funds are not clear or are not convincing shall be
categorized under RIP Three.

Higher due diligence shall be applied for this category of customers who include
the following.
Non resident customers.
High net worth individuals.

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Trusts, Charities, NGOs and organizations receiving donations.


Companies having close share holding or beneficial ownership.
Firms with sleeping partners.
Politically exposed persons (PEPs) of foreign origin,
customers who are close relatives of PEPs and accounts of which a PEP is
the ultimate beneficial owner,
Non-facetoface customers.
Those with dubious reputation and connected to persons with dubious
reputation as per public information available.
Accounts of bullion dealers(including sub-dealers) and jewellers in view of
risks involved in cash intensive businesses.
RIP Exceptional (Very High Risk)

Individuals and entities whose public image in the estimation of branch is poor
/ adverse shall be categorised under RIP Exceptional.

Examples:
Persons and entities having large number of cases filed against them by the
competent authorities viz.,
Enforcement Directorate
Police
Income Tax Department
Monitoring Agency for Forex violations
Commercial Tax department
Bodies handling Export / Imports disputes
b. Customer Identification Procedure (CIP)

Customer Identification Procedure refers to identifying the customer and


verifying his/ her identity by using reliable, independent source
documents, data/ information etc.

Customer identification procedure shall be carried out at different stages;


While establishing a banking relationship;
Carrying out a financial transaction or
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When the branch has a doubt about the authenticity / veracity or


adequacy of the previously obtained customer identification data.

Customer identification procedure shall also be carried out in respect of nonaccount holders approaching the bank for high value one-off transactions.

Any one or more document(s) which provide customer information to the


satisfaction of bank shall be sufficient.

The documents except passport ration card, registered lease deed and postal
identity card should not be more than 6 months old.

If the address on the document submitted for identity proof by the prospective
customer is same as that declared by him/her in the account opening form, the
document may be accepted as a valid proof of both identity and address.

A rent agreement indicating the address of the customer duly registered with
State Government or similar registration authority may also be accepted as
a proof of address.

For opening bank accounts of salaried employees,


Branches have to rely on certificate issued by employers as the KYC
document for the purpose of certification of identity as well as address proof.
These are to be obtained from corporates and other entities only of repute.
Branches should be aware of the competent authority designated by the
concerned employer to issue such Certificate or letter.
In addition to the certificate from employer, branches should insist on
atleast one of the officially valid documents as provided in the Prevention of
Money Laundering Rules (viz. passport, driving licence, PAN Card etc.) or
utility bills for KYC purposes.

Opening the savings bank account of the SHG


While opening the savings bank account of the SHG, KYC verification of all
the members of SHG need not be done. KYC verification of all the office
bearers would suffice.
At the time of credit linking of SHGs, no separate KYC verification of the
members or office bearers is necessary since KYC would have already been
verified while opening the savings bank account and the account continues
to be in operation and the same account is to be used for credit linkage.

Verification of Address of Close Relatives

Some close relatives viz., wife, son, daughter, parents etc who live with their
husband/Father/Mother/Son are experiencing difficulty in opening account
with banks as the utility bills required for address verifications are not in their
names.

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In order to obviate this predicament, bank shall obtain identity document and
utility bill of the relative with whom the prospective customer is living along
with a declaration from the relative that the said person (prospective customer)
who wants to open an account is a relative and is staying with him/her.

Bank can use any supplementary evidence such as a letter received through
post for further verification of the address.

Transfer of Accounts

KYC once done by one branch of the bank should be valid for transfer of the
account within the bank as long as full KYC has been done for the concerned
account.

The customer should be allowed to transfer his account from one branch to
another branch without restrictions.

In order to comply with KYC requirements of correct address of the person,


fresh address proof may be obtained from him/her upon such transfer by the
transferee branch.

Walk-in-customers

Full particulars of the applicant including PAN number details are to be


obtained in case of walk-in customers also when DDs are issued for Rs 50000
and above as multiple DDs in aggregate for the same applicant.

Client Accounts opened by professional intermediaries

Where the bank has knowledge or reason to believe that the client account
opened by a professional intermediary is on behalf of a singleclient, then that
particular client shall be identified.

Professional intermediary, who is under any obligation that inhibits bank's


ability to know and verify the true identity of the client on whose behalf the
account is held or beneficial ownership of the account or understand true
nature and purpose of transaction/s, should not be allowed to open an
account on behalf of a client.

First remittance to the account of non face to face applicant customer shall
be insisted through banks branch which adheres to similar KYC standards.

While verifying the identity of proprietary concerns and when income tax
return is used for the purpose, the complete Income Tax Return (not just the
acknowledgement) in the name of the sole proprietor where the firm's income is
reflected, duly authenticated/acknowledged by the Income Tax authorities and
utility bills such as electricity, water, and landline telephone bills in the name of
the proprietary concern as required documents for opening of bank accounts of
proprietary concerns.

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Strict adherence to guidelines on KYC/AML/CFT minimize the operations of


Money mules.

In a money mule transaction, an individual with a bank account is recruited to


receive cheque deposits or wire transfers. These funds are then transferred to
accounts held on behalf of another person or to other individuals, after paying a
certain amount as commission.

In case of opening of accounts for migratory workers, The concerned branch


may get the details of permanent place of residence verified through an online
communication to the nearest branch of the permanent domicile within 30
days of opening of an account within which the customer may be allowed
limited operations to enable him/her to meet basic day-to-day requirement of
funds.

Small accounts
'Small account' means a savings account in a banking company where the aggregate of all credits in a financial year does not exceed Rs. 1 lakh;
the aggregate of all withdrawals and transfers in a month does not exceed
Rs.10,000; and
The balance at any point of time does not exceed Rs. Rs.50,000.

If any of the condition with regard to credit/withdrawal/balance as stated in


above is breached, the account will be blocked.

Foreign remittances will not be allowed to be credited into small account


unless the identity of the client is fully established through the production of
officially valid documents.
In the case of accounts, which are opened against self-attested photograph
and affixation of thumb impression, If the account holder fails to produce
any of the officially valid documents even after 24 months from the date of
opening of the account, the account will be blocked disallowing any
credit/debit transactions.
Option to unblock the account will be given to the branch manager after
keying in the particulars of receipt of officially valid documents.
c. Monitoring of Transaction

It is the duty and responsibility of the deskofficers at the branches /other


offices to report immediately the details of such transaction which in his / her
estimation are of suspicious nature (falling outside the regular pattern of
activity), to the First Line Manager.

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For this purpose Branches will maintain a Suspicious Transaction Index Book
(STIB) wherein the desk officers will record the details of the transactions and
bring them to the attention of the branch Manager

Suspicious transaction means a transaction whether or not made in cash


which, to a person acting in good faith;
gives rise to a reasonable ground of suspicious that it may involve the
proceeds of crime or
appears to be made in circumstances of unusual or unjustified complexity or
Appears to have no economic rationale or bonafide purpose.

The bank shall advise the branches to fix-up category wise (viz., salaried class,
middle Income group, Businessmen, Traders etc) threshold limits for each
account based on the data on income / business furnished by the customer in
CROP form.

Example;
The threshold limit for an account may be his / her annual salary for salaried
and the total annual business income for a businessman / trader.

The bank shall fix risk level Single Transaction Threshold Limit (STTL) at the
time of opening the account itself, based on the risk profile of the customer.

STTL Limits;

Sl.no

Risk Perception

Low Risk RIP 1


Medium Risk-RIP
2
High RiskRIP 3 &
Risk Exceptional

2
3

Individual25 % of annual income


subject to
Minimum
Maximum
(Rs.)
(Rs.)
50,000
20,00,000

Legal Persons
1/12th of annual
turnover subject to
Minimum
Maximum
(Rs.)
(Rs.)
5,00,000
50,00,000

50,000

15,00,000

4,00,000

50,00,000

50,000

10,00,000

3,00,000

50,00,000

Any transaction, which exceeds the threshold limit, shall be enquired into
and the response shall be recorded. If the response from the said customer
is unsatisfactory or not convincing, the transaction shall be reported by the
branches in STR to Regional Office.

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d. RISK MANAGEMENT

The branches shall review the risk categorisation of accounts as follows :


In respect of accounts categorised under Low and Medium Risk ( RIP-I
and RIP- II), branches should review the risk perception once in a year
as of December and refix the same if necessary
In respect of High and Exceptional risk category, (RIP III and RIP
exceptional) review of risk perception should be done once in 6 months.

Closure of Accounts;
Where the bank is unable to apply appropriate KYC measures due to non
furnishing of information and /or non-cooperation by the customer, the
bank shall consider closing the account or terminating the banking /
business relationship after issuing due notice to the customer explaining the
reasons for taking such a decision.
Such decisions shall be taken by Regional Managers and above only.

Freezing of Accounts
In terms of Section 51A of Unlawful Activities (Prevention) Act, 1967 (UAPA) ,
the Central Government is empowered to freeze, seize or attach funds
and other financial assets or economic resources held by, on behalf of or at
the direction of the individuals or entities.

D. General Manager, Inspection Department, Central Office has been designated


as PRINCIPAL OFFICER ( PDoc KYC AML ) of our bank.
E. Maintenance and preservation of records

Banks shall maintain for at least 10 years from the date of transaction
between the bank and the client, all necessary records of transactions, both
domestic or international, which will permit reconstruction of individual
transactions (including the amounts and types of currency involved if any) so as
to provide, if necessary, evidence for prosecution of persons involved in criminal
activity.

Bank shall ensure that records pertaining to the identification of the customer
and his address (e.g. copies of documents like passports, identity cards, driving
licenses, PAN, card, utility bills etc.) obtained while opening the account,
undertaking transactions and during the course of business relationship, are
properly preserved for at least 10 years after the business relationship is
ended/ from the date of cessation of the transactions/ business relationship.

Branches shall maintain record of all cash deposits and withdrawals of Rs. 10
lacs and above in CDW Ten Register.

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Bank shall submit the Cash Transaction Report (CTR) for each month 15th of
the succeeding month

The Suspicious Transaction Report (STR) shall be furnished within 7 days of


arriving at a conclusion that any transaction, whether cash or non-cash, or a
series of transactions integrally connected are of suspicious nature.

F. The Principal Officer shall record his reasons for treating any transaction or a
series of transactions as suspicious.
G. General Guidelines

Information collected from the customers for the purpose of opening an account
will be kept confidential

Remittance of funds by way of demand draft, mail /telegraphic transfer /


RTGS/NEFT / swift or any other mode and issue of travellers cheques for value
of Rs.50000/- and above is effected by debit to the customers account or
against crossed cheques and not against cash payment

Introduction is not necessary for opening of accounts under PML Act and Rules
or Reserve Banks extant KYC instructions. Therefore introduction should not
be insisted for opening bank accounts of customers.

Branches/Regional Offices/Other offices are advised, as an initial measure ;


to place KYC non-compliant accounts under close watch;
Depriving the noncompliant customers certain additional facilities till the
customer complies with such requirements.

If the customer shows unwillingness to comply with KYC/AML/CFT


requirements and not responding with in a period of 3 months/not found at the
given address, branches can close the account after giving due notice to
him/her. Such decisions shall be taken only at Regional Managers level.

However, Basic banking transactions already in force should not be disturbed


for meeting KYC review requirements

H. RBI's Penalty for violation of norm


As per the Banking Regulation Act amendment, Reserve Bank of India will now
be able to levy a penalty of Rs-l crore on banks if they breach a single norm.
********************************
srn/06.05.2013

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General Banking - points


1. Banking is defined under sn 5(b) of the Banking Regulation Act 1949.
Banking means the accepting, for the purpose of lending or investment, of
deposits of money from the public, repayable on demand or otherwise, and
withdrawal by cheque, draft, order or otherwise.
2. RBI prescribed certain benchmarks towards achieving standardisation of
cheques issued by banks across the country. These include provision of
mandatory minimum security features on cheque forms like quality
of paper, watermark, banks logo in invisible ink, void pantograph, etc., and
standardisation of field placements on cheques. This benchmark
prescriptions is known as : CTS-2010 standard'
3. Compensation Policy
The Compensation Policy envisages compensation to the customers in case
of financial loss due to the deficiency of service in the following areas.
a. Unauthorized debit/ Erroneous debit in the customers accounts.
b. Erroneous transactions in credit card operations.
c. Failure in carrying out ECS direct debits/ other debits to the accounts.
d. Payment of cheques after Stop Payment instructions.
e. Delay in foreign exchange transactions.
f. Delay in collection of outstation cheques.
g. Cheques / Instruments lost in transit/in clearing process or at paying
Banks Branch
h. Violation of the Code by banks agent.
i.

Transaction of at
Commercial Banks.

par

instruments

of co-operative

Banks

by

4. Compensation Limit: As a measure of our banks commitment to speedy


customer service, the customer will be compensated up to Rs. 1 Lac
where erroneous debits have taken place in the customers accounts either
through our fault or where the fault is elsewhere in the system
5. Delay in Remittance of Government Receipts - Delayed Period Interest

Delayed period interest shall be calculated only for the delayed period
and not from the date of transaction

The period of delay in a transaction of Rs.1 lac and above will attract
delayed period interest at Bank rate + 2% (Bank rate is notified by RBI
from time to time).

For Transactions below Rs.1 lac each : The delayed period interest will
be levied only at the Bank rate for delays upto 5 calendar days and

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For delay above 5 calendar days, Penal Interest at the Bank rate +2% for
the full period of delay

6. Payment of cheques after Stop Payment instructions:

In case a cheque has been paid after stop payment instruction is


acknowledged by the bank, the bank shall reverse the transaction and
give value dated credit to protect the interest of the customer.

Any consequential financial loss to the customer will be compensated.


Such debits will be reversed within 2 working days of the customer
intimating the transaction to the Bank.

7. Foreign inward remittance:

Inward remittance will be credited to beneficiarys account within 7 days


from the date of credit to Nostro account provided account details are
available correctly.

Bank shall compensate the customer of an inward remittance by


payment of interest @ 2% over the applicable Savings Bank rate of
interest in case the proceeds of the inward remittance are not paid within
7 days.

8. Personal Accident Insurance cover provided to the following customers free


of cost.

SB gold -

Rs.5,00,000

SB silver

Rs.1,00,000

Current account classic

Rs.1,00,000

Current account super

Rs.5,00,000

RD gold

Rs.1,00,000

Corporate salary account

SB Student

Rs.1,00,000

SB Platinum

Rs. 75,000

Rs.1,00,000

Maximum coverage under PAI is Rs.5,00,000 irrespective of having more


number of accounts in the same branch or with different branches.
9. MARKING OF CHEQUES
The Marking of any cheque as "Good for Payment" is strictly prohibited.
Whenever a customer wants cheques to be marked as good for payment
they should be asked to take a Demand Draft out of the clear funds or
drawing power available in the account
10. Excess in cash: Any excess in cash balance is to be credited to sundry
creditors account. Amount lying unclaimed for more than 6 months will
be transferred to Central office half yearly - during March and Sept every
year.

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11. Deposits General


The approval to open an account must be given by the Branch Manager
irrespective of the cadre
Photographs need not be insisted by branches, in the under noted
accounts:
a. Staff accounts
b. Banks, Local Authorities and Government Departments
c. Term Deposit for an amount up to and inclusive of Rupees Ten
thousand only
Whenever any partner of a partnership firm approaches the branch for
opening an account in the similar name of the firm with him as a
proprietor or otherwise, such request should be declined by the branch.
Up to six months of operation the computer system will flash the
message New account to ensure that the branch is keeping a careful
watch on the transactions in the new account
12. Banker- Customer Relationship:
Sl.No

Type of accounts/transactions of the


Customer with the Bank

Relationship of the
Banker-Customers

1.

Deposit Accounts (Cr. Balance)

Debtor-Creditor

2.

Deposit Accounts (Dr. Balance)

Creditor-Debtor

3.

Loan accounts

Creditor-Debtor

Collection of cheques/acceptance of
standing instructions
Acceptance of articles for safe custody

Agent/ Principal

Acceptance of money for specific


purposes
Accepting money for issuing draft (before
draft is issued)

Trustee -Beneficiary

4.
5.
6.
7.
8.

Draft tendered to applicant, but before it


passes on to the hands of beneficiary

9.

Draft tendered by payee (with the payee


of DD)

10.

Account of safe deposit locker

Bailee - Bailor

Agent-Principal

Debtor-Creditor
Trustee-Beneficiary
Lessor-Lessee

13. Mandate
A mandate is neither stamped not witnessed.
If the account holder is illiterate, mandate must be attested by notary
public

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14.

Power of attorney

It is in writing, executed in the presence of notary and is stamped as per


the Stamp Act of the State. If it is executed outside India, it should be
executed before High Commissioner in Indian Embassy and should be
stamped in India within three months of its receipt.
The Power of Attorney must be definite and no provisional or conditional
clause as "during my absence from India" or "during my illness" etc.,
shall be accepted as the monitoring of such conditions is difficult. Care
must be taken to see that the attorney does not exceed the powers
granted to him
A cheque signed by the agent can be paid even after his death provided
the principal is alive.
If there is no specific clause in the POA as regards the irrevocability, the
POA will be treated as revocable POA and in such cases; it should be
verified and ensured that the said POA has not been revoked, from the
SRO where the POA was originally registered.
Though POA received, is irrevocable, it gets automatically cancelled on
the death of the Principal. It should therefore be ensured that the
Principal is alive on the date of creation of mortgage.
The POA should also contain a ratification clause whereby the Principal
agrees that all acts, deeds and things lawfully done should be construed
as the act of the Principal and his undertaking to ratify and confirm all
such acts done by the POA holder
15.

Revocation of stop payment instructions

In the case of accounts of individuals and proprietary concerns, the


revocation instruction must be given by the individual or proprietor. In
case of joint accounts of individuals irrespective of operational
instructions like either or Survivor, etc., the revocation instructions must
be signed by all the joint account holders.
In the case of partnership accounts, the letter carrying the revocation
instructions must be signed by all the partners of the firm.
In the case of accounts of companies, clubs, associations and trusts, the
letter revoking the stop payment instructions must be signed by all the
Office bearers or trustees (including the one who issued the stop payment
instructions).
An acknowledgment of the letter containing the revocation instruction
must be sent to the customer
16.

Insolvency
When an individual customer/proprietor of proprietary concern/ any of
the joint account holders in a joint account becomes insolvent, or when a
company is in the legal process of winding up, the banker customer
relationship stands terminated.

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Cheques issued by the partnership firm signed by a partner who has been
declared insolvent, notice of which has been received by the bank must be
returned with the reason "Refer to Drawer".
If the Partnership Deed does not provide for the continuation of the
partnership and if a partner becomes insolvent and therefore the firm has
to be dissolved, then the solvent partners can be allowed to operate the
account for the purpose of winding up only.
On receipt of notice of insolvency of a Karta or any coparcener of the Joint
Hindu Family firm, all operations in the account of the Joint Hindu Family
firm must be stopped.
Effect of insanity of customers:
A notice or knowledge that a customer is confined to a lunatic asylum or is
judicially declared a lunatic under the Lunacy Act, would constitute
adequate authority to the Bank to stop operations on his account
On the insanity of one of the joint account holders, the joint relationship
stands cancelled. No operations either by the sane or insane account
holder should be allowed irrespective of the fact that the balance is payable
to either or survivor, anyone or survivor etc.
Cheques issued prior to receipt of notice of insanity should not be
honoured even if it is signed by the sane account holder.
Cheques presented subsequent to receipt of notice of insanity of the
proprietor should be returned with the remark "Refer to Drawer".
If the Partnership Deed provides for continuation of the partnership
business even if one or other partners become insane and if the other
partners want to continue the partnership business, they must be
requested to close the account by drawing a self cheque signed by all the
other partners and open a new account by fulfilling all the formalities
connected with opening an account.
Cheques drawn by partnership firms signed by the partner, who has been
declared insane or known to be insane by way of notice of insanity received
by the Bank, should be returned by the Bank with the reason "Refer to
Drawer".
If the Partnership Deed does not contain such a provision and
subsequently the partnership firm is to be dissolved, the other partners
must be allowed to operate the account for the purpose of dissolution.
Insanity of the karta or individual coparceners will not disrupt the Hindu
Undivided Family Firm. The next senior coparcener becomes
automatically the karta of the family to manage its affairs. The
account may be allowed to be continued after satisfying the validity of the
claim, of the new karta by getting the written consent of all coparceners.
Cheques drawn by the insane karta presented after the notice of his
insanity may be paid only after getting the confirmation of the new karta.

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Insanity of person who is authorised to operate an account of a Limited


Company will not affect the account and cheques issued by the person
before his becoming insane will also be paid.
The Company will arrange to forward a copy of the new Resolution
regarding operation in the bank account to the branch.
17.

Return of paid cheques to customers

In terms of Section 45 Z of the Banking Regulation Act, 1949, banks may


return a paid instrument only after obtaining a true copy thereof, by
mechanical or other process at the cost of the customer.
Branches should obtain prior permission of Banking Operations
Department, Central Office for furnishing full details of the customer and
reason for their seeking return of their paid instruments.
Such permission will be granted subject to the customer giving an
undertaking to the Bank to retain such paid instruments for a minimum
period of eight years and to produce the same on demand when required
under Law such as the Income Tax authorities etc. This undertaking is to
be preserved with the account opening form.
Branches on daily basis should report the particulars of all the
dishonored cheques for amount of Rs. ONE CRORE and above to their
respective Regional office in DSDC form
Branches on daily basis should report the particulars of all dishonored
cheques irrespective of the amount drawn in favour of stock exchanges
by share broker entities to their respective Regional office in DSDC
form.
18. The cheque requisition slips, request letters and acknowledgement for
receipt of cheque books should be stitched and preserved along with the
days vouchers
19. Demand drafts of Rs. 20,000/- and above are to be issued invariably with
account payee crossing.
20. The Payment and Settlement Systems Act, 2007 provides for punishment of
2 years and twice the amount of electronic funds transfer instruction, or
both for dishonour of such electronic funds transfer on par with the
penalties stipulated for dishonour of cheques under the Negotiable
Instruments Act, 1881.

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Savings Banks Account

1. Interest rate on SB accounts (domestic, NRE & NRO) has been deregulated.
2. ONLINE ACCOUNT OPENING through our Web site is available.

The accounts can be opened under SBGOLD1. SB-NRE, SB-PLAT, SBPUB, SB-GOLD2, SBSTUDNT, SB-SLVR1, & SB-SLVR2.

Minimum balance requirement will be as applicable to the respective


schemes.

As and when the required documents, forms, copies of proof etc. have
been obtained by the branch, account opening shall be completed after
due verification of documents as per extant guidelines.

Accounts should be opened within 3 days of registration, excluding


intervening holidays, without fail.

In case the account could not be opened due to genuine reasons/ the
same should be recorded against the relevant data with the reasons.

For SB-NRE:
The initial remittance for opening the account is to be received
through banking channels in an approved manner along with
signature of the depositor duly verified and attested by the overseas
bank, Indian Embassy or Notary Public.
Branch should confirm the identity of the depositor at a later date
when he calls in person by calling for and verifying his current valid
passport.
The officer should compare the signature of the customer in the
passport with those in the account opening form and ensure that they
agree

3. Individuals resident in India may be permitted to include non-resident


close relative(s) as a joint holder(s) in their resident bank accounts on
former or survivor basis. However, such non- resident Indian close
relatives shall not be eligible to operate the account during the life time of
the resident account holder.
4. Accounts of Foreign nationals:

The Foreign Nationals employed in India and holding valid visas are
eligible to maintain resident accounts with branches in India.

RBI has permitted branches to re-designate the resident account of


foreign nationals, maintained in India as NRO account, on leaving the
country after their employment to enable them to receive their pending
bonafide dues.

Branches should obtain the complete details from the account holder
about his legitimate dues expected to be received into his account. A

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declaration to this effect listing out all the legitimate dues to him have to
be obtained from account holder.

Branches have to satisfy themselves as regards the credit of amounts


which have to be bonafide dues of the account holder when she / he was
a resident in India.

The funds credited to the NRO account should be repatriated abroad.


Before remitting, branch should verify that all the applicable Income tax
and other taxes in India have been paid.

The amount repatriated abroad should not exceed USD one million per
financial year.

The debit to the account should be only for the purpose of repatriation to
the account holders account maintained abroad.

There should not be any other inflow / credit to this account other than
that mentioned above.

The account should be closed immediately after all the dues have been
received and repatriated as per the declaration made by the account
holder.

5. Opening of Bank Accounts by Foreign Students studying in India

A foreign student studying in India would be considered as a Person


Resident In India as defined in Section 2 (v) of FEMA Act,1999.

Therefore, they are eligible to open bank account without prior


permission of RBI.

Details of documents that can be accepted from Foreign Students


studying in India for KYC compliance:
a. Passport proof of identity
b. Valid Visa a visa with photograph in it also serves as a proof of
identity
c. Proof of admission usually a letter from the university or college
d. A letter from the college or hostel, certificate from embassy of the
country of origin or any appropriate legal authority certifying local
address in India/rent agreement/certification of registration issued by
Foreigner Registration Regional Office (FRRO) Address proof.

6. The interest rates applicable on the domestic savings deposit will be


determined on the basis of end-of-day balance in the account.
7. While calculating interest on domestic savings bank deposits, banks are
required to apply the uniform rate set by them on end-of-day balance up to
Rs. 1 lakh and for any end-of-day balance exceeding Rs.1 lakh, banks may
apply the differential rate(s) as fixed by each bank.

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8. Banks are directed by RBI not to make payment of cheques/pay orders/


bankers cheque bearing that date or any subsequent date, if they are
presented beyond the period of three months from the date of such
instrument.
9. Branches should obtain the nomination as per procedure and record in the
computer system for all Savings Bank accounts, excepting Minors Special
Savings accounts
10. The passbook should be branded with the rubber stamp reading
NOMINATION REGISTERED. The details of the nominee should also be
entered in the computer master through appropriate programme
11. All Cash Deposits in Savings Accounts of Rs.50,000/- and above will require
the account holder furnishing the Income-tax PAN or declaration in Form 60
or 61 as the case may be.
12. Additional withdrawal slips not exceeding ten leaves at a time may be given
to such of those customers who do not have cheque books, for the purpose
of drawing cash through third parties. In such a case the savings bank clerk
(operator) should note the account number in all the withdrawal slips before
parting with the same.
13. Payment out of Savings Bank account to third parties through withdrawal
slips may be allowed up to a maximum amount of Rupees One thousand
only per instrument.
14. No interest in SB accounts should be paid unless the interest accrued
during the half year amounts to at least Rupee One.
15. SB Overdraft Accounts not adjusted and outstanding beyond sixty days
from the date of granting should be treated as irregular and reported to
Regional Office in ERI.
16. Savings Bank Accounts where an average quarterly balance of Rs. 10000
and above was continuously maintained during the previous quarter are
eligible for the following concessions in the current quarter

Inland Demand Drafts for 2 occasions in a month for a total amount of


DD and put together not exceeding Rs.10,000/= are totally exempted
from Exchange / Commission charges

Collection charges would not be levied on outstation instruments such as


Cheques, Demand Drafts, Dividend Warrant, Interest Warrant, Refund
Order etc., (excluding Documentary / Clean Bills, Hundies, Supply Bills).
The total amount of instruments collected during a month for which no
service charges are recovered should not exceed Rs.10,000/=. However
there is no restriction on the number of instruments collected per month.

17. Basic Savings Bank accounts (MSD/ Basic Savings Bank accounts

All Rural, Semi Urban, Urban and Metropolitan branches can open
and maintain Basic Savings Bank account.

Individuals including minor who have completed 10 years of age and


pensioners. Joint accounts are permitted.

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Minimum balance: No requirement of any minimum balance

Withdrawals in the account: withdrawal in cash & ATM withdrawals.


Cheque book will not be issued.

Facility of ATM card is available.

Restrictions for number of transactions: 4 withdrawals in a month


including ATM withdrawal.

Penalty for exceeding number of transactions: No interest is payable

Basic Savings Bank Account must also be extended to students from


scheduled castes, scheduled tribes and other backward classes also,
who are availing various scholarships, benefits etc.

Holders of Basic Savings Bank Deposit Account will not be eligible for
opening any other savings bank deposit account in that bank.

If a customer has any other existing savings bank deposit account in


that bank, he/she will be required to close it within 30 days from the
date of opening a Basic Savings Bank Deposit Account.

If such account is opened on the basis of simplified KYC norms, the


accounts would additionally be treated as a Small Account and
would be subject to conditions stipulated for Small Accounts.

18. Minimum balance requirements


Category

With cheque
facility (Rs.)

Without cheque
facility (Rs.)

Penalty for non


maintenance (Rs.)

Rural & Semi


urban branches

500/-

100/-

20 per month

Other branches

1000/-

500/-

20 per month

Pensioners SB
acc

250/-

5/

20 per month

19. For Basic Savings Bank accounts, no minimum balance charges.


20. Number of withdrawals permitted is fifty per half year in a financial year.
For accounts opened in the middle of the half-year permissible withdrawals
will be calculated pro-rata
21. If the number of debits in the account exceeds the permitted limit or if the
minimum balance requirement is not complied a reasonable service charge
shall be levied to cover the cost.
22. A depositor cannot withdraw a smaller sum than one rupee unless it is to
close the account, in which case the entire balance of the account will be
withdrawn.
23. No cheque shall be drawn for amounts below Rupees Five only.

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24. Cheque leaves issued more than 25 in number would be charged at the rate
of Rs.2.55/= per MICR cheque leaf and Rs.1.55 per Non MICR Cheque Leaf.
25. Savings Bank customers can enjoy the privilege of having their name(s)
printed on the cheque-book Personalised Cheque-book (PCB). IOB-PRIDE
Project.
26. Some charges:
Item of service
Issue of Duplicate Statement
Issue of Duplicate Pass book
Standing Instructions
Stop payment Instructions
signature verification
Account closure charges

27. SAVINGS BANK


SCHEME, 1988

ACCOUNTS

Charges
Flat charges of Rs.41/- for 40 entries
Flat charges of Rs.31/Within same branch for credit to Loan,
RD & Deposits- Free & For othersRs.31/- per transaction
Rs.31/- per instrument -Maximum
Rs.255/Rs.51/For With Cheque book accounts Rs. 76/For without Cheque Book accounts Rs.
51/- ( No period restriction)
UNDER

CAPITAL

GAINS

ACCOUNTS

Branches situated in non-rural areas can accept deposits under the


above scheme to enable the tax payers to avail of the benefit of exemption
from Capital gains
These accounts can be opened only by those tax payers who are eligible
for exemption under Section 54, 54-B, 54-D, 54-F OR 54-G of the Income
Tax Act, 1961 (43 of 1961).
Joint Accounts are not permitted under Capital Gains Accounts
Scheme.
Separate accounts should be opened if the depositor intends to avail the
benefit under more than one of the above sections of the Income Tax Act
Account opening form, FORM - A for opening of Savings Bank(account
A)/term loan (Account B) accounts under the scheme
Account A (SB) under the scheme may be converted into Account B (Term
deposits) and vice versa
applications for conversion from SB to term deposit or vice versa FormB
The proceeds of Account B are to be routed through Account A (SB).
Amount can be withdrawn from Account A only.
Interest on Term Deposit accounts is to be credited to Account A only.
initial withdrawal, the depositor should apply in Form-C

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and for subsequent withdrawals in Form -D


Form D (in duplicate) is to be submitted by giving details showing the
manner / purpose for which the previous withdrawal has been utilized.
Branches may refuse to allow further withdrawal, if above referred
particulars are not furnished.
Withdrawals for amounts exceeding Rs.25000 should be paid to the
depositor only by way of crossed demand draft drawn in favour of the
person to whom the depositor intends to make the payment.
Accounts under the scheme may be closed only with the prior written
approval of the Assessing Officer (Income Tax Department, Government
of India) having jurisdiction over the depositor
Amount drawn from Account A has to be utilized within 60 days from the
date of such withdrawal for the purpose mentioned in the relevant
sections.
Unutilized amount should be re-deposited in Account A immediately.
Non compliance of this rule will render the depositor to lose exemptions
under relevant section.
Amount held in Account A and Account B can not be placed or offered as
security for any loan or guarantee and can not be charged or alienated.
Account can be transferred to another branch of the same Bank.
Interest is taxable. TDS should be deducted as per extant guidelines.
Nomination is permitted. (Maximum Three nominees). FORM E is to be
submitted for nomination. Nomination is to be entered in Pass book/
Deposit Receipt
In case of more than one nominee, the first nominee shall have the right
to receive the amount due in the account of the deceased depositor.
Form F is to be submitted for variation/ cancellation of nomination.
If the depositor dies, the nominee, will make application in Form H with
the approval of Assessing officer ( having jurisdiction over deceased
depositor)
application for closure of account in Form G

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Current & Cash Credit Accounts

Prior approval of Regional Office should be obtained for opening accounts in


the name of Executors and Administrators, Liquidators, and Trusts.

No current account should be opened for blind persons

For opening of accounts of other banks, prior sanction of Banking


Operations Department, Central Office should be obtained.

Whenever any partner of a partnership firm approaches the branch for


opening an account in the similar name of the firm with him as a proprietor
or otherwise, such request should be declined by the branch.

No interest is payable on the balances held in current account except in the


following cases.

Current accounts of Regional Rural Banks are eligible for payment of


interest irrespective of whether they are sponsored by our bank or by other
banks.
This interest will be paid on daily products basis and credited to the
accounts every six months ending February and August.

Credit
balances
lying
in
current/cash
credit
accounts
of
individuals/proprietary concerns where the individual/ proprietor has
expired, are eligible for payment of interest at Savings Bank rates for the
period from the date of death till date of settlement of the claims.

The minimum balance to be maintained in any current account is furnished


hereunder :

Category of Branches

Tiny and Village & Cottage


Industries

Others

Metro and Urban

Rs. 1,000/-

Rs. 2,000/-

Others

Rs. 1,000/-

Rs. 1,000/-

All cash deposits in Current and Cash Credit accounts of Rs.50000/- and
above will require the account holder furnishing the Income-tax PAN number
or declaration in Form 60 or 61 as the case may be.

In respect of Cash Credit Accounts, as per directives from Reserve Bank of


India, the credits arising out of clearing are to be passed on to the respective
accounts on the day the Bank Account is credited for the relative clearing.

As the purpose of releasing the credit is to pass-on the interest benefit to the
customers, no drawings shall be allowed against such uncleared credit as a
matter of routine.

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The following types of service charges are to be recovered in the case of


Current and Cash Credit accounts:
a) Ledger folio charges to be recovered on an annual basis.
b) Charges for the return of cheques for want of clear funds, as and when a
cheque is returned.
c) Charges for carrying out Standing Instructions as and when carried out.

VALUE ADDITIONS (CONCESSIONS) IN CURRENT ACCOUNTS


Eligible Accounts: Current Deposit accounts where an average quarterly
balance of Rs.25,000/- and above was maintained during the previous
quarter.
For arriving at the quarterly average balance, the calendar quarter
immediately preceding the date of transaction is to be taken into account.

Concessions

Inland Demand Drafts and /or Mail Transfers not exceeding 2


occasions in a month for a total amount not exceeding Rs.10,000/- in a
month are totally exempted from Exchange/ Commission charges.

Collection charges should not be levied on outstation instruments such


as cheques, Demand Drafts, Dividend Warrant, Interest
Warrant,
Refund Order etc. (excluding Documentary/Clean Bills, Hundies,
Supply bills).

The total amount of instruments collected during a month for which no


service charges are recovered should not exceed Rs.10,000/-.

However, there is no restriction on the number of instruments collected


per month.

Some Charges:
Sl
No

Services

Charges

1.

Issue of Duplicate
Statement

Flat charges of Rs.41/- for 40 entries

2.

Standing
Instructions

Within same branch for credit to


Loan, RD, Deposits- Free
For others- Rs.31/- per transaction

3.

Charges for nonmaintenance of


Minimum balance

Rs.25/- per day Maximum of


Rs.76/- per month

4.

Issue of Cheque
Books

MICR Centres
Centres
Rs.3.05 per cheque
cheque

NonMICR
Rs.2.00
per

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5.

Stop payment
Instructions

Rs.102/- per instrument &


maximum Rs.510

6.

Account closure
charges

Rs.102/-

7.

for signature
verification

Rs.51/-

8.

Cash handling
charges

First 10 Sections
NIL
From 11th Section Rs.5 per section
(per transaction)
Maximum
Rs.2550/-

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27
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CASA Schemes
Features

Target Group

Minimum balance
requirement

Special features /
concessions

Remarks

SB-Silver

SB-Gold

Individuals including those employed in


reputed companies, among Software, Public
/Private sector, Govt.
While opening the account, the account can
be opened with '0' balance. average daily
balance in the account during the last three
months should not be less than Rs.5, 000
Transfer of funds through NEFT free of
cost
Personal Accident insurance cover of Rs.
one lakh free of cost.
ATM usage at any Bank free.
RTGS free of charges.
Overdraft facility up to one-month salary in
case of salary earners.
Facility for automatic transfer of balance in
SB to Term Deposit If the quarterly
average balance is Rs.25000/- and above,
this facility is offered. Wherein the balance
exceeding Rs.35000/- will be swept out in
units of Rs.2000/-and kept in TD.

IOB-SB Silver I : Quarterly average


balance between Rs. 5000 and less than
Rs.25000 are not eligible for liquid-deposit
facility.
IOB-SB Silver II ;If the quarterly average
balance is Rs.25000/- and above, liquiddeposit facility is offered. Wherein the
balance exceeding Rs.35000/- will be
swept out in units of Rs.2000/-and kept in
TD.

_____________________________________

All individuals including professionals such as


doctors, Lawyers, CA.s, Executives working
in MNC, Software Companies, Public/ private
sector and businesspeople, High Net Worth
individuals, CEOs, IAS and IPS.
The average daily balance over the last three
months should not be less than Rs.50000.
Personalised Multi city cheques issued at
MICR centres free.
Transfer of funds through RTGS without
charges.
Transfer of funds through NEFT without
charges
Personalised cheque books with name
printed free of cost.
Personal Accident insurance covers of Rs.
5 lakhs free of cost.
Preferential rate for gold coins.
ATM usage at any Bank free
Demat account opening charges free
Online Tax payment free of charge.

IOB-SB Gold I : If the quarterly average


balance is between Rs 50000 and less than
Rs.100000, the balance exceeding Rs
65000 will be swept out and kept in TD.
IOB-SB Gold II: If the quarterly
average balance is Rs. 100000 and above,
the balance exceeding Rs125000 will
swept out and kept in TD. The customers
of this category are also eligible for Online
equity trading facility and Overseas Travel
card free of charge.

_____________________________________

CORPORATE SALARY ACCOUNT


All existing customers as and when they request
and new accounts at the time of opening the
account are eligible under the scheme
Can be opened and maintained at Zero Balance.
(Customer will be allowed to maintain at Zero
Balance as long as he/she associated with that
organisation
1 Cheque book free(60 leaves per annum)
RTGS/NEFT Free
Personal Accident Cover Free of Cost for Rs 1
Lac (cost will be borne by the Bank)
Credit Card Free Life Time Card with Base Limit
of Rs 10,000 ( Provided the customer satisfy the
Bank requirement and eligibility norms)
Transactions at ATM Customers can withdraw
maximum of Rs 50,000/- per day in ATM
Overdraft facility up to One Month salary at the
rate of interest applicable to temporary overdraft
facility (Provided the customers a/c is
Satisfactory and free from adverse CIBIL report)

In Case of Retirement / Switch Over to the


other organisation the A/c will be treated as
Regular SB A/cs wherein he/ she would have
to maintain the required balance)
Ref: DEP/ 88 /2010 11 Date : 28.08.2010
Issuing Dept : Marketing and Development

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Features
Target Group
Minimum
balance
requirement

Special
features /
concessions

Remarks

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28
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SB - Student

IOB SB PLATINUM SPECIAL

All existing customers(students) - Student


Age 10 Years and above

All individuals including those employed in


reputed companies, among Software, Public/ Private
Sector, Govt.

Rs.500
Zero balance with prior permission of
GM/GM(Mkg)
Fund Transfer Facility/ Bankers Cheque (or)
Demand Draft restricted to tuition fees/hostel
fees to a Particular School/ College A/c for
payment of fees.
Free Multi purpose usage card
Free Standing Instructions.
Free Cheque Book.
a Free Personal Accident Insurance Cover
for Rs 1 Lac
Customer ID card (Format given below) as an
alternative to carry out their transactions in
the absence of Pass Book. The card would be
in nature of a debit Card issued to the
students with facilities to operate in ATM, POS
& ECOM. The card would be embossed with
the photo of the student, which may serve as
identification card as well.
Branch should not issue Debit Cards
separately as the multipurpose card is a debit
Card with facilities to operate in ATM, POS &
ECOM.
Maximum amount in the account is. Rs
50,000/- ( Maximum amount will be
removed after the A/c holder attains the age
of 18 yrs)

Rs.750/-

Free cheque book (75 leaves).


Free Personal Accident Insurance cover of
Rs.75000/-.
Transfer of funds through RTGS/NEFT (above Rs.
1.00 lakh) -75% concession on charges.
.

Ref: DEP/ 102 /2010-2011 Date : 05.02.11


Issuing Dept. : Retail Banking and Marketing Dept

Ref:DEP/ 103 /2010-2011 dt : 05.02.11DEP/


011/2011-12 Dt : 29.11.11

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Features
Target Group

Minimum
balance
requirement

Special
features /
concessions

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IOB Classic Current account


Proprietary concern, Partnership
firm, HUF, Limited companies,
corporations, SMEs, Trusts,
Societies, clubs, Association, Local
Bodies, Govt. Departments subject
to RBI directives
The average daily balance in the
account over the last three months
should not be less than Rs.1 lac.
Transfer of funds through NEFT
free.
Personal accident Cover for Rs.
one lakh free of cost.
Waiver of Demat account opening
charges.
International Debit Card without
charges to all employees and
owners.
Online Tax payment facility
Customised Multi city cheques
issued at MICR centres at 50%
concession.
Name printed cheque books with
free of cost up to 100 leaves.
Issue of Demand drafts @ 50%
concession.
Folio charges @ 50% concession.
Outstation cheque collection
charges @25% concession.
Transfer of funds through RTGS
@ 25% concession.

IOB Super current account


Proprietary concern, Partnership
firm, HUF, Limited companies,
corporations, SMEs, Trusts,
Societies, clubs, Association, Local
Bodies, and Govt. Departments
subject to RBI directives.
The average daily balance in the
current account during last three
months should not be less than
Rs.5 lac
Anywhere
Banking
in
CBS
branches free.
Transfer of funds through' NEFT
free.
Personal accident Cover for Rs.
Five lakhs free of cost.
Name printed cheque books free
of cost.
Customised Multi city cheques
issued at MICR centres free.
Waiver of Demat account opening
charges.
Folio charges free.
Online Tax payment facility.
Transfer of funds through RTGS
@ 50% concession.
Issue of Demand drafts @ 50%
concession.
Outstation cheque collection
charges @50% concession

Remarks

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29
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IOB SUPREME - CA
Proprietary, / Partnership Firms,
Clubs, Societies etc

Rs.7500
Free 75 Cheque Leaves
Debit Card Free IOB
International VISA Debit Card
to Employees/ Owners.
Rent Free POS for 75 days.
Cash Withdrawal up to RS.
50,000 under CBS transactions
from any branch.
Gold Coin Concession of Rs.
7.50 per gram on purchase of
minimum 76 grams of gold coin
in a day.
RTGS/ NEFT (ABOVE Rs. 1.00
lakh) Facility Available with 75
% Concession

Rent free POS Machines is


applicable only for the
customers satisfying the terms
and conditions of the Bank .

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IOB Defence Salary Account


Features

SBDEFCOM

Target Group

Commissioned officers

Minimum
balance

Zero balance

Special features
/ concessions

ATM

Credit card
Demand Draft
Over draft
Retail loans
Remarks

Free NEFT & RTGS.


Free CBS Transaction (Within bank)
Unlimited & Free Cheque book
Facility of Auto sweep in and sweep out available (As
applicable to Silver II Account)
Instant Credit of Outstation cheques up to Rs 30000
Passbook available & Free updating at Non-Home Branch
Free facility setting up Standing Instructions
ASBA Facility Available
Free PAI for Rs.5.00 lacs
Free mobile banking
Free International Visa debit card
Free Add on Card for spouse.
Only one Add on Card under the scheme
No annual maintenance Fee
Withdrawal limit of 50000/- per account per day.
Rs.50,000 limit for POS/Merchant Establishment
Zero Lost Card Liability (Army personnel will have to
communicate the loss of card to the Bank and the
liability will be nil from then on.)
Free life time Credit Card. Free AMEX-IOB GOLD
Charge CARD ( free for 1st yr) Subject to Eligibility, Bank
satisfactory & CIBIL REPORT
Unlimited & Free DD (only if issued transfer
from salary account and ceiling to Rs. 1 lac per yr)
Up to Two Month salary at the rate of interest applicable
to temporary overdraft facility(Provided the customers
a/c is Satisfactory and free from adverse CIBIL report)
Waiver of Processing Charges
DEP/ 18 /2012-13 Date : 26.04.2012

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SBDEFNON
Personnel below the rank of commissioned officers and other
Staff:
Zero balance
Free NEFT & RTGS.
Free CBS Transaction (Within bank)
Unlimited & Free Cheque book
Instant Credit of Outstation cheques up to Rs 15000
Passbook available & Free updating at Non-Home Branch
Free facility setting up Standing Instructions
ASBA Facility Available
Free PAI for Rs.2.50 lacs
Free mobile banking

Free International Visa debit card


Free Add on Card for spouse
Only one Add on Card under the scheme.
No annual maintenance Fee
Withdrawal limit of 50000/- per account per day.
Rs. 50,000 limit for POS/Merchant Establishment
Zero Lost Card Liability (Army personnel will have to
communicate the loss of card to the Bank and the liability
will be nil from then

Free life time Credit Card Subject to Eligibility, Bank


satisfactory & CIBIL REPORTS
Unlimited & Free DD (only if issued transfer from salary
account and ceiling to Rs. 50000 per year)
Up to one Month salary at the rate of interest applicable to
temporary overdraft facility(Provided the customers a/c is
Satisfactory and free from adverse CIBIL report)
Waiver of Processing Charges
DEP/ 18 /2012-13 Date : 26.04.2012

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General features/concession for SB/Current account holders


1.
2.

ATM cards on day one


International Debit Card without charges only annual maintenance charges of Rs.100 to
those other than exempted schemes.
3. Internet banking (E see banking).
4. NEFT free upto Rs.1 lakh for all customers
5. SMS alerts for daily transactions.
6. Facility for family Health Insurance IOB-healthcare Plus.
7. PAN / TAN facilitation
8. Online Tax payment facility.
9. Utility Bill payment facility
10. Anywhere Banking in CBS/TBA branches
11. ASBA facility available
Back to index
srn/30.03.2013

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Term Deposits
1. Term Deposits
Period of deposit & minimum amount

Term deposits can be made for periods ranging from 7 days ( Rs.1 lakh
and above ) / 15 days ( less than Rs.1 lakh) to one hundred and twenty
months.

Deposits for six months and over are classified under Fixed Deposits, and
the rest are classified under Short Term Deposits.

Branches can accept deposits for a minimum of Rs.1000 for periods


ranging from 15 days to 120 months.

For minimum period of 7 days the deposit amount is more than Rs.1
lakhs.

The minimum amount for which deposits are accepted under the SFD
scheme is Rs.3000 for periods ranging from 6 months to 120 months.

Any amount in multiples of Rs.100 with a minimum of Rs.1000 can be


accepted under RDP for periods ranging from 6 months to 120 months.

Multiple Deposit Accounts can be opened for a minimum sum of


Rs.100 only and in multiples of Rs.5 thereafter, under Plan-I and for
minimum amount of Rs.10,000 only and in multiples of Rs.1000 only
under Plan-II .

MDA - PLAN I (WITHOUT UNITS): Minimum initial Deposit of Rs.25 and


in multiple of Rs.5 and FOR WEAKER SECTIONS Rs.10 and in multiples
of Rs.1 only.

The minimum amount of deposit under MIS is Rs.100 only and any
further amounts should be in multiples of Rs.10 only with a minimum of
Rs.100 only. MIS deposits can be opened for a minimum period of 1 year
and maximum period of 10 years

Recurring Deposit accounts may be opened for monthly instalment of


Rs.50 and minimum in multiples of Rs.5 only.

Wedding Deposit accounts may be opened for a minimum monthly


instalment of Rs.50 or in multiples of Rs.5 only. The accounts may be
opened for sixty three months, eighty four months or one hundred and
twenty months.
Every subsequent year, the monthly instalment will
increase by the amount of monthly instalment in the initial year.

Accounts under Education Deposit schemes may be opened for periods of


63 months or 84 months only. The minimum amount of initial monthly
instalment should be Rupees Two hundred and fifty only for a sixty three
months deposit and Rupees Three hundred and fifty only for an eighty
four months deposit. Deposits can be opened for monthly instalment
amounts in multiples of the minimum instalment fixed as above.

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Varshik AAi Yojana is a combination of RDP and Fixed Deposit Scheme.


Deposits under the scheme can be accepted for a minimum period of Two
years and a maximum period of Ten years. The minimum amount of
deposit should be Rupees One thousand only.

Under Easy Deposit Scheme, a minimum monthly instalment of Rupees


One hundred or above in multiples of Rupees Ten with a maximum of
Rupees Ten thousand only per month is permitted. The Core amount
which the depositor indicates is from Rs.100 to Rs.1000.

Under IOB Tax Saver Scheme, a maximum of Rs. 1,00,000 per year is
accepted under the scheme from one individual singly or jointly with
another person (including minor) and the minimum amount is
Rs.10000/-. The deposit can be accepted for any period from 5 years to
10 years.

Banks deposit receipts are exempted from stamp duty as a receipt under
the Stamp Act. When the deposit is renewed together with interest or the
proceeds credited to depositors account, then also no stamp duty is
attracted.

If the principal or interest exceeding Rupees Five Thousand is paid


otherwise than by transfer to the depositor, the receipt must be
discharged by the depositor over a revenue stamp of Rupee One.

A deposit receipt is not transferable

If the deposit is in the name of a single individual, addition of name(s) of


any other person(s) may be permitted at the written request of the sole
depositor.

If the deposit is already in the joint names of two or more persons, for
adding or deleting the name of any person in the deposit, written consent
of all the depositors should be obtained.

If the request for addition/deletion of a name is received from the


survivor(s), after the demise of one or more of the joint depositors,
branches may accede to the request provided the legal heir(s) of the
deceased depositor(s) and the survivor(s) give a consent letter for the
addition/deletion.

While addition/deletion of names in the account, the amount of deposit


or duration does not undergo any change.

At least one of the original depositors is to be RETAINED during the


currency of the deposit as deletion of names of all the original depositors
will tantamount to termination of the contract.

Deletion of the name of the former in a former or survivor deposit is not


permitted.

No addition or deletion of name(s) should be permitted in the case of


accounts in the names of minors.

Splitting of joint deposits in the name(s) of each of the joint depositors in


the proportion desired by the depositors is permitted subject to obtaining

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the written request from all the joint depositors. Such splitting should
not be treated as premature withdrawal.

IN CBS atmosphere, renewal of deposits alone can be effected by the


facilitator branch up to an amount of Rs. Ten lakhs. The depositor
should also be having an account with the facilitator branch (so as to
enable Facilitator branch to identify the depositor).

For payment / closure of the deposit, the deposit receipt should be sent
to the account maintaining branch on collection basis as detailed above,
in CBS atmosphere.

Staff members are eligible for additional interest of 1% p.a in their


deposits, in single name or jointly with the members of their family,
provided the monies deposited in the account belongs to the staff
member.

Retired staff members are eligible for additional interest of 1% p.a in their
deposits, in single name or jointly with the members of their family,
provided the monies deposited in the account belongs to the staff
member.

The spouse of a deceased member or a deceased retired member of the


banks staff is also eligible for additional interest of 1%.

The interest rates on NRE/FCNR/RFC deposits of staff members should


not exceed the rates allowed to general public, as the bank is fixing the
rates closer to the ceiling rate prescribed by RBI.

The additional interest rate is not payable on NRE S.B. accounts


maintained by staff member.

A minor aged Ten years or above can open deposit account in his/her
single name to be operated upon by himself/herself, subject to
conditions.

2. Vardhan Scheme - for Senior Citizens


The main features of the scheme are as follows:
Deposit scheme for Senior Citizens who have completed 60 years of age.
Additional interest of 0.50% over the card rates.
Payment of additional interest is restricted to deposit amount of Rs 25
Lacs in aggregate in the name of Senior Citizen in the same Branch or
different Branches for Special Deposit Schemes (A declaration is to be
obtained to this effect from the senior citizen).
For deposits exceeding Rs.25 Lacs, the card rate alone will apply, without
the benefit of additional interest rate.
In case of normal deposit schemes, the ceiling of Rs.25 lacs is not
applicable.

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3. Penalty for premature closure of deposits

RBI guidelines
Banks are given the discretion to disallow premature withdrawal of
a term deposit in respect of bulk deposits of Rs 1 crore and above of
all depositors, including deposits of individuals and HUFs. Bank
should, however, notify such depositors of its policy of disallowing
premature withdrawal in advance, i.e., at the time of accepting such
deposits.
A bank on request from a depositor shall allow withdrawal of a
Rupee term deposits of less than Rs 1 crore, before completion of the
period of the deposit agreed upon at the time of making the deposit.
Bank will have the freedom to determine its own penal interest rates
for premature withdrawal of term deposits. Bank should ensure that
the depositors are made aware of the applicable penal rates along
with the deposit rates.

IN IOB
For Domestic Deposits- No penalty for premature closure subject to;
The interest paid on the deposit to be as per card rate for period run
as per existing guidelines and
In case special rates are offered, the same stands withdrawn and
interest rate as per card rate for the period run only will apply.

Additional interest rate contracted for Senior Citizens deposit is payable


for deposits only upto 5.00 lacs on premature closure (Vardhan Scheme)

For deposits above Rs.5 lakhs, additional interest rate contracted for
Senior Citizens deposit is not payable (Vardhan Scheme)

If an overdue deposit, renewed after paying the interest for the overdue
period , is closed prematurely before completing 15 days in the case of
deposits of less than Rs.15 lakhs and 7 days in the case of deposits of
Rs.15 lakhs and above , from the date of renewal - No interest Is payable
on the renewed deposit. The interest already paid for the overdue period
will also be recovered.

If NRE deposit has not completed one year from the date of opening or
renewal and closed prematurely - No interest is payable.

If NRE deposit has completed one year from the date of opening or
renewal and closed prematurely - !% penalty is applicable.

If an NRE overdue deposit, renewed after paying the interest for the
overdue period , is closed prematurely before completing one year from
the date of renewal - No interest is payable on the deposit. Interest
already paid for the overdue period will also be recovered.

Conversion Of Balance Under Recurring Deposit Scheme To Fixed


Deposit/RDP/SFD Etc. Allowed interest on a compounded basis at the

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rate applicable for the period during which the deposit has remained with
the bank, without any penalty for premature closure. However, the term
deposit should be placed for a period longer than the remaining period of
the original contracted period of Recurring deposit.
4. Payment of interest on renewal of deposits (NRE deposits)

Up to and inclusive of 14 days from the date of maturity (both the date of
presentation and date of maturity inclusive) for deposits from the public,
staff and senior Citizens Deposits can be renewed from the date of
maturity.

If the overdue period is more than 14 days from the date of maturity for
deposits from the public, staff and senior Citizens, interest for the
overdue period shall be paid separately at simple rate prevailing on the
maturity date or date of renewal whichever is lower is applicable.

In the case of NRE deposits, if the overdue period is less than one year,
the interest rates for one year prevailing on date of maturity or renewal
whichever lower is to be applied.

5. Payment of interest reckoning on number of days in a year:


On deposits payable in less than three months or where the terminal quarter
is incomplete, interest shall be paid for the actual number of days on such
period reckoning 365 days in a year, also in respect of a leap year.
6. In case of term deposits remaining in overdue deposits / unclaimed balances
and later withdrawn by customers without renewal, branches may pay
simple interest from the maturity date till date of payment, at the rate of
Savings Bank Interest prevailing on the date of maturity.
7. Deceased depositors accounts

Interest on deceased depositors term deposit shall be paid at the


contracted rate on maturity of the deposit if paid on the date of maturity.

In the event of payment of deposit being claimed before the maturity


date, interest shall be paid at the appropriate rate for the period for
which the deposit has remained with the bank, without charging penalty
for premature closure.

In the event of death of depositor before the date of maturity of the


deposit and the amount of deposit is claimed after the date of maturity,
the interest shall be paid at the contracted rate till the date of maturity.
From the date of maturity to the date of payment, simple interest shall be
paid at the applicable rate operative on the date of maturity, for the
period for which the deposit remained with the bank beyond the date of
maturity.

However in the case of death of depositor after the date of maturity of


deposit, interest shall be paid at savings deposit rate (operative on the
date of maturity) from the date of maturity till date of payment.
Back to index

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8. OVERDUE DEPOSITS

If a deposit is not paid or renewed on the due date, the principal together
with the accrued interest should be credited to OVERDUE DEPOSITS
ACCOUNT in the General Ledger.

9. ADVANCES AGAINST DEPOSITS

Margin on advances (both demand loans and Cash credit) against the
prime security of all kinds of rupee term deposits is 10 % (short deposits,
Special fixed deposits, fixed deposits, Recurring deposits, NRE deposits).

The minimum amount of loan against RD accounts should be Rs.100


only.

In case of Reinvestment deposits with remaining maturity of less than 4


years the margin is fixed at 10 %

For RDP with remaining maturity of 4 years and above the margin is
fixed at 15 %.

Loan can be granted against Varkshik Aai Yojana deposit upto the extent
of Eighty Five percent of the principal amount only.

Rate of interest in respect of loan against several deposits: if the


borrower/depositor wishes to have one loan against several term deposit
receipts, then the rate of interest will be 1% over the rate of deposit,
which will be calculated on the basis of weighted average method.

Loan against staff deposits: the rate of interest chargeable shall be half
percent over the staff deposit rate. Advances to staff members can be
granted up to Ninety Five percent of the deposit amount.

10.

Notice of lien/assignment

When a Notice of Lien is received from branches of our Bank,


State/Central Government Departments, Income Tax Department,
Enforcement Directorate, Government Investigating Agencies, and
Competent Court and from any other Competent Authority, the same
shall be registered by the receiving branch and acknowledgement shall be
mailed with a copy to the Depositor.

The Notice of Assignment should be clear as to the intention of the


Depositor to assign the debt due by the Bank to a specified third party.
Branch should verify the correctness and authenticity of such Notice and
can register the same by marking in the Deposit Receipt. An
acknowledgement shall be mailed to such third party with a copy to the
Depositor.

11.

Payment of Term Deposits


As per Section 269-T of the Income Tax Act, whenever payment of term
deposits is made to the depositors, branches should effect the payment of
proceeds only by Drafts or Bankers Cheques or by credit to the
depositors account if the proceeds of the deposit payable is Rs.20000

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or more or when the aggregate amount of deposits held by the depositor


in the branch is Rs.20000 or more.

If fixed/term deposit accounts are opened with operating instructions


Either or Survivor, the signatures of both the depositors need not be
obtained for payment of the amount of the deposits on maturity.

However, the signatures of both the depositors may have to be obtained,


in case the deposit is to be paid before maturity.

In case of term deposits with Either or Survivor or Former or


Survivor mandate, banks are permitted to allow premature withdrawal
of the deposit by the surviving joint depositor on the death of the other,
only if, there is a joint mandate from the joint depositors to this effect.

The joint deposit holders may be permitted to give the mandate either at
the time of placing fixed deposit or anytime subsequently during the
term/tenure of the deposit. If such a mandate is obtained, banks can
allow premature withdrawal of term/fixed deposits by the surviving
depositor without seeking the concurrence of the legal heirs of the
deceased joint deposit holder.

Such premature withdrawal would not attract any penal charge.

This, however, would not stand in the way of making payment to the
survivor on maturity.

In case the mandate is Former or Survivor, the Former alone can


operate/withdraw the matured amount of the fixed/term deposit, when
both the depositors are alive.

However, the signature of both the depositors may have to be obtained,


in case the deposit is to be paid before maturity.

If the former expires before the maturity of the fixed/term deposit, the
Survivor can withdraw the deposit on maturity.

Premature withdrawal would however require the consent of both the


parties, when both of them are alive, and that of the surviving depositor
and the legal heirs of the deceased in case of death of one of the
depositors.

If the joint depositors prefer to allow premature withdrawals of fixed/term


deposits also in accordance with the mandate of Either or Survivor or
Former or Survivor, as the case may be, it would be open to banks to do
so, provided they have taken a specific joint mandate from the depositors
for the said purpose.

12.

DEPOSITS MATURING ON A HOLIDAY


In the event of a deposit falling due for payment on a holiday/Sunday
interest at the originally contracted rate on the deposit amount is payable
for the holiday(s) intervening between the date of expiry of the specified
term deposit and the succeeding working day, irrespective of the date of
payment of the deposit.

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13.

These instructions are applicable to domestic as well as Non-resident


(FCNR & NRE) term deposits.
Floating Rate Deposits

Floating Rate Deposit Scheme is applicable only to the public and is not
applicable to staff members

The deposits received from Senior Citizens under Floating Rate Deposit
Scheme are not eligible for additional interest rate

Resident individuals either singly or jointly with others, a natural / legal


guardian on behalf of a minor, HUF, Trusts, Companies / Firms and
RRBs. The scheme is optional.

Under Floating Interest Rate deposit, the interest rate is fixed in relation
to an anchor rate and will change as and when there is a change in the
anchor rate at predetermined intervals.

Deposits will be accepted for a minimum period of more than 3years but
up to a maximum period of 10 years

Floating rate deposits will be accepted under Special Fixed Deposit(Q)


Scheme only and interest is payable at quarterly intervals.

The minimum amount of deposit accepted under the scheme is Rs.1 lakh
and in multiples of Rs.10,000/- thereafter. There is no upper ceiling for
amount of deposit.

Interest rate:
For deposits for a maturity period of 3 years to 5 years, the interest
rate will be 5 year G Sec rate, and for deposits for maturity period of
above 5 years to 10 years, the interest rate will be 10 year G Sec
rate.
The rate will be fixed based on the daily average of G Sec rate for the
last 6 months.
The rates will be reset in the accounts on 1st March and 1st
September every year.

Premature closure is permitted if depositor gives a minimum 10 days


notice in writing and the deposit has completed 3 years.

Premature closure is not permitted, if the deposit has not completed 3


years from the date of deposit irrespective of the amount of deposit.

On premature closure, there will be a foreclosure charge of 1.00% if the


deposit amount is more than Rs.5 lacs.

Loan can be granted against the deposit for 90% of the amount
deposited. The interest rate on the loan will be 2% over the current
floating rate for loan to self and 3% over the current floating rate for loan
to third parties.

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The interest on loan will also be reset once in six months to synchronise
with resetting the deposit rate.

An existing Fixed rate Deposit can be converted into a Floating Rate


Deposit scheme. In such an event, the Deposit will be treated as
prematurely closed and the interest on the closed deposit will be paid at
the appropriate rate for the period run without deducting any foreclosure
charges

Conversion floating rate to fixed rate schemes is not permitted.

Transfer of Floating Rate deposit is not allowed between branches

14.

15.

Gold Recurring Deposit Scheme

Minimum amount of deposit: Rs.250/- and in multiples of Rs.50 or


Rs.100 per month.

Deposits can be accepted for a minimum period of 12 months and


maximum of 24 month.

In the event of delayed payment of monthly instalments of RD, penalty of


Rs.1.50 for Rs. 100/- per month will be charged by the Bank.

In case of Easy deposit, depositor should remit at least ten instalments


during a year, failing which a penalty of Rs.10/- per year will be levied.

The depositor will get gold coins worth the maturity amount on the date
of maturity.

The price of gold coins will be the price prevailing as on the date of
maturity of the deposit.

If the maturity amount is less than the price of 2 gms coins, gold coins
will not be given and the maturity proceeds will be paid to the customers.

Concession of Rs.25 per gram on the gold price prevailing as on the date
of maturity, will be given to the depositors.

Personal Accident cover up to Rs. One lakh, the cost of which will be
borne by Central Office.

Unfixed Deposit

Period : 7 days to 179 days

Minimum amount Rs.100 lacs

Interest rate : Treasury dept. decides(refer to the dept)/IOB online.

No Prepayment Penalty for this Scheme

If Closed before 7 days no interest is payable.

If closed after 7 days and before 15 days, Normal Interest is only


applicable

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16.

Additional Interest for Senior Citizens and Additional Interest for Staff
Members will not be applicable under the Scheme

Opening of Internet Deposits

Any individual account holder having an account with the operational


instructions self operated or either or survivor can open a deposit
online.

The accounts with joint operations and corporate customers are not
allowed with this facility.

The title of the deposit account would be the same as that of the source
account for funds.

E-accounts can be opened under the following categories;


Re-Investment deposit plan Interest payable on Maturity
Recurring Deposit
All Special Schemes
Fixed deposits Interest payable - Half Yearly Monthly

As the deposit is opened online and the printing of receipt is also


automatically done through the system, it does not bear any signature of
Bank Official and hence the e-receipt is to be construed as the deposit
receipt issued to the customer.

No separate manual deposit receipt needs to be printed / issued for deposits


opened online.

As a recurring deposit requires issuance of passbook, the branch may at the


request of the customer, shall verify from the ledger and issue a new
passbook for the RD account opened by him / her online.

Nomination has to be registered by the customer/s at the Branch by


furnishing nomination form duly signed by depositor/s.

The deposit can be closed in full term or on a premature basis by getting the
print out of the deposit discharged, verified and the proceeds credited back
to the customers savings / current account on closure.

Banks will have the discretion to disallow premature withdrawal of a term


deposit in respect of bulk deposits of Rs.1 crore and above of all depositors,
including deposits of individuals and HUFs. Bank should, however, notify
such depositors of its policy of disallowing premature withdrawal in advance,
i.e., at the time of accepting such deposits.

A bank on request from a depositor shall allow withdrawal of a Rupee term


deposits of less than Rs. 1 crore, before completion of the period of the
deposit agreed upon at the time of making the deposit.

Bank will have the freedom to determine its own penal interest rates for
premature withdrawal of term deposits. Bank should ensure that the

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depositors are made aware of the applicable penal rates along with the
deposit rates.
The revised guidelines will be applicable with effect from April 1, 2013.
17.

Acceptance of Bulk Deposits : branches have to obtain prior permission


from AGM, Treasury Domestic department, before accepting single deposit
of Rs.1 crore and above, even at card rates.

srn/19.05.2013
Back to index

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Term Deposits Schemes

Features

Target group

Minimum
Deposit amount
Minimum &
maximum
period
Payment of
Interest

Remarks

Re-investment Deposit Plan (RDP)

Individuals, Traders, Self employed


persons, salaried persons

Rs.1000 and multiples of Rs.100/-.

Special fixed Deposit {SFD


(M)/(Q)}
Ideal for depositors who want
regular monthly or quarterly
interest income.
Senior citizens / Pensioners could
be targeted for this product.

Ideal for depositors who save in


installments for future big occasions.
Target house wife, students, small
traders etc.

Rs.3000

Minimum of Rs. 50 and in multiples of


Rs.5/-.

6 months to 120 months

1 year to 120 months.

quarterly compounding and paid at


the time of maturity

Monthly/Quarterly

All future expenses will be met


through this deposit
The interest accrued till date may
be considered for arriving at the
loan amount.

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Recurring Deposit (RD)

Monthly interest is payable at


discounted rate

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6months to 120 month

quarterly compounding and paid at the


time of maturity
All future expenses will be met
through this deposit
The interest accrued till date may be
considered for arriving at the loan
amount

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Features

Target group

Minimum Deposit
amount
Minimum &
maximum period
Payment of
Interest

Gold RD

Multiple Deposits (MDA) Plan I

Agriculturists, rural savers, house wife,


small traders etc who want to save for
purchase of gold coin in future.
Minimum amount Rs.250/- in multiple of
Rs.50/12 months to 24 months
quarterly compounding and paid at the
time of maturity

Maturity proceeds in gold coins


Concession of rs.25 per gram on gold
coins on rates prevailing
Free Personal accident cover upto Rs.
1 lakh

Multiple Deposit (MDA) Plan II

Salaried people, professionals, business


people etc

6 months to 120 months


quarterly compounding and paid at the
time of maturity
is

accepted

for

The amount of the deposit the customer


wishes to deposit, may be split into
convenient units and held as different
remittances under the same MDA.
The depositor has the option of making
any number of deposits under the same
account and each remittance will be
deemed as a separate deposit maturing
after the agreed period.
Separate deposit receipt is not issued for
each deposit but a pass book is issued
showing each remittance with interest
rate, due date and maturity value.

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Individuals either singly or jointly with


two or more persons, institutions,
companies, firms, societies etc
Traders,
Professionals,
salaried
individuals etc.
Minimum deposit amount rs:10000/- and in
multiples of Rs.1000/-.
6 months to 120 months

Rs.100 and in multiples of Rs. 5/-

Each remittance
identical period.

Remarks

44
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quarterly compounding and paid at the time


of maturity
Each remittance is accepted for identical
period
The amount of the deposit the customer
wishes to deposit, may be split into
convenient units and held as different
remittances under the same MDA.
The depositor has the option of making any
number of deposits under the same account
and each remittance will be deemed as a
separate deposit maturing after the agreed
period.
Separate deposit receipt is not issued for
each deposit but a pass book is issued
showing each remittance with interest rate,
due date and maturity value.
If the depositor wants to take back a part of
his deposit amount the required number of
units can be closed and repaid while the
remaining amount remains intact and earns
interest.

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Multiple investment scheme (MIS)

Features

Target group

Agriculturist, self employed persons,


traders etc
This scheme will benefit those who
want to save but unable to make fixed
monthly payments.

Minimum Deposit
amount

Automatic cumulative Wedding deposit


(ACWD)
Targeted at small traders, professional
and self employed salaried persons
etc.
The deposit can be made in such a
way that maturity proceeds are used
for marriage expenses of their
children.

Rs.100 and any further amounts should


be in multiples of Rs.10 with a
minimum of Rs.100
one year and maximum period of ten
years
compounded quarterly and reinvested

Minimum &
maximum period
Payment of
Interest

Minimum of Rs. 50
May be opened for 63 months, 84
months or 120 months
compounded quarterly and reinvested

The scheme is combination of RD


and RDP.
Remittances become due for payment
on the same date fixed at the time of
opening the account.
Remarks
Various remittances made into the
account at irregular intervals at the
convenience of the depositor, mature
on the specified maturity date.

This is a variation of RD

The monthly instalment payable by


the depositor increases uniformly year
after year

Each remittance under the MIS


account should be treated as a
separate RDP

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EDUCATION DEPOSIT (ED)

Rural savers, small traders, self employed


persons etc.
Monthly installments can be planned in
such a way that the maturity proceeds are
utilized for meeting the education
expenses.
Rs.250 for 63 months and Rs.350 for 84
months
63 months & 84 months
compounded quarterly

The scheme is also a variation of


Recurring Deposit.
The monthly instalment payable by the
depositor decreases uniformly year after
year.
The depositor can get back the deposit
amount plus interest either as a lumpsum
on the date of maturity or in three annual
instalments in the case of sixty three
month deposits and in four annual
instalments in the case of eighty four
month deposits
The monthly deposit from the second year
decreases by 1/5 in the case of 63 month
deposit and 1/7 in the case of 84 month
deposit.

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Features

Permanent income plan (PIP)

Target group

Ideal for depositors who want to have


permanent income either monthly or
quarterly after 5 to 8 years.
Salaried people, rural savers, self employed
persons etc.

Minimum Deposit
amount

Minimum of Rs. 50 and in multiples of


Rs.5/-.

Minimum &
maximum period
Payment of
Interest

60 months, 84 months or 96 months


compounded quarterly
Permanent Income Plan (PIP) is a combination
of RD & SFD schemes. The scheme operates
in two stages.
Stage - I : The depositor remits to the bank
monthly instalments for a period of sixty,
eighty four or ninety six months similar to
Recurring Deposit accounts.

Remarks
Stage - II : Bank pays a fixed sum monthly /
quarterly to the depositor along with an annual
bonus for sixty, thirty six or twenty four
months for deposits of sixty, eighty four or
ninety six months respectively.
The total period of the deposit in both stage 1
and stage II should not exceed 120 months
The interest is paid in round sum every month
and the fraction is accumulated and paid as
bonus at the end of each year. The
accumulated capital will remain intact.

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Fixed Deposit (FDR) & Short


Deposit (SDR)
Ideal for Senior citizens / salaried
class/ business people who want
to retain savings for a fixed period
for some future use.
Rs.1000 and in multiples of
Rs.100

Earn And Save for You (Easy) Deposit


Students, house wife, salaried individual,
professionals etc., who want to save money in
flexible and convenient installments.

Min 100, higher deposits in multiple of 10 &


max. Rs.10000

6 months to 120 months


Interest at simple rates payable
every half-year
Moneys deposited for six
months and above are called
Fixed Deposits and deposits for
fifteen days ( amounts less than
Rs.15 lakhs ) for 7 days (
amounts more than Rs.15 lakhs)
and above but less than six
months are called Short
Deposits

6 months to 120 months


compounded half yearly and paid on maturity

Monthly interest depending on the


minimum balance in a/c between 10th and
last day of the month

Minimum deposit amount is the core


amount and depositor is free to deposit up
to 10 times the core amount every month

Interest on Short Deposits is


payable only on maturity of the
deposit.
Interest on Fixed Deposit is
payable half-yearly on the first
working day of April and
October.

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Floating rate deposit

Features

Tax Saver Scheme

Individuals, Institutions etc.

Target salaried class and other


Income Tax payers

Target group
Minimum Deposit
amount
Minimum &
maximum period
Payment of
Interest

Remarks

Minimum 1 lakh and multiples of Rs.10,000


3 to 10 yrs

5 to 10 yrs

Quarterly

Interest according to the mode of


deposit

The deposit will be in the nature of Special


Fixed Deposit (quarterly interest payment
Interest rate reset on 1st March and 1st
September every year
5 year G sec rate (daily average for the last 6
months) for deposits with maturity of 3 to 5
yrs
10 year G sec rate (daily average for the last
6 months) for deposits with maturity of 5 to
10 yrs
Premature closure is permitted if the deposit
has completed 3 years and with a notice of 10
days from the depositor.
1% charge on premature closure
Loan can be taken upto 90% of deposit
amount.
Conversion from fixed to floating rate
deposit is possible by closing the fixed rate
deposit and paying applicable interest
without any penalty. Conversion from
floating to fixed not permitted.

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Min. Rs.10,000 and Max. Rs.1,00,000

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Varshik Aai Yojana


Parents with school going children,
House wives, salaried individuals etc.
Rs.1000
2 yrs and above
Compounded quarterly and paid
annually

The scheme is a combination of RDP


and Fixed Deposit Scheme.

Deposit can be made under RDP,


SFD or FD.

No loan against deposit

No premature closure

Interest on deposit is liable to tax

Useful for depositors to pay annual


school fee of their children, payment
of taxes, annual insurance premia etc.

This scheme intended to attract


deposits under Section 80 C of
Income Tax Act.

Deposits under Varshik Aai Yojana


should be classified under the General
Ledger head RDP

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The principal remains intact till the


date of maturity.

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General

Branches may permit addition/deletion of names in term deposits standing in


the names of individuals
No deletion of the name of the former in a former or survivor deposit.
No addition or deletion of name is permitted in the case of accounts in the
names of minors.
Term Deposits like any other deposit account are freely transferable from one
branch to another under written instructions of the depositor(s) provided the
reasons adduced by the depositor(s) are satisfactory.
Nomination facility is available for deposit accounts
Advances in the form of demand loans or cash credits/overdrafts may be
granted against the security of our banks term deposit receipts. Margin for
loan is 15% where the residual maturity is 4 years and above, and 10% only
for others.
Although the amount of a term deposit is payable only on maturity, branches
may accede to the request of depositors for refund of the amount of deposit
before maturity when the depositor is in urgent need of money
Penal charges on premature closure of Deposits (all Domestic Rupee Term
Deposits Irrespective of amount) has been waived with effect from
07.08.2012 subject to the following conditions:
The interest paid on the deposit to be as per card rate for period run and
In case special rates are offered, the same stands withdrawn and interest
rate as per card rate for the period run only will apply.
Senior citizens are given additional interest @ 0.50% under vardhan scheme.

Back to index

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49
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IOB Gold Deposit Scheme

A. Persons eligible to deposit


a. Resident Indians (Individuals, HUF, Trusts and Companies),
b. A Trust including Mutual Funds /Exchange Traded Funds registered under
SEBI (Mutual Fund) Regulations may deposit under the scheme
c. Resident minor by a natural or legal guardian
d. Joint Deposits in the case of individuals
B. HOW TO DEPOSIT
a. Bank will accept gold bars, coins, jewellery etc. without any stones, gems
etc. in scrap form along with the prescribed application form duly signed.
b. There will be a preliminary assay to ascertain gold content / caratage by
non-destructive technique followed by a foolproof fire assay method
c. Bank will issue a provisional receipt on preliminary assay followed by a
Deposit Certificate on final assay.
d. The cost of transport, melting, assay and other charges incurred at
the Mint and octroi, if any will be borne by the depositor.
e. Exception from fire assay/destructive assay will be provided for physical
gold tendered by Mutual Funds/Gold Exchange Traded Funds approved by
SEBI and complying with the Good delivery norms of the London Bullion
Market Association(LBMA) having a fineness of 995.0 parts per thousand
accompanied by a certificate acceptable to our bank
C. Minimum & Maximum Quantity

Minimum quantity accepted as deposit will be 1000 grams in net weight and
for quantities less than 1000 grams prior permission from Treasury
Department is necessary.

There is no upper limit for such deposits

D. Period Of Deposit

E.

Period of deposit will be minimum 6 months and maximum 7 years


Rate of Interest

a. The rate of interest will be decided by the Bank from time to time
b. Interest rates once fixed and indicated in the Deposit Certificate will
remain the same for the entire period of deposit
c. Interest can be paid semi annually on 30th September and 31st
March every year. It can also be compounded at the option of the Depositor.
d. Interest will be paid in Rupee only at Banks Gold / Rupee buying rate

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e. Interest will be paid from the date of provisional receipt on the net weight
and fineness indicated in the final receipt
f. Interest will be calculated at 360 days a year basis (365/360
F. Current Interest Rates
Until further instructions, the following are the rates of interest payable on Gold
Deposits
6 months and above to less than 1 year

1.50% p.a.

1 year and above upto 3 years

1.65% p.a.

More than 3 years to 7 years


G. Transferability

1.75% p.a.

a. IOB Gold Deposit Certificate is in the form of a document of title to goods


and is therefore transferable by endorsement and delivery. However
in the case of certificates issued in dematerialized form, the depository rules
will apply.
b. The transfer is required to be registered with the Deposit Issuing Branch
H. Nomination
a. Nomination facility is available in the case of a deposit in a single name
and not for HUF/Trusts/Companies.
b. In the case of deposits payable to Former/Survivor, the Survivor will
be deemed nominee
c. Nomination will automatically seize in case the depositor transfers the
IOB Gold Deposit Certificate to another person
d. The transferee, if an individual, is eligible for fresh nomination facility
I. Repayment
a. Bank will redeem the Deposit Certificate for the principal amount of the
deposit either in Rupees or in Gold as per the option exercised by the
Depositor against surrender of the Deposit Certificate duly discharged.
b. In case of repayment in Gold, Bank will repay 995 or 999 fineness gold in
one Kilo Bar or such other denomination as available at our sole
discretion. Bank will make necessary adjustments in weight consequent
to the redemption in different fineness as against the fineness shown in
the final receipt. For any fraction quantity, Bank will pay the same in
rupees at our Gold/Rupee buying rate.
c. In case of repayment in rupees, it will be paid at Banks Gold/Rupee
buying rate on the date of repayment
d. The deposit will stop earning interest from the date of maturity
e. In case the depositor wishes to renew the deposit after maturity date,
Bank will renew the same from that date only at the then prevailing
interest rate. No retrospective renewal is permissible.

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f. Bank may at its discretion in such renewals after the maturity date
pay interest at such rates as deemed feasible for the overdue period in
rupees at its Gold/Rupee buying rate on the date of payment.
J. Premature Payment
There will be a lock-in period of 6 months and no premature payment will be
allowed during the said period.
K. Tax Concessions
In terms of various amendments carried out by respective Acts in Finance Act
1999, the following concessions are currently available:
a. Interest earned under IOB Gold Deposit Scheme will be exempted from
Income Tax.
b. Value of Gold deposited under
be exempted from Wealth Tax.

IOB Gold

Deposit

Scheme

will

c. Capital gains earned through trading or on redemption will be exempted


from Capital Gains Tax
L. Authorised Branches
The scheme is open and is available at our select branches only at present
M. Prior Permission
Prior permission is to be obtained from Treasury, Central Office before accepting
any gold under IOB Gold Deposit Scheme
******************************
srn/15.04.2013
Back to index

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Dormant accounts, inoperative accounts and unclaimed balances

Every working day the CBS system will classify Savings Bank/Current
Account where there has been no operation in the account by customers
for one year (other than crediting of periodic interest in SB accounts or
debiting service charges) as non-operative.
Every working day the CBS system will classify Savings Bank/Current
Account where there has been no operation in the accounts by customers
for the last 2 years (other than crediting of periodic interest in SB
accounts or debiting service charges) as Dormant Accounts.
Savings Bank/Current Account where there has been no operation in the
accounts by customers for the last 3 years (other than crediting of
periodic interest in SB accounts or debiting service charges) will be
classified as Inoperative Accounts.
Transferring to Inoperative Accounts will be done by the system on or
before 10th March of every year.
However, it should be noted that balances should not be transferred to
inoperative accounts in the following cases:
a. where an account is stopped under Garnishee or other court order;
b. where the operations in the account is stopped to obtain legal
representation;
c. where the account is under lien for advances allowed in another
account;
d. where the account is showing a debit balance
Accounts which had remained in-operative for 5 years and above since
their transfer to Inoperative Accounts (8 years since the last transaction
in it by the customer) are classified for transfer to Unclaimed Balances
Account.
Term Deposit Account
The Deposit account will be classified as Unclaimed Deposit account
if the deposit is not claimed within 5 years from the due date.
In case of Term Deposits transferred from Unclaimed Balances
Account and withdrawn by customer without renewal, branches may
pay simple interest, from the maturity date till the date of payment, at
the rate SB interest prevailing on the date of maturity.
Demand Drafts
The Demand Drafts which are outstanding (i.e. remaining unclaimed) for
3 years or more are to be classified as unclaimed balance.

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Sundry Creditors
All items (except those relating to clearing adjustments) lying in the
Sundry Creditor for 3 years or more are to be classified as unclaimed
balances.
Excess Cash
Excess Cash unclaimed for more than 6 months shall be transferred to
Unclaimed Balances Account maintained at Central Office every half year
during March and September
Overseas Branches should, however, maintain Unclaimed Balances
Account in their own books to which all their inoperative accounts
outstanding for more than three years should be transferred under
advice to the parties concerned at their last known addresses or as per
guidelines prevailing in the respective countries whichever makes
more stringent compliance.
There is no limitation period for claiming back the amount from the
Unclaimed Balance Account.
The bank will display on the website, the list of only the names of the
account holders and his/her last known address in respect of Unclaimed
Deposits / Inoperative Accounts which are inactive / inoperative for ten
years or more. The account number, its type and the name of the
branch shall not be disclosed on the website. The list will be updated
once in a year, as of 31st December.
When a branch is approached by a customer whose account has been
transferred to Unclaimed Balances Account, the branch, after verification
of the bonafides of the customer, should request the Balance sheet
Management Department, Central Office, to retransfer the balance in
the particular account giving all the relevant details.
On receipt of the credit from Central Office, the account has to be opened
in the computer system afresh by obtaining KYC Crop form and going
through the Customer Acceptance Policy and Customer Identification
procedure as per KYC Norms / AML standards, if operations are to be
continued in the account.
Display List of Unclaimed Deposits
The bank displays on the website, the list of the names of the account
holders and his/her last known address in respect of Unclaimed Deposits /
Inoperative Accounts which are inactive / inoperative for 10 years or more.
The account number, its type and the name of the branch shall not be
disclosed on the website. The list will be updated once in a year, as of 31st
December
**********************
srn/09.01.2013

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SPECIAL TYPES OF CUSTOMERS

1. Illiterate Persons
A person who is unable to read and write is considered to be illiterate,
even if he/she can sign in some language
Illiterate customers have to withdraw cash in person and not by
Cheques.
The illiterate customer can have a Mandate Holder for operation of his
account using cheque books
No account can be opened, for a minor blind person, but he can have a
Joint Account with a major, who is not blind.
Major, illiterate account can be opened, provided he is capable of
conducting the account, signing consistently and operating personally by
himself.
2. Visually Challenged/Persons with Disabilities
All banking facilities such as cheque book facility including third party
cheques, ATM facility, Net Banking, Locker, retail loans, credit cards etc. are
invariably offered to visually challenged persons/Persons with disabilities
without any discrimination as they are legally competent to contract.
3. Minor Special Account
A minor can open/operate a SAVING BANK account with cheque book
facility in his/her name provided:

The Minor has completed 10 years of age

The Minor should be able to read and write a language.

He should be able to adhere to a uniform signature

His date of Birth should be declared and recorded.

Only cash operations are permitted, except in cases like payment to


school, hostel, etc.
Maximum balance should not exceed Rs.50,000/ Withdrawal only by loose leaf cheques, no withdrawal slips permitted.
A Minor can have a Term Deposit Account in own name, if He/she had
completed 10 years of age
the maximum aggregate principal amount in such deposit(s) can be
accepted without any ceiling
No advances will be allowed against the security of these deposits.

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Advances up to Rs.20,000 against the security of minors term deposits


can be granted to the natural guardian provided he gives a written
declaration to the effect that the advance is required for the benefit of the
minor.
In no case, premature payments of such deposits will be allowed.
The stipulation of a maximum period of 120 months for term deposits
does not apply to minors deposits. Branches may open accounts of
minors for periods over ten years, if they are convinced that it is
necessary to do so for the protection of the minors interest.
4. OPENING OF JOINT ACCOUNTS OF MINORS WITH THIRD PARTIES:
For joint account with the minor and third party, only fixed deposit
account should be opened, provided,
a. the minor has completed ten years of age
b. the maximum amount of the fixed deposit is Rupees
thousand and

Fifty

c. The minor can sign consistently.


Savings bank accounts cannot be opened jointly with the minor by the
close relative.
If the relative has no objection for the natural guardian knowing about
the joint deposit, the deposit may be opened in the joint names of the
relative and the minor represented by the natural guardian. The account
opening form should be signed by both the relative and the natural
guardian with FORMER OR SURVIVOR instructions
5. Pardanashin ladies: No account to be opened if she happens to be an
illiterate
If the pardanashin lady is able to sign, she can sign the account opening
form and specimen signature sheets at her residence in front of her
husband, who should attest the ladys signature.
Where, however, the pardanashin lady is unmarried and if she signs the
application form and the specimen signature sheets at her residence,
then her signature should be attested as above, by her natural guardian.
Further, in respect of Savings Bank accounts/Current accounts (in
exceptional cases) opened for pardanashin ladies, all instruments
including withdrawal slips/cheques etc. executed by her should be duly
attested by her husband or two account holders of the bank.
6. Limited Company
Minimum number of members in a private limited company: 2
Maximum number of members in a private limited company: 50
Minimum number of members in a public limited company; 7
Maximum number of members in a public limited company: No limit

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When a Private Limited Company becomes a Public Limited Company, a


copy of amended Certificate of Incorporation should be obtained and the
change in the name should be noted in Bank records.
Memorandum and Articles of Association are required for opening the
accounts of private/public limited companies.
7. Accounts of Executor
Executor is appointed by the Will of the dead person. When no one is
named in the will or the person die without any will, the court appoints
Administrator.
For opening of their accounts, the
Administration is required by the Bank.

Probate

(Will)

or

Letter

of

a true copy of the Certificate of Commencement of business duly certified


by a Director or the Secretary of the Company (in case of public limited
companies only),
8. DEEMED PUBLIC LIMITED COMPANIES
Under Section 43(A) of the Companies Act, a private limited company
shall be deemed to have become a public limited company when the
average annual turn over of the company exceeds, for a period of three
years, the limit prescribed by the Central Government from time to time.
(Rs.10 crores as of 18th September, 1990). Such companies are termed
as Deemed Public Limited Companies.
9. Trust Accounts:
A public Trust includes a Society formed either for Religious or
Charitable purpose and registered under Societies Registration Act.
Accounts of a Trust can be opened ONLY with Regional Office approval.
In the event of death of any trustee, the surviving trustees should not be
allowed to operate the account or withdraw the balance without
ascertaining whether terms of the trust deed permit such withdrawal or
operation.
The Bank has no right of set off against the trust funds for debts due
from the trustees or any other persons in their individual capacity.
Accounts of Provident Funds are treated like the Trust Accounts only.
10. ACCOUNTS OF OTHER BANKS
For opening accounts of other banks in India with our bank prior
sanction should be obtained from Banking Operations Department,
Central Office, through Regional Office.
For opening of our accounts with other banks as well as for entering into
agency arrangements with other banks, prior approval of Treasury
(Foreign ) Dept ,Central Office is compulsory.

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11. Guardianship of minor:


Minor attains majority at the age of 18 years.
A guardian appointed by a court on the basis of Will : Testamentary
Guardian
Hindu: the case of a boy or an unmarried girl the father, and if, he is not
alive, the mother.
Where both the father and mother are not alive, no one other than a
person holding a guardianship certificate from a competent court can act
as a guardian of the minor.
Mohammedans:
Under Mohammedan law the father is the guardian of the property of the
minor but after his death the following persons are entitled, in the order
mentioned below to be guardians of the minor:
a. the executor appointed by the fathers will
b. the fathers father
c. the executor appointed by the will of the fathers father
d. In the absence of the above said guardians, a guardian appointed by a
competent Court alone can act as a guardian.
Mother can be the guardian if appointed by the court or under the will of
the father or fathers father. In no other case, can the mother act as the
natural guardian of the Mohammedan minor.
Christians, Parsis and other Religions
Under the Personal Law applicable to Parsis, Christians, the father is the
natural guardian.
The mother will be the natural guardian only if the father is not alive.
If both are not alive, a person holding a guardianship certificate, from a
competent Court can act as guardian.
However, it should be noted that the guardianship may extend only to
the person and not the property of the minor, depending on the
directions in the court order.
If the guardianship of the person appointed by the court extends only to
the person of the minor and not to the property, such a guardian will not
be in a position to alienate any property of the minor, even in the interest
of the minor.
Acceptance of legal guardianship certificates
Branches can open accounts for persons with disability, depending upon the
Legal Guardianship Certificate, issued by the competent authorities as
mentioned below. A legal guardian so appointed, can open and operate the
Bank account, as long as he remains the legal guardian.

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Local Level Committees set up under National Trust for the welfare of
the persons with Autism, Cerebral Palsy, Mental Retardation and
Multiple Disabilities Act, 1999 (called as Mental Disabilities Act, 1999).

legal guardians appointed by District Courts under the Provisions of


Mental Health Act, 1987

The details of Local Level Committees are available in the web-site of the
National Trust for the welfare of persons with Autism, Cerebral Palsy, Mental
Retardation and Multiple Disabilities, i.e. www.thenationaltrust.in.
12. Insolvent persons:
No account should be opened in the name of an un discharged insolvent and
no operation should be allowed in any existing account as soon as the bank
is put on notice of the insolvency of the account holder
13. Partnership firms
A minor admitted to the benefits of a partnership or his guardian is not
required to sign the account opening form and other documents.
He should not be allowed to operate the account unless he is a mandate
holder to operate the firms account.
A Minor is liable only to the extent of his/her share for any debts
incurred by the partnership firm before he attains majority.
If the minor does not elect to become a partner by giving public notice
within 6 months of his/her attaining majority or his/her knowledge of
admission to the benefits of the firm, whichever is later, he/she shall
become a partner on the expiry of the said 6 months.
Minimum number of persons in a partnership firm:2
Maximum number of person in a partnership firm engaged in
banking:10
Maximum number of person in a partnership firm engaged in activity
other than banking:20
Maximum number of person in a partnership firm of professionals: 50
A company can be a partner in a partnership firm.
HUF cannot be a partner of a partnership firm.
14. ACCOUNTS OF HINDU UNDIVIDED FAMILY CONCERNS
The account of Hindu Undivided Family (HUF) firm should be opened
and operated upon by the Karta
Savings Bank accounts in the name of a Hindu Undivided Family Firm
may also be opened, if such accounts are for non-trading purpose
In a HUF, male members of the family become coparceners by birth

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The female members are not coparceners in the HUF. However, in the
States of Tamil Nadu and Andhra Pradesh the Hindu Succession Act
has been amended to confer equal right to property on Hindu women.
In these two states, in a HUF, the daughters shall, by birth, become
coparceners in their own right and have the same rights as a son has in
the co-parceners property.
The Karta of a HUF may issue a mandate letter in favour of a major
coparcener for operating the account.
In case the mandate is to be issued in favour of a third party an
indemnity has to be obtained executed by the Karta and the entire
major coparceners of the HUF.
Liability of a co-parcenor in HUF is restricted to his share in HUF asset.

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Rights of Banker
1. Right of set off:

This is the right to combine more than one account in order to arrive at
the net amount due from the customer i.e. adjusting debit balance in one
account against credit balance in another both relating to the same
customer.

This right is subject to the following conditions:

a. The moneys in the accounts should belong to the customer(s) in the same
right and capacity.
b. The right of set off is subject to the duty to honour cheques
c. A notice must be served on the customer before exercising the right.
d. The right does not extend to contingent liabilities.
e. Right of set off as well as Right of lien is available for time barred debts.
f. Right of set off is available on the deposit balance held in other branches
of the Bank
2. Appropriation of Payments

When a debtor having several debts makes a payment, the creditor


should appropriate them as per rules of appropriation, which is based on
the provisions under Section 59, 60, 61 of Indian Contract Act.

Under Section 59, the borrower customer has a right to tell his Banker to
which debt (out of several) the money he pays is to be applied and the
Banker accepting such credit is under obligation to act accordingly to the
such instruction.

If however, the debtor customer fails to give any such instruction, as per
Section 60 of Indian Contract Act, the creditor-Banker is free to use his
discretion to credit the amount to any borrowal account he (Creditor Banker) chooses under intimation to the customer who cannot later seek
to vary the appropriation.

However, "when neither party makes any appropriation (choice) the


payment shall be applied in discharge of the debts in order of time,
whether they are or not barred by the law in force for the time being as to
the limitation suits.

If the debts are of equal standing, payments shall be applied in discharge


of each proportionally" (Section 61 of Indian Contract Act).

3. In case of credit, in a running loan/cash credit account, the first item on


the debit side of an account is discharged or reduced by the first item on
the credit side. This is generally known as : Clayton's Rule

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4. On receipt of notice of death/insolvency/including revocation of guarantee of


a guarantor, the operation of the account (cash credit/overdraft account)
should be stopped or ruled off . Why? in the light of Clayton's case rule
5. Section 133 of Income Tax Act 1961 permits IT Authorities to call for any
information with reference to a particular account or all accounts of the
customer. Section 131 empowers the income tax authorities to examine a
bank officer on oath.
6. General Lien :Bankers right to retain the property of another till such time
the owner thereof has paid his debt due to the person in possession of the
property: General Lien

Right of lien is the right to retain the property of another till such time
the owner thereof has paid his debt due to the person in possession of
the property.

Right of lien gives power to retain and not to sell.

Being a statutory right no specific contract is necessary for creating this


right though the same may be excluded by mutual agreement.

Right of lien arises out of normal course of business and is not therefore
available for goods received for specific purpose (safe custody, goods in
safe deposit lockers, goods held by bank in the capacity of trustee),

Is available against goods/securities held by the debtor in joint names or


in capacity other than that in which the debt is.

Banker's lien, known as implied pledge is a 'general lien' (as per section
171 of Indian Contract Act) which is applicable against all dues payable
as against a particular lien (under Section 170 of Indian Contract Act)
which is available for specific dues only.

Through general lien, Bankers get the advantage of selling the


goods/securities after giving the debtor a reasonable notice which is not
available under particular lien

Right of lien is available for time barred debts

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RIGHT TO INFORMATION ACT 2005

Right to Information Bill 2005 as introduced by Union Ministry of Personnel,


Public Grievance and Pension was passed by Lok Sabha on 11.5.2005 and by
Rajya Sabha on 12.5.2005, and received the assent of the President on
15.6.2005.

It came on the Statute Book as THE RIGHT TO INFORMATION ACT 2005.

It has been held by the Supreme Court that Right to Information is derived from
the freedom of speech and expression which is guaranteed by Article 19 (1)(a) of
the Constitution of India.

What is Right to Information?

Information, in general terms, has been described by the Act as any material in
any form, including records, documents, memos, e-mails, opinions, advices,
press releases, circulars, orders, log books, contracts, reports, papers, samples,
models, data material held in any electronic form etc.

The right to information under the Act means, accessibility to the information
held under the control of any public authority and includes the right to
i.

inspection of work, documents, records

ii.

Taking notes, extracts or certified copies of documents or records

iii.

Taking certified samples of the material

iv.

Obtaining information in the form of diskettes, floppies, tapes, video


cassettes or in any other electronic mode or through printouts whether
such information is stored in a computer or in any other device.

Who can seek the information?

ALL CITIZENS have the right to information under the Act.

In respect of companies, firms and association of persons, the directors,


partners and office bearers respectively can seek information under the RTI act
in the name of the company, firms and the association of persons, even though
these entities may not be construed as 'Citizen' in terms of the RTI Act.

Further, the person requesting for information need not give any reasons.

Who will give information?

The Act provides that if any officer is assigned the task of providing information
by CPIO then, such officer shall be treated as CPIO.

In our Bank, The Deputy General Manager (Law department), has been
designated as Central Public Information Officer (CPIO) and

All Regional Heads as Central Assistant Public Information Officers (CAPIO).

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Branches / Regional Offices / Other departments at Central Office will act as


facilitators only.

Exemption from disclosure

Section 8 & 9 provide for the exemption from disclosure.

On studying the request from the applicant, CPIO will decide whether the
disclosure is exempted under the Act, on case to case basis. Brief details of
grounds for exemptions are furnished below:
Information which would affect sovereignty and integrity of the Country .
Expressly forbidden by any court of law or tribunal and disclosure which
could be construed as contempt of court.
Information causing breach of privilege of Parliament and State
Legislature.
Information including commercial confidence, the disclosure of which
would harm the competitive position of a third party (issues involving
larger public interest not covered)
Information available to a person in his fiduciary capacity.
Information received from foreign government, in confidence.
Information which endanger life or physical safety of any person.
Information impeding the process of investigation
Cabinet papers including records of deliberations.
Information which relates to personal information the disclosure of which
has no relationship to any public activity or interest.
Disclosure of information infringing the copy right may be rejected
outright.

Procedure for request of information

Any request by any person seeking information can be made orally or in


writing in any official language to the Public Information Officer specifying
the particulars of information sought by him / her either in English or Hindi
or in Official language of the local area, in a prescribed form.

The oral request shall be reduced to writing.

Fee Payable:
Application fee - Rs. 10.
Following fee structure has been prescribed for furnishing the information.

Rs. 2 for each page (in A4 or A3 size paper) created or copied

Actual charge or cost price of a copy in larger size paper

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For inspection of records, no fee for the first hour, and a fee of Rs. 5 for each
fifteen minutes (or fraction thereof) thereafter.

For information provided in diskette or floppy Rs. 50 per diskette or floppy

Additional fee representing the cost of providing the information may be


charged. But full details should be furnished to the applicant.

No such fee shall be collected from persons who are of below poverty line

No charges should be levied if the information is not provided within the


time limit

Time Limit prescribed

As per the Act, CPIO or CAPIO shall either provide the information or reject
the request as expeditiously as possible, and in any case within thirty days
of the receipt of the request.

Failure to reply to the applicant will attract penalty under the Act.

Appellate Authority

If the reply provided by the CPIO is not satisfactory, an appeal can be


preferred before the Appellate Authority, within 30 days by the seeker of the
information.

The appeal so received, should also be disposed of by the Appellate authority


within 30 days.

In our Bank, General Manager (Law department) had been designated as


Appellate Authority.

Any Appeal received at Branches / Regional Offices should be forwarded to


the Appellate Authority immediately, to enable them to dispose the same
within the stipulated period.

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Banking Codes & Standard Board of India (BCSBI)

BCSBI was promoted by Reserve Bank and 11 Banks public, private and
foreign.

It is not a Department under the control of RBI, but "An independent and
autonomous watch dog to monitor and ensure that the Banking Codes and
Standards adopted by the banks are adhered to in true spirit while
delivering their service

BCSBI has been registered as a separate Society under the Societies


Registration Act 1860. The membership is restricted to scheduled
commercial Banks.

Banking codes stipulated by BCSBI are voluntary Code, which sets


minimum standards of banking practices for banks to follow when they are
dealing with individual customers. It provides protection to you and explains
how banks are expected to deal with you for your day-to-day operations.

Even though the Codes are voluntary, it is obligatory on our part to


submit Statement of Compliance to BCSBI on the adherence of various
Codes.

Banking Codes & Standard Board of India has brought out two codes. They
are;
One is Code of Banks Commitment to Customers.
Code of Banks Commitment to Micro and Small enterprises.

This Code will be reviewed within a period of three years. The review will be
undertaken in a transparent manner. Last reviewed during August 2009.

The customers should be given a copy of the Code while opening an


account.

As per code of BCSBI and RBI directives for any increase or introduction of
Service charges one month prior notice is to be given to the customers.

In our bank, all the Regional Managers are designated as Regional Code
Compliance Officer to ensure implementation of the code,

This Code applies to all the products and services listed below, whether they
are provided by branches or subsidiaries, agents acting on our behalf, across
the counter, over the phone, by post, through interactive electronic devices,
on the internet or by any other method.
Current accounts, savings accounts, term deposits, recurring deposits,
PPF accounts and all other deposit accounts
Payment services such as pension, payment orders, remittances by way
of Demand Drafts, wire transfers and all electronic transactions e.g.
RTGS, EFT, NEFT
Banking services related to Government transactions

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Demat accounts, equity, Government bonds


Indian currency notes exchange facility
Collection of cheques, safe custody services, safe deposit locker facility
Loans, overdrafts and guarantees
Foreign exchange services including money changing
Third party insurance and investment products sold through our
branches
Card products including credit cards, debits cards, ATM cards, smart
cards and services (including credit cards offered by our
subsidiaries/companies promoted by us) etc.
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THE BANKING OMBUDSMAN SCHEME- 2006

Reserve Bank of India has formulated Banking Ombudsman Scheme and


setup Banking Ombudsman Offices at various centres across the country.

The Banking Ombudsman Scheme is being amended by RBI from time to


time and last amended scheme as on May 24, 2007.

1. Objective of the scheme


To resolve the complaints relating to provision of banking services ;
a. Of its constituents against a bank
b. Of one bank against another bank through the process of conciliation,
mediation and arbitration.
2. Appointment

The Reserve Bank may appoint one or more of its officers in the
rank of Chief General Manager or General Manager to be known as
Banking Ombudsmen to carry out the functions entrusted to them by or
under the Scheme.

The appointment of Banking Ombudsman may be made for a period


not exceeding three years at a time.

3.

Location of office and temporary headquarters


The office of the Banking Ombudsman shall be located at such
places as may be specified by the Reserve Bank. In order to expedite
disposal of complaints, the Banking Ombudsman may hold sittings at
such places within his area of jurisdiction as may be considered
necessary and proper by him in respect of a complaint or reference before
him.

4.

5.

Powers and jurisdiction

The Reserve Bank shall specify the territorial limits to which the authority
of each Banking Ombudsman.

The Banking Ombudsman shall receive and consider complaints relating to


the deficiencies in banking or other services and facilitate to their
satisfaction or settlement by agreement or through conciliation and
mediation between the bank concerned and the aggrieved parties or by
passing an Award in accordance with the Scheme.
Grounds of complaint
(1) A complaint on any one of the following grounds alleging deficiency in
banking or other services.
a. non-payment or inordinate delay in the payment or collection of
cheques, drafts, bills etc.;

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b. non-acceptance, without sufficient cause, of coins/small denomination


notes tendered for any purpose, and for charging of commission in
respect thereof;
c. non-payment or delay in payment of inward remittances ;
d. failure to issue or delay in issue of drafts, pay orders or bankers
cheques;
e. non-adherence to prescribed working hours ;
f. failure to honour guarantee or letter of credit commitments ;
g. delays, non-credit of proceeds to parties' accounts, non-payment
of deposit or non-observance of the Reserve Bank directives, if
any, applicable to rate of interest on deposits in any savings, current
or other account maintained with a bank ;
h. refusal to open deposit accounts without any valid reason for refusal;
i.

levying of charges without adequate prior notice to the customer;

j.

non-adherence by the bank or its subsidiaries to the instructions


of Reserve Bank on ATM/Debit card operations or credit card
operations;

k. non-disbursement or delay in disbursement of pension (to the extent


the grievance can be attributed to the action on the part of the
bank concerned, but not with regard to its employees);
l.

forced closure of deposit accounts without due notice or without


sufficient reason;

m. refusal to close or delay in closing the accounts etc.


n. any other matter relating to the violation of the directives issued
by the Reserve Bank in relation to banking or other services
o. Non-adherence to provision of fair practice code or code of banks
commitment to customers issued by BCSBI, etc.
(2) A complaint on any one of the following grounds alleging deficiency in
banking service in respect of loans and advances may be filed with the
Banking Ombudsman having jurisdiction:
a. non-observance of Reserve Bank Directives on interest rates;
b. delay in sanction, disbursement or non-observance of prescribed time
schedule for disposal of loan applications;
c. non-acceptance of application for loans without furnishing valid reasons to
the applicant; and
d. Non-observance of any other direction or instruction of the Reserve Bank as
may be specified by the Reserve Bank for this purpose from time to time.
e. Non-observance of Reserve Bank Directives on engagement of recovery
agents.

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(3) A customer would also be able to lodge a complaint against the bank for its
non-adherence to the provisions of the fair practices code for lender or the
code of banks commitments to customers issued by BCSBI
(4) The Banking Ombudsman may also deal with such other matter as
may be specified by the Reserve Bank from time to time in this behalf.
6. Procedure for filing complaint
(1) Any person who has a grievance against a bank on any one or more
of the grounds may, himself or through his authorised representative
(other than an
advocate), make
a
complaint
to
the
Banking
Ombudsman within whose jurisdiction the branch or office of the
bank complained against is located.
If the complaint is arising out of the operations of credit cards, it
shall be filed before the Banking Ombudsman within whose territorial
jurisdiction the billing
address of the card holder is located and not the
place where the bank concerned or the credit card processing unit is located.
(2) No complaint to the Banking Ombudsman shall lie unless:a. the
complainant had, before making a complaint to the Banking
Ombudsman, made a written representation to the bank and the bank
had rejected the complaint or the complainant had not received any reply
within a period of one month after the bank received his representation or
the complainant is not satisfied with the reply given to him by the bank;
b. the complaint is made not later than one year after the complainant has
received the reply of the bank to his representation or, where no reply is
received, not later than one year and one month after the date of the
representation to the bank;
c. the complaint is not in respect of the same subject matter which was
settled or dealt with on merits by the Banking Ombudsman in any previous
proceedings whether or not received from the same complainant or along
with one or more complainants or one or more of the parties concerned with
the subject matter;
d. the complaint does not pertain to the same subject matter, for which any
proceedings before any court, tribunal or arbitrator or any other forum is
pending or a decree or Award or order has been passed by any such court,
tribunal, arbitrator or forum;
e. The complaint is not frivolous or vexatious in nature; and
f. The complaint is made before the expiry of the period of limitation prescribed
under the Indian Limitation Act, 1963 for such claims.
7. Award by the banking ombudsman

The award shall state briefly the reasons for passing the award.

The Award passed under sub-clause (1) shall specify the amount, if any,
to be paid by the bank to the complainant by way of compensation for
the loss suffered by him and may contain any direction to the bank.

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the Banking Ombudsman shall have the power to pass an award directing
payment of an
amount not exceeding the actual loss suffered by the
complainant as a direct consequence of the act of omission or commission
of the bank, or ten lakh rupees (one lakh for credit card) whichever is
lower.

A copy of the Award shall be sent to the complainant and the bank.

An award shall lapse and be of no effect unless the complainant furnishes to


the bank concerned within a period of 30 days from the date of receipt of
copy of the Award, a letter of acceptance of the Award in full and final
settlement of his claim.

Appeal before the appellate authority

Appellate Authority is the Deputy Governor in charge of the


Department of the RBI. Either the bank or the complainant, if not
satisfied with the award, can prefer appeal within a period of 30 days of its
communication. The time allowed for filing appeal by the bank is one month
from the date of receipt by it of the acceptance in writing of the Award by the
complainant.

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Garnishee Order:

Issued by court under Section 60 of Civil Procedure code

Issued at the request of the creditor to attach the debtors' funds in the
hands of another debtor (banker known as Garnishee)

It is issued in two stages.

First order Nisi is issued requesting the bank to explain why the funds
of the depositor should not be attached. Bank informs depositor and
stops operations.

After receipt of explanation from banker, Order Absolute is issued. On


receipt of it, banks make payment to the court.

If amount to be attached is not mentioned the entire balance is attached.


However, if it is for specific amount, only that amount should be
attached.

Applicable for the accounts in the same capacity as mentioned in the


order.

If the order is in the name of individual it will not attach the partnership
a/c in which the individual is a partner or the individual who holds the
a/c in trust.

Under garnishee order the order issued in the name of partnership


company attaches the partnership account and also the individual
partner's accounts

Accounts in the name of deceased and undischarged insolvent are not


attached

Any deposit already due or accruing due (term deposit) are attached but
payable to court only on maturity.

If the order is in the name of individual but the a/c is in the Joint names
it is not attachable.

If the order is issued in joint names it attaches the joint accounts as well
as individual accounts if any.

Payment in cash, before actual parting; and in case of clearing, upto the
time of return of clearing cheques the balance available can be attached

Proceeds of cheques/bill sent on collection are not attachable. Uncleared


balances on SB/CD are also not attachable.

Right of set off is available before effecting the Garnishee order.

On receipt of a Garnishee Order, the date and time of its receipt must be
marked and authenticated by the officer of the department

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Notice of receipt of the garnishee order should be sent to the account


holder immediately.

In order to prevent against inadvertently making payments of the


amounts so earmarked, the branch must transfer them to Sundry
Creditors Account by giving full details of the garnishee order in the
sundry creditors voucher, which must be recorded in the sundry
creditors register / module as well.

In the case of accounts of proprietary concerns, a garnishee order


mentioning the name of either the proprietary concerns or the name of
the proprietor extends to the accounts of both the proprietary concern as
well as the accounts in the name of the proprietor since there is no
distinction in law between the proprietor and his proprietary concern.

A garnishee order does not extend to any deposits made subsequent to


its receipt.

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Attachment Order

Issued by Income Tax Authorities under Sec.226(3) of Indian Income Tax


Act.

Issued to receive from any person the money due or becoming due to
the assessee, or from any person who holds money or may hold
subsequently for or an account of an assessee.

In case an IT attachment order is received on a partnership account, the


same will attach the personal accounts of the partners as well.

The attachment order issued is final and binding.

Joint a/c is also attached on pro-rata basis.

If the bank fails to act on an Income Tax (IT) attachment order, it will be
deemed as an assessee in default.

Right of set off is available in both cases before effecting the Garnishee or
IT attachment order.

On receipt of an Attachment Order from the IT Department, the date and


time of its receipt must be marked and authenticated by the officer of the
department.

Notice of receipt of the attachment order should be sent to the customer


immediately.

If, however, any amount standing to the credit of the constituent in


respect of which a notice under section 226(3)(i) is served has already
been under lien to the Bank, such account should be advised to the
Income Tax Officer and if there is any surplus after adjusting the amount
due to the Bank such surplus will be available for remittance to the
Income Tax Officer.

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Negotiable instruments some points

The NI Act states in its preamble that it seeks to define the law relating to
promissory note, bill of exchange and cheque and therefore it deals with only
these three kinds of negotiable instruments

Common Features: Any instrument that possesses the common features may be
considered to be a negotiable instrument (e.g. bank drafts, government
promissory notes).

The common features of negotiable instruments are as follows:

i.

A negotiable instrument can be transferred by delivery or by endorsement


and delivery, depending on whether it is payable to the bearer or order.
Transferability of the instrument may be restricted by the maker or holder
by crossing it as 'Account Payee.'

ii.

A negotiable instrument confers an absolute and valid title on the


transferee who takes it in 'good faith, for value, and without notice of the
defect in the title of the transferor.

iii.

The holder of negotiable instrument can sue in his own name and can
recover the amount of the instrument from the party liable to pay thereon
as there is a right of action attached to the instrument itself.

Promissory Note: (section 4 of NI Act).


''A Promissory Note is an instrument in writing (not being a bank note or a
currency note) containing an unconditional undertaking, signed by the maker,
to pay a certain sum of money only to, or to the order of, a certain person, or to
the bearer of the instrument
A promissory note that is dependent on contingency would tantamount to being
an uncertain undertaking and hence cannot be treated as a promissory note.

BILL OF EXCHANGE : (Section 5 of NI Act).


''A bill exchange is an instrument in writing containing an unconditional order,
signed by the maker, directing a certain person to pay a certain sum of money
only to, or to the order of, a certain person or to the bearer of the instrument."
Main elements of a bill of exchange are as follows:

Bill of exchange is used in business and trade involving the seller and buyer
of goods/services sold on credit terms.

It has three parties - drawer (seller), drawee (buyer) and payee (beneficiary).

Instead of paying cash, the drawee (buyer) undertakes to pay to the payee, or
to his order, a specified sum on demand (i.e. demand bill on presentment of
the bill), or on a specified future date (i.e. usance bill after acceptance).

The drawee of a bill is not liable until he accepts the bill, indicating thereby
his assent to the drawer's order to pay.

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Demand bill is payable immediately on presentment to the drawee.

Usance bill is presented twice to the drawee - first for acceptance, and
thereafter for payment on the due date.

The date of payment must be certain or ascertainable. Demand bill is


payable on demand or immediately on presentment. Usance bill is payable
after specified period or at a future date. Usance bills attract stamp duty
and they need to be accepted by the drawee/ s to legally -bind him/them for
payment.

CHEQUES (Section 6 of NI Act). ''A cheque is a bill of exchange drawn on a


specified banker and not expressed to be payable otherwise than on demand
and it includes the electronic image of a truncated cheque and a cheque in the
electronic form.

A cheque has three parties. The drawer is the account holder signing the
cheque; drawee is always the bank branch where the account holder
maintains his account and the payee is the beneficiary who will receive the
amount mentioned in the cheque.

The cheque has to be signed in ink by the account holder or his authorized
agent (through mandate or power of attorney) as per the specimen

Printed signatures on dividend/interest warrants cheques that are issued by


companies in bulk, are also acceptable.

A cheque has to be dated, as the date constitutes a material element of a


cheque.

A holder of an undated cheque may fill in the date while presenting it for
payment.

A post-dated cheque cannot be paid before the date on the cheque.

An ante-dated cheque (i. e. date prior to the presentment) is payable within 3


months from the date specified on the cheque. There is no law to this effect.

A banker can pay a cheque written only in words where the amount in
words and figures mutually differs.

But if the amount is written only in figures, the bank generally returns it.

A demand draft is a negotiable instrument and is always drawn, payable to


order. A demand draft resembles a bill of exchange; the only difference being
that in the former, the drawer (bank) and the drawee (bank) are same.
General Crossing : A cheque or bank draft may be crossed by the drawer/issuer
and holder by simply drawing on its face, two parallel transverse lines, with or
without the words 'not negotiable' or and 'company' or 'account payee'.
In such cases the drawee banker shall not pay it to anyone other than a
banker.

Such crossing ensures that the cheque or draft will be payable not in cash,
but only through the bank, by credit to the account of the payee.

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Account payee crossing restricts further transferability of the instrument as


the amount thereof has to be credited to the payee's account only with the
bank.

SPECIAL CROSSING: A special crossing consists of an addition of the name of a


banker across the face of a cheque with or without two parallel transverse lines.

Such crossing ensures that the drawee bank shall not pay the cheque to
anyone than the banker/his agent (to whom it is crossed) for collection.

This means that a specially crossed cheque has to be routed through an


account with the named bank.

Endorsements: Endorsement is made on the back of the instrument, or by


attaching a slip of paper ('allonge') if the space on the instrument is not enough.

A negotiable instrument payable to order can be negotiated only by endorsement


and delivery

Following are the main requirements of endorsement


Signature of the endorser with/without adding any words.
Endorsement to be made by the payee or by all the payees jointly.
A stranger cannot endorse an instrument, unless he is a holder in due
course.
Endorsement to be made for the entire amount and not for a part of the
amount of the instrument.

Type of Endorsements:
Blank endorsement: When the endorser signs only his name on the back of
the instrument, it is termed as a blank endorsement.
After such endorsement, the instrument can be negotiated by mere delivery
without any further endorsement required.
Special endorsement or endorsement in full: When the endorser's signature
is accompanied by instructions to pay the amount to/to the order of a
named person, it is termed as a special endorsement.
The person to whom the money is payable is known as endorsee.
That endorsee can further endorse the instrument in favour of another
person specifically instructing to pay to that certain person.
Restrictive endorsement: When further negotiation of the instrument, is
prohibited. (e.g. the instrument is endorsed as "pay A only") it is termed as
restrictive endorsement.
Such an endorsement takes away the negotiability of the instrument.

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Inland instruments (Sec 11)


A promissory note, bill of exchange or cheque drawn or made in India and made
payable in or drawn upon any person resident in India shall be deemed to be an
inland instrument.

A minor may draw, endorse, deliver and negotiate negotiable instruments so as


to bind all parties except himself.

When maturity is a holiday (Sec 25)


When the day on which a promissory note or bill of exchange is at maturity is a
public holiday, the instrument shall deemed to be due on the next preceding
business day.

'Holder' of a negotiable instrument as per section 8 of NI Act.

In order to be a 'holder' of these instruments, the title or claim of the person


is more important rather than the actual possession of the instrument.

Thus, a person who has stolen or fraudulently obtained possession of a


cheque cannot be the 'holder' of the cheque, despite actually possessing it

HOLDER IN DUE COURSE Section 9 of NI Act defines a 'holder in due course' as


"any person who for consideration became the possessor of a promissory note,
bill of exchange, or cheque if payable to bearer, or the payee or endorsee thereof,
if payable to order, before the amount mentioned therein became payable, and
without having sufficient cause to believe that any defect existed in the title of
the person from whom he derived his title."

The term 'holder in due course', denotes a 'bona fide holder for value
without notice

Paying Bankers Duty:


The Paying Banker's (Drawee) duties are laid down by section 31 of NI Act as
"The drawee of a cheque having sufficient funds of the drawer in his hands,
properly applicable to the payment of such cheque must pay the cheque when
duly required so to do, and, in default of such payment, must compensate the
drawer for any loss or damage caused by such default.

The banker would be justified in refusing payment of a cheque, if:


The cheque is countermanded by the customer.
There is a garnishee order attached to the amount of the cheque.
The bank receives notice regarding insolvency, death or insanity of the
customer.
"
There is a defect in the title of the presenter of cheque.

PAYMENT IN DUE COURSE


Payment in due course' has been defined in section 10 of the Act.
Its main features are:

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The payment must be in accordance with the apparent tenor of the


instrument:
A cheque should not be paid before its due date.
If the amount is written only in figures, the bank generally returns it.
Pencil signature is valid, but not allowed by bankers in practice.
If the cheque is torn, the banker should normally return it for the reason
'mutilated cheque', unless the drawer confirms the mutilation or the
collecting bank attaches a certificate that it was accidentally torn.
The paying banker is not concerned with an 'account payee' crossing.
His liability is discharged once he makes payment in due course.
It is the duty of the collecting banker to collect the proceeds of the
cheque for the credit of the payee's account.
It should be noticed that a bank may be held liable for wrongful
dishonour of cheques when there is sufficient balance in the customer's
account, as per the provisions of sec 31 of Negotiable Instruments Act,
1881.
The protection under section 131 of NI Act is available to a collecting banker
when he acts as agent for collection.
Section 138 deals with dishonour of cheque for insufficiency etc., of funds in
the account;

This section shall apply only when;


The cheque has been presented to the bank within a period of 3 months
from the date of on which it is drawn or within the period of validity
whichever is earlier
The payee or the holder in due course of the cheque, as the case may be,
makes a demand for the payment of the said amount of money by giving
a notice, in writing, to the drawer of the cheque within 30 days of the
receipt of information by him from the bank regarding the return of the
cheque as unpaid.
The drawer of such cheque fails to make the payment of the said
amount of money to the payee or, as the case may be to the holder in due
course of the cheque within 15 days of the receipt of the said notice.
The offence can be tried by I Class Judicial Magistrate or Metropolitan
Magistrate.
Punishment under the section is with imprisonment for a term upto 2
years or with fine which may extend to twice the amount of the cheque or
with both.

Merely because the drawer issued a stop payment instruction to the drawee or
to the bank for stopping the payment, will not preclude an action under Sec 138
of the NI Act by the drawee or the holder of a cheque in due course.

srn/04.04.2012

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Certificate of deposit (CD)

Certificates of Deposit (CDs) is a negotiable money market instrument


and issued in dematerialised form or as a Usance Promissory Note, for
funds deposited at a bank or other eligible financial institution for a
specified time period.

Banks have the freedom to issue CDs depending on their requirements.

Minimum amount of a CD should be Rs.1 lakh, i.e., the minimum


deposit that could be accepted from a single subscriber should not be
less than Rs. 1 lakh and in the multiples of Rs. 1 lakh thereafter.

CDs are issued at a discount on face value.

The maturity period of CDs issued by banks should be not less than 7
days and not more than one year.

Banks have to maintain the appropriate reserve requirements, i.e., cash


reserve ratio (CRR) and statutory liquidity ratio (SLR), on the issue price
of the CDs.

The FIs can issue CDs for a period not less than 1 year and not
exceeding 3 years from the date of issue.

The issuing bank/financial Institutions cannot clos a CD before its due


date.

Investors : CDs can be issued to individuals, corporations, companies,


trusts, funds, associations, etc. Non- Resident Indians (NRIs) may also
subscribe to CDs, but only on non-repatriable basis, which should be
clearly stated on the Certificate. Such CDs cannot be endorsed to another
NRI in the secondary market.

Banks / FIs cannot grant loans against CDs.

CDs in physical form are freely transferable by endorsement and delivery.


CDs in demat form can be transferred as per the procedure applicable to
other demat securities.

There is no lock-in period for the CDs.

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Commercial Paper (CP)

Commercial Paper (CP) is an unsecured money market instrument


issued in the form of a promissory note

Companies, Primary Dealers (PD) and Financial Institutions (FI) that


have been permitted to raise short-term resources are eligible to issue.

A corporate would be eligible to issue CP provided:


the tangible net worth of the company, as per the latest audited
balance sheet, is not less than Rs.4 crore;
company has been sanctioned working capital limit by bank/s or allIndia financial institution/s; and
the borrower account of the company is classified as a Standard
Asset by the financing bank/s/ institution/s

Rating Requirements:
All eligible participants shall obtain credit rating for issuance of
Commercial Paper from either CRISIL or ICRA or CARE or The India
Ratings and Research Private Limited (India Ratings) or such other
credit rating agencies as may be specified by the Reserve Bank of
India from time to time, for the purpose.
Eligible participants/issuers shall obtain credit rating for issuance of
CP from any one of the SEBI registered CRAs. The minimum credit
rating shall be A3 as per rating symbol and definition prescribed by
SEBI.
The issuers shall ensure at the time of issuance of the CP that the
rating so obtained is current and has not fallen due for review

CP can be issued for maturities between a minimum of 7 days and a


maximum up to one year from the date of issue

CP can be issued in denominations of Rs.5 lakh or multiples thereof.


Amount invested by a single investor should not be less than Rs.5 lakh
(face value).

CP shall be issued at a discount to face value as may be determined by


the issuer.

CP can be issued either in the form of a promissory note (Schedule I) or


in a dematerialised form through any of the depositories approved by and
registered with SEBI.

srn/14.04.2013

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Cheque collection
1. Cheque collection(foreign)- USD-denominated cheques :

All Cheques denominated in USD and payable in US up to USD 10000


should be sent for collection to JP Morgan chase Bank, Mumbai under
their Cash Letter Services (CLS) irrespective of their designated USD
correspondent.

Regional Offices concerned are authorised to permit the branches to send


cheques above USD 10,000 but upto a maximum of USD 25,000.

JP Morgan Chase will make arrangements to collect cheques from the AD


branches for onward transmission to their Mumbai office through their
authorised couriers at their cost.

JP Morgan will transmit the image of cheques after truncation to New


York for clearing purposes.

JP Morgan Bank will credit our Nostro account on the second banking
business day in USA calculated from the date of receipt of cheque at JP
Morgan, Mumbai under usual reserve as applicable to cash letter
service.

JP Morgan will be charging USD 0.25 per cheque towards check 21,
which will be absorbed by Treasury Dept.

Services of JP Morgan Chase Bank NA is used for handling Secure


Collection Service which includes cheques not covered under Cash
Letter Service, of value above USD 10,000/- upto a maximum of USD
500,000/- drawn on USA and denominated in USD
JP Morgan will allow us to obtain finality of payments against fraud
on the front of the cheque in 6 days if the cheque is drawn on JP
Morgan Chase or in New York City and in 15 days if the cheque is
drawn outside New York City.
Dishonour of cheque will be notified within these time frames.
Cheques under this scheme will be collected on a final credit basis.
That is if the cheques are returned for reason other than fraud, J.P.
Morgan will not debit/recall funds after it is credited to our Nostro
account. Branches can be assured of the final payment.

JP Morgan will make arrangements to collect cheques from the AD


branches for onward transmission to their Mumbai Office through their
authorised couriers at their cost.
They have tie up with Blue Dart
Courier to collect checks from our AD branches. Cash letter covers
should be addressed to:
J P Morgan Services India Pvt. Ltd
Check Processing Center
Treasury & Securities Services
Paradigm B, 9th Floor, Malad Link Road, Mumbai 400 064

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Branches while accepting cheques for collection must affix a rubber


stamp on the counterfoil reading original cheques will not be returned
as per US Law, if cheques are unpaid

Cooling period for USD denominated cheques - 15 days

Cooling period will not be indicated for other countries, in view of the fact
that within the same country it may vary from one centre to other

The day when the amount is due for credit is the date of credit to Nostro
Account plus 15 days for USD cheques and date of credit to Nostro
Account plus 21 days in case of other currencies subject to other
conditions as applicable in respective countries.

Branches should pay interest at SB rate from the date of credit to Nostro
account to the date of credit to customers account.

AD branches concerned should pay the interest for the delayed period.

However, if the date of credit is more than 16 days, interest at term


deposit rate applicable for the period of delay should be paid.

In respect of customers of NAD branches, the NAD branches concerned


should pay the interest and for any delayed period beyond 16 days.

In respect of cheques with value less than USD 100, customers may be
informed of the charges likely to be levied while accepting the cheques for
payment.

Cheques received for collection from customers representing receipt of


foreign contribution by entities like associations/organizations having a
definite cultural, economic, educational, religious and social programmes
shall be governed by Foreign Contribution Regulation Act (FCRA 1976).

The exchange rate will be the rate prevalent on the date of conversion.

No compensation will be paid for the volatility in the exchange rate.

2. Collection of Euro travellers cheque


All the Travellers Cheques issued in EURO by Thomas Cook Travellers
Cheques Ltd, Travelex Global and Financial Services Ltd, Travelex Inc and
Inter-payment Services Ltd, containing in the line MICR the codification
6940908 and payable in France, must be send directly to the following
address:
Travelex Global and Financial Services Limited
Travellers Cheques Operations
Worldwide House, Thorpe Wood
Peterborough, PE36SB,
United Kingdom
As regards all other Cheques/travellers Cheques, branches can continue to
send them to Societe Generale

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3. Collection of Inland cheques:

Local Cheques
All cheques and other Negotiable Instruments payable locally would
be presented through the clearing system prevailing at the centre.
All branches will fix up the days cut off time for the inclusion of
instruments for clearing, taking into account the clearing cycle and
other related factors, like distance from clearing house,
communication facility, local established practices, methodology being
followed by other banks in the particular centre etc.
Display board will be placed in the banking hall , indicating the cut off
time limits for receipt of cheques for payment to Government
Accounts like income-tax etc.
Cheques deposited at branch counters and in collection boxes within
the branch premises before the specified cut-off time will be presented
for clearing on the same day.
Cheques deposited after the cut-off time and in collection boxes
outside the branch premises including off-site ATMs will be presented
in the next clearing cycle.
As a policy bank would give credit to the customers account on the
same day clearing settlement takes place.
Withdrawal of amounts as credited would be permitted as per the
Cheque return schedule of the clearinghouse.
Bank branches situated at centres where no clearing house exists,
would present local cheques on drawee banks across the counter and
it would be the banks endeavour to credit the proceeds at the earliest.

Immediate credit of local/outstation cheques/instruments:


Branches/Extension counters of the Bank will consider providing
immediate credit to outstation instruments which include Demand drafts
drawn on other Banks, Interest Warrants and Dividend Warrants upto
the aggregate value of Rs.15000/- tendered for collection by individual
account holders subject to satisfactory conduct of such accounts for a
period not less than 6 months.

Immediate credit will be provided against such collection instruments at


the specific request of the customer or as per prior arrangement.

The facility of immediate credit would also be made available in respect of


local cheques at centres where no formal clearing house exists.

The facility of immediate credit will be offered


Bank/Current/Cash Credit Accounts of the customers.

For extending this facility there will not be any separate stipulation of
minimum balance in the account.

on

savings

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Under this policy, prepaid instruments like demand


interest/dividend warrants shall be treated on par with cheques.

In the event of dishonour of cheques against which immediate credit was


provided, interest shall be recoverable from the customer for the period
the bank remained out of funds at the rate applicable for overdraft limits
sanctioned for individual customers.

Bank shall levy normal collection charges and out of pocket expenses
while providing immediate credit against outstation instruments tendered
for collection.

Exchange charges applicable for cheque purchase will not however be


charged

drafts,

Satisfactory conduct of account;

Opened at least 6 months earlier and complying KYC norms

Conduct of which has been satisfactory and bank has not noticed any
irregular dealings.

Where no cheques/instruments for which immediate credit was afforded


returned unpaid for financial reasons.

Where the bank has not experienced any difficulty in recovery of any
amount advanced in the past including cheques returned after giving
immediate credit.

4. Purchase of local and outstation cheques:

Bank may, at its discretion, purchase local/outstation cheque tendered


for collection at the specific request of the customer or as per prior
arrangement.

Besides satisfactory conduct of account, the standing of the drawer of the


cheque will also be a factor considered while purchasing the cheque.

5. Speed Clearing System.


Through speed clearing system, customers can present the cheques drawn
on other Banks CBS Branch through Local Clearing. They can get the
clearance affected within the time frame applicable for local banks. This
facility is available at selected Centres only. Applicable service charges for
speed clearing will be collected from the customers.
6. Cheque Truncation System (CTS):
In order to utilize the technological innovations in banking services Cheque
Truncation System(CTS) is introduced in certain centres in which physical
exchange of cheques to drawee bank in clearing will be dispensed with and
instead, the images of the cheques will be viewed and acted upon by the
drawee bank branches, for payment or return as warranted. It will be
introduced to other centres in a phased manner.
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Time frame for collection of Local/ Outstation cheques / Instruments

7.

In case of local cheques presented for clearing, the bank shall permit
usage of the shadow credit afforded to the customers account
immediately after closure of relative return clearing and withdrawal shall
be allowed on the same day or maximum within an hour of the
commencement of business on the next working day subject to usual
safeguards.

Cheques/Instruments presented in high value clearing ( with the


minimum value of Rs 1 lac) shall be credited on the same day
(applicable only in areas covered by high value/same day clearing).

For cheques and other instruments sent for collection to centres within
the country the following time norms shall be applied
Cheques presented at any of the four major Metro Centres ( New
Delhi, Mumbai, Kolkata and Chennai) and payable at any of the other
three centres: Maximum period of 7 days.
Metro Centres and State Capitals (other than those of North Eastern
States and Sikkim) Maximum period of 10 days
In all other Centres: Maximum period of 14 days

Cheques drawn on foreign countries:

Such instruments are accepted for collection on the best of efforts


basis.

Bank may enter into specific collection arrangement


correspondent bank for speedy collection of such instrument.

Bank would give credit to the party on credit of proceeds to the Banks
Nostro Account with the correspondent bank after taking into account
cooling periods as applicable to the countries concerned.

with

its

8. Payment of interest for delayed collection of Outstation Cheques:

As part of the compensation policy of the bank, the bank will pay interest
to its customer on the amount of collection instruments in case there is
delay in giving credit beyond the time period mentioned above.

Such interest shall be paid without any demand from customers in all
types of accounts.

There shall be no distinction between instruments drawn on the banks


own branches or on other banks for the purpose of payment of interest
on delayed collection.

9. Interest for delayed collection (for inland cheque only)shall be paid at


the following rates:

Local cheque: interest will be paid at savings bank rate for the
corresponding period of delay

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Outstation Cheques :
Savings Bank rate for the period of delay beyond 7/10/14 days as
the case may be in collection of outstation cheques.
Where the delay is beyond 14 days, interest will be paid at the rate
applicable to for term deposits of the respective period.
In the case of extraordinary delay, i.e., delay exceeding 90 days,
interest will be paid at the rate of 2% above the corresponding Term
deposit rate.
In the event of the proceeds of Cheque under collection was to be
credited to an overdraft / loan account of the customer, interest will
be paid at the rate applicable to the loan account.
For extraordinary delays, interest will be paid at the rate of 2% above
the rate applicable to the loan account.

10.

Cheques/Instruments lost in transit, in clearing process or at paying


Banks Branch
In line with the compensation policy of the bank the bank will compensate
the account holder in respect of instruments lost in transit in the
following way:

In the event a Cheque or an instrument accepted for collection is lost in


transit or in the clearing process or at the paying banks branch, the
bank shall immediately on coming to know of the loss, bring the same to
the notice of the accountholder so that the account holder can inform the
drawer to record stop payment

The bank would provide all assistance to the customer to obtain a


duplicate instrument from the drawer of the Cheque.

In case intimation regarding loss of instrument is conveyed to the


customer beyond the time limit stipulated for collection (7/10/14 days as
the case may be) interest will be paid for the period exceeding the
stipulated collection period at the rates as applicable for delay.

In addition, bank will pay interest on the amount of the Cheque for a
further period of 15 days at Savings Bank rate to provide for likely
further delay in obtaining duplicate Cheque/instrument and collection
thereof.

The bank would also compensate the customer for any reasonable
charges he/she incurs in getting duplicate Cheque/instrument upon
production of receipt, in the event the instrument is to be obtained from
a bank/institution who would charge a fee for issue of duplicate
instrument.

Bank will reimburse the related charges debited in the account of the
drawer (of collection/clearing cheque deposited by the customer which is
lost in transit) by the drawee bank branch

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11.

Charging of interest on cheques returned unpaid where credit was


given

Bank will seek the consent of the beneficiary-customer for debiting


his/her account towards recovery of discounted value of the cheque
which is lost-intransit and interest thereon.

If the Customers consent is not forthcoming, Paid value of the cheque


and the interest thereon will be collected from the customer by debiting
his/her account with prior notice.

In case the recovery is found to be difficult, necessary legal action will be


initiated.

12.

Force Majeure
The bank shall not be liable to compensate customers for delayed credit
if some unforeseen event (including but not limited to civil commotion,
sabotage, lockout, strike or other labour disturbances, accident, fires,
natural disasters and other Acts of God war, damage to the Banks
facilities or of its correspondent bank(s) absence of the usual means of
communication or all types of transportation, etc beyond the control of
the Bank prevents it from performing its obligations with the specified
service delivery parameters.

13.

Charging of interest on cheques returned unpaid where instant credit


was given
If a cheque sent for collection for which immediate credit was provided
by the bank is returned unpaid, the value of the cheque will be
immediately debited to the account.
The customer will not be charged any interest from the date
immediate credit was given to the date of return of the instrument
unless the bank had remained out of funds on account of withdrawal
of funds.
Interest where applicable would be charged on the notional
overdrawn balances in the account had credit not been given initially.
If the proceeds of the Cheque were credited to the Savings Bank
Account and was not withdrawn, the amount so credited will not
qualify for payment of interest when the Cheque is returned unpaid.
If the proceeds of the Cheque were credited to an overdraft/loan
account, interest shall be recovered at the rate of 2% above the
interest rate applicable to the overdraft /loan from the date of credit
to the date of reversal of the entry if the Cheque/instrument was
returned unpaid to the extent the bank was out of funds.

14.

Policy for dishonour of Physical/ Truncated for less than Rs. 1 Crore
Branches should affix a rubber stamp with message on the front upper
wrapper of cheque book that issue of cheque without maintaining
sufficient balance in the account will disqualify the drawer for additional
cheque books.

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Branches should report on daily basis the particulars of all the


dishonoured cheques for Rs. One Crore and above and return of all
cheques irrespective of amount issued in favour of stock exchanges by
stock broker entities to the respective Regional Offices.

When cheque is returned for the third time pertaining to a particular


account in a financial year, branches should send a caution advice to
the customer requesting him to maintain the account properly and in
accordance with the Bank rules and regulations.

In the event of dishonour of cheques drawn on a particular account of


the drawer on four occasions in a financial year, the branch should
record the reasons which lead to the dishonour of cheques in the account
and no fresh cheque books should be issued.

If the customer does not maintain the account properly even then, the
branch should send a letter to the account holder by Registered post
with acknowledgement due & also notice by certificate of posting (in
addition to Regd letter) requesting that the account holder should
maintain the account properly and also cautioning him that the Bank
will close the account if it is not conducted properly within one month.

Even after expiry of the notice period if the account is not conducted
properly the branch should close the account and remit the balance
payable to the customer by draft by Registered post with
acknowledgement due & notice by certificate of posting..

The branch should call for return of the unutilized cheque leaves from
the customer and effectively follow up to obtain the same.

However, if branches, despite cheque returns, desirous of continuation of


account after the notice period should refer to the Regional Office.

Regional Managers are vested with authority to allow continuation of the


account even after the notice period, taking in to consideration merits of
the case.

When the account holder is also a borrower, the returns are to be


reported to the sanctioning authorities and the same is to be reckoned
while the account is appraised for review / renewal/ enhancement of
limits.

15.

Policy for dishonour of Physical/ Truncated for Rs. 1 Crore and above
(Similar to that of Less than one crore, but daily reporting.)

16.

Policy for dishonour of ECS mandates

The Electronic clearing envisages lodgement of mandate by a customer


with his Banker authorizing him to debit his account when a claim is
made by an user institution through ECS Clearing.

When an ECS mandate is dishonoured for the third time in a financial


year branches should send a caution advice to the customer requesting
him to maintain the account properly and in accordance with the Bank
rules and regulations.

Branches should also draw the attention of customers that if the


Mandate is dishonoured for fourth time even after receipt of the ECS will
be stopped.

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The branch should send a letter to him by Registered post with


acknowledgement due & a notice by certificate of posting, requesting him
that he should maintain the account properly failing which there is no
alternative to the Bank but to close the account.

However, if branches, despite dishonour of ECS mandates, desirous of


continuation of account after the notice period should refer to the
Regional Office.

Regional Managers are vested with authority to allow continuation of the


account even after the notice period, taking in to consideration merits of
the case.

To discourage Banks from indiscriminately charging ECS customers on


dishonor of ECS mandate and with a view to encourage ECS by the
Public, RBI has prescribed the ceiling charges for ECS returns.

Our Bank has fixed ECS return charges within the ceiling limits and the
same is given below:
For transactions up to Rs. 25,000/ -

Rs. 31/-

Above Rs.25,000/ up to Rs. 1 Lac -

Rs. 51/

Above Rs. 1 Lac to 10 lac

Rs. 76/

Above Rs.10 lac - upto Rs. 1 crore

Rs. 102/-

( first 3 returns)

Rs. 153/-

( after 3 returns)

Rs. 204/-

Above Rs.1 crore

17. Dishonour of electronic funds transfer request for insufficiency of funds


in banks Penalty Clause;

18.

The provisions contained in Section 25 of the payment and Settlement


Systems Act, 2007 accord the same rights and remedies to the payee
against dishonour of electronic funds transfer as are available to the
payee under section 138 of the Negotiable instruments Act.

The sub-section (5) of Section 25 of the Payment and Settlement


Systems Act, 2007 provides for punishment of 2 years and twice the
amount of electronic funds transfer, or both for dishonour of
electronic funds transfer as has been stipulated for dishonour of cheques
under the Negotiable instruments Act.

Collection Of Account Payee Cheques


Proceeds To Third Party Account

Prohibition

On

Crediting

Banks cannot collect account payee cheques for any person other than
the payee constituent.

Branches may consider collecting account payee cheques drawn for an


amount not exceeding Rs 50000/- to the account of their customers
who are Co-operative Credit societies, if the payees of such cheques are
the constituents of such co-operative credit societies.
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Safe deposit locker


A. Hiring Lockers
1. Lockers should be rented only to respectable persons, properly introduced to
the Branch. Lockers can be rented to: Individuals Singly or Jointly
including non resident Indians
2. Lockers should not be hired with Former or Survivor clause.
3. Lockers should not be rented to minors.
4. Lockers should be rented to Trusts only with the prior permission of the
Regional Office
B. Addition/deletion of names
1. Whenever locker hirers wish to add/delete names in the existing locker
account, the locker account should be closed and a fresh contract should be
entered into with all the hirers in whose names the lockers are to be rented
out, in the Safe Deposit Locker Agreement (Form 125 AX).
2. Since the closing / opening of the locker is carried out only to facilitate
addition/ deletion of names, branch should ensure that atleast one of the
Original hirers continues to be a hirer in the new contract also.
3. Branches need not collect any additional rent for the purpose of such
closure and opening on account of addition / deletion of names
C. Forms and Registers to be used:
Locker Application and Agreement: F.125 AX
Power of Attorney for Single Hirers: F.122 AX
Power of Attorney for Joint Hirers: F 122 BX
Trust Account Opening Form: F. 551
Hindu Undivided Family Letter F. 303 X
D. Other procedures for hiring locker

At the time of breaking open the locker there should be sufficient evidence to
show that the hirer failed to pay the rent due in spite of registered notices.

E. Charges

For Visits/ Operations

: Rs.51/- per operation over and above 24 free


operations in a year

For delay in remittance of Locker rentals : Rs.20 per month as penalty

For Loss of Locker keys : Rs.204/- in addition to break opening charges

F. Break opening of lockers

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1. Locker hirers must either operate the locker or surrender it where the
lockers have remained not operated for more than three years for medium
risk category OR one year for higher risk category
2. The locker should be broken open by the representative mechanic of the
manufacturers in the presence of 3 respectable outside witnesses and 2
officers of the Bank.
3. The contents, if any, should be removed to vacant locker and kept in the
joint custody of the Manager and Deputy Manager of the Branch with the
triplicate copy of the list of contents also deposited therein along with the
articles, pending the receipt of instructions of Regional Office/Central Office
regarding their disposal.
4. A registered notice on form 122 J form 122 K as the case may be along with
the quadruplicate copy of the list of contents should be sent to hirer(s). In
the case of joint accounts such notice should be sent to each person.
G. Access to Lockers
1. If the hirer, accompanied by a third party desires that the third party, be
allowed to accompany him inside the vault, the hirer may be permitted to do
so at his specific written request and at his sole risk and responsibility
2. Access to locker may be allowed to the hirers appointee or Authorised
person only against a Power of Attorney in form 122 AX or Form 122 BX as
the case may be (single hirer or joint hirers).
H. Responsibility of the Officer in charge of the locker units
1. It is the responsibility of the custodian of the vault to check all lockers
operated during the day and ensure that they are properly locked and that
no articles / valuables are left behind by the locker hirers in the strong
room/ locker room
2. The lock of a surrendered locker must be interchanged with that of another
vacant locker before being let out to another hirer and the entry in the
Locker Key Register should be amended accordingly under the authorisation
of the official concerned
I. Procedures to be followed When Locker left open by the Hirer.
1. A declaration to that effect should be obtained in writing from the hirer to
that effect.
2. In case the hirer who has left the locker unlocked is not immediately
available the contents may be listed in the presence of the Manager, Deputy
Manager the custodian and one or two customers.
3. In case the key is left in the unlocked locker the contents should be kept
locked in the locker and the key should be kept in the joint custody of the
Manager and Deputy Manager or the custodian.
4. In case the key is not left behind the contents should be kept in a vacant
locker and the key should be kept in the joint custody of the Manager and
Deputy Manager or the custodian.

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J. Settlement of Claim on account of missing persons


1. Satisfactory proof evidencing the death of the constituent(s) must be
tendered along with the claim papers.
2. In respect of missing persons, the presumption of death can be raised after a
lapse of seven years from the date of his/her being reported missing.
The legal heirs or the nominee have to raise an express presumption of
death of the depositor under Section 108 of the Indian Evidence Act
before a competent court.
If the court presumes that he/she is dead, then the claim in respect of
assets left by a missing person can be settled on the basis of the
same.
The order of the Competent Court will be accepted in lieu of death
certificate for settlement of claims in favour of Legal heirs / nominee
as the case may be along with other documents prescribed for
settlement of deceased claim
3. The value of the claim in respect of articles kept in Locker / Articles kept in
Safe Custody is done by taking inventory of the articles in the presence of
Legal heirs/Nominee along with 2 witnesses.
4. While taking inventory, branches are not required to open any sealed/closed
packet(s) left in the Safe Deposit Locker /Safe Custody with the branch.
Also, documents of title to landed property need not be valued at the current
value of the property as the title can pass on to the claimants only through a
subsequent legal procedure.
5. After taking inventory of the Articles in Safe Deposit Lockers / Safe Custody
left by the missing person, the same should be valued at the current
market value for arriving at the value of claim. If the value of the articles
exceeds ` 25,000/- branch should insist for the order of the competent court
presuming the missing person as dead.
6. Branch should also obtain all other documents prescribed for settlement of
normal death claim (in favour of nominee or legal heirs) other than the death
certificate.
7. The threshold limit for the value of the articles kept in Safe Deposit Locker /
Safe custody , left by missing person could be settled without insisting on
production of court order is fixed at ` 25,000/- subject to:

Considering the Claim for settlement only after lapse of 7 years from the
date of his/her being reported missing.

The claimant /legal heirs should produce enquiry form, legal heir ship
certificate, affidavit, consent letter, etc except the death certificate, as
prescribed for the normal death claim. In addition to the above, the
claimant /legal heirs should also produce the following documents:-

srn/04.04.2012

FIR for reporting missing of the person.

Non traceable report issued by the police authorities

indemnity by the claimants/legal heirs / nominee


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Mobile Banking

RBI Instructions

Technology and Security Standard: Transactions up to Rs 5000/- can be


facilitated by banks without end-to-end encryption. The risk aspects involved in
such transactions may be addressed by the banks through adequate security
measures

IOB Mobile Banking

Carry your Bank in your Pocket IOBmobile

Website of IOB Mobile Banking https://www.iobnet.mobi

Mobile banking initiatives permits to access a Bank account and carry out
various banking transactions and enquires.

Mobile banking is one the alternative


banking channels, which allows
customers to do banking activities from their mobile phone using SMS
Technology.

SMS alert service keeps you informed/ updated about the significant activities/
transactions taken place in your account(s).

Mobile Banking service works on all GSM mobile phones that support SMS
technology.

What is "GPRS"?

The General Packet Radio Service (GPRS) is a new non-voice value added
service that allows Mobile Phones to be used for sending and receiving data over
an Internet Protocol (IP)-based network.
Interbank Mobile Payment Service (IMPS)

IMPS is introduced in co-ordination with National Payments Corporation of


India (NPCI).

IMPS offers an instant, 24 x 7, inter-bank electronic fund transfer service


through Mobile Phones.

Allows sender to send money to the mobile number of the beneficiary.

The beneficiary does not need to disclose his/her account and other financial
critical details to the sender.

The customer can transact on IMPS subject to a daily cap of Rs.50,000/(Rupees Fifty Thousand Only) and monthly limit of Rs.2,50,000/- (Rupees Two
Lakh Fifty Thousand Only). This amount is the overall limit for both IMPS and
non-IMPS funds transfer through mobile banking.

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Pre-Requisites for IMPS


Registration Process for Remitter:
KYC and AML guidelines should be complied with.
Remitter shall have GPRS enabled Mobile phones.
Register for our Banks Mobile Banking
MPIN and Mobile Money Identifier (MMID) will be provided by the system.
Registration Process for Beneficiary:

No need to register for Mobile Banking Service.

Beneficiary Mobile number should be linked to the account in the


Beneficiary Bank.

Get Mobile Money Identifier (MMID) from the Receiving Bank.

Remittance Process
For Remitter (To Send Money):
Login to the IOB Mobile Banking Software and select Interbank System
(IMPS) under Funds Transfer Option.
Create / Approve Payee.
Enter Debit Account, Beneficiary Nickname, Amount and Remarks
Await confirmation SMS for the debit in the senders account
Beneficiarys account.
Note the Transaction Reference number for any future query.
For Beneficiary (To Receive Money):
Share the Mobile Number and MMID with the remitter
Check the confirmation SMS for credit to the beneficiarys account

Note the Transaction Reference Number for any future query

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RTGS TRANSACTIONS

Customer Window:

A.

B.

C.

It is a channel through which funds remitted by customers are routed outward


to the credit of other Bank Customers through RBI.

A customer can transfer funds through RTGS only if the amount is Rs. 2 lakh
and above.
Inter-Bank Window:

It is a channel through which bank to bank settlement takes place like funding
of clearing adjustment, LC payment, Bill Payments etc.

There is no restriction on the amount to be transferred.

Routing customer payments under inter-bank mode is a gross violation of RBI


norms and it is being viewed by the Regulator as a serious lapse.

Return of Inward RTGS Transactions:

Returns of inward RTGS customer transactions should always be routed


through inter-bank settlement.

In the case of any inward RTGS customers transactions received by branches,


they have the following options:
1. Vouch the transactions to the credit of the beneficiarys account with us.
Return the inward transaction, immediately, back to the senders bank
with the option return. Returning of the inward messages should be
effected within one and half hour of the time of receipt of the transaction,
on the same day.
2. RTGS messages are returned in R-42 format. To have uniformity, field tag
7495 should be filled in as follows;
Field
Tag
7495

Line Number
Line 1
Line 2
Line 3

Details provided
RETURN
UTR number of the original transaction
Reason for return

3. If it is a local holiday for the branch or the branch has finished the day end
jobs, at the time of receipt of RTGS inward transaction(s), our Software
provides an option to keep the transaction in the Sundry Creditors A/c of
the respective branch General Ledger, automatically.
4. In such cases, immediately, after the branch does the day begin jobs on the
next working day, the entries shall be vouched to the credit of the customers
account or returned back to the senders bank through the return option
available in the system (which reverses the entry in the Sundry Creditors

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and sends the message to the other Bank with full particulars of the inward
message.
5. Branches are not permitted to forward their originating RTGS customer
transactions through Inter Bank Window.
6. Message format used in RTGS for transmission of messages in respect of
customer transactions : R41
7. NEFT uses the Public Key Infrastructure (PKI) technology to assure endto-end security and the Indian Financial Network (INFINET) to connect bank
branches for electronic transfer of funds
8. The B+2 return discipline would require banks to afford credit to beneficiary
accounts immediately upon completion of a batch or else return the
transactions within 2 hours of completion of the batch settlement, if credits
are unable to be afforded for any reason
9.

Levy of service charges by RBI

RBI levy service charges for all outward transactions of RTGS members.

The RTGS service charges would have three components;


(i) membership fee -

Rs.4000

(ii) transaction fee


Monthly Volume
From
To
1
25,000
25,001
50,000
50,001
100,000
100,001
and above

Band
1
2
3
4

Charge per
transaction Rs.
0.50
0.40
0.30
0.10

and
(iii) time-varying tariff as follows:
Block
1
2
3
4

Time of settlement at the Reserve


Bank of India
From
To
09:00 hours
12:00 hours
After 12:00 hours 15:30 hours
After 15:30 hours 17:30 hours
After 17:30 hours

Charge per
transaction
Rs.
Nil
1.00
5.00
10.00

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D.

Service charges levied from RTGS customers;


Time settlement at RBI
RTGS transactions

E.

9.00 hrs to
12.00 hrs

After 12.00 hrs to


15.30 hrs

Rs.2 lacs to Rs.5


lacs

Rs.25+ ST = 28

Rs.26+ST = 29

Above Rs.5.00 lacs

Rs.50+ST = 56

Rs.51+ST = 57

After 15.30
hrs to 16.30
hrs
Rs.30+ST =
34
Rs.55+ST =
62

Remittance to the credit of NRE accounts


o

Only foreign inward remittances and remittance originated from NRE


accounts in India are eligible for credits in NRE accounts.

While branches originate a transaction the originator must ensure that the
funds are either received from abroad or a NRE account maintained in India
is debited, before the transaction is originated.

While remittance of funds to the credit of NRE accounts, the following steps
should be followed.
1. In the field tag 7495 (sender to receiver information), the branch should
select NRE, instead of FT available as default.
2. In case NRE is mentioned in field tag 7495, then the field tags
5516/5517 become mandatory and the details of the ordering
institutions have to be given.
3. If the field tag 7495 contains the word NRE, it is assumed that the
sending bank is certifying the source of fund and payment bank must
ensure STP

F.

Government Accounts transactions


1. Outward transactions
Branches originating outward Govt. Transactions can do so only when the
receiving bank is in agreement with our bank to receive funds through prior
arrangement. In such a case, branches have to use the interbank mode (R-42
message type) for such transfers
2. Inward transactions
We are one of the accredited banks, receiving credits to Govt. accounts.
Therefore, branches shall ensure that any inward credit in RTGS from other
banks to credit of Govt. accounts,
a. Is always supported by a chalan sent in either through Fax/post
b. The receipt from the other bank is through interbank (R-42 message
type) mode with complete information , in field tag 7495.

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G.

Cut of Timings (Outward & Inward return)

Days

Customer transactions

Inter bank transactions

Monday to Friday

9.00 Hrs to 16.30 Hrs

9.00 Hrs to 18.00 Hrs

Saturday

9.00 Hrs to 13.30 Hrs

9.00 Hrs to 15.00 Hrs

A gap of one hour and thirty minutes is kept between customer timings and
interbank timings to ensure that a customer transaction, where credit
cannot be afforded to the beneficiary, would have to be returned to the
senders account within one hour and thirty minutes after closing hours of
Customer mode window.
NEFT TRANSACTIONS:

The National Electronic Funds Transfer (NEFT) system was launched in


November 2005.

NEFT has no amount restrictions and accepts cash up to Rs. 50,000 for
originating transactions. All NEFT receipts shall have the new 15-digit number;
otherwise, the receipts are liable to be rejected.

Credits are accepted through NEFT to SB,CDCC and loan accounts.

No Service charges for NEFT transactions upto Rs.1 lac.

In order to facilitate non-customers to make remittances under NEFT and to


have uniformity, a nominal Current Account titled NEFT-Non Customer Pool
Account has been opened in all CBS branches by ITD. The account No. is
641120 and module ID is 'CDCC'.

For the purpose of remitting such funds received by cash, branches should use
the code no. 50.

The remitter has to produce identification documents like Passport/PAN/


Driving license/Telephone Bill/certificate of identification issued by employer in
India with details and photograph etc

In our CBS system, NEFT remittances are received through a process known as
Straight-Through-Process (STP).

In order to remove ambiguity and to introduce the element of positive


confirmation, NEFT outward message to contain an additional mandatory field,
wherein mobile number or e- mail address of the originating customer shall be
populated.

If the customer doesnt provide e-mail id/mobile number, branches should use
branch e-mail id.

In the case of inward NEFT transactions, if the branches are not able to apply
funds to beneficiarys account, they should return the transaction (using the
return mode available in the system) within two hours of the batch time

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under which the remittance was received. The return transactions are on
B+2 basis

In the event of any delay or loss on account of error, negligence or fraud on the
part of an employee of the destination branch in the completion of funds
transfer pursuant to receipt of payment instructions by the destination branch
leading to delayed payment to the beneficiary, the destination branch has to
pay compensation at current RBI LAF Repo Rate plus 2% for the period of
delay.

In the event of delay in return of the funds transfer instructions for any reason
whatsoever, the destination branch has to refund the amount together with
interest at the current RBI LAF Repo Rate plus 2% till the date of refund.

In cases of delayed credits, banks resort to value-dating of the credit in the


customers account to avoid payment of penalty which is not in accordance
with the instruction issued by RBI in this regard

During the NEFT operating hours, originating branches should endeavour to


put through the requests for NEFT transactions received by them, either online
or across the counters, preferably in the next available batch but, in any case,
not exceeding two hours from the time of receipt of the requests.

Banks have to put in place a mechanism which would enable NEFT


participating banks to provide a positive confirmation to the remittance
originator confirming the successful credit of funds to the beneficiarys
account.

Cut of Timings (Outward & Inward return)


Days
Monday to Friday
Saturday

Customer transactions (hourly settlements)


9.00AM, 10.00 AM, 11.00 AM 12 Noon,1.00 PM,
2.00PM, 3.00 PM, 4.00PM, 5.00 PM, 6.00 PM.
7.00PM
9.00 AM, 10.00AM,11.00 AM, 12 Noon,1.00PM

General:

FIRC should not be issued for remittances to NRE/NRO Accounts made


through RTGS/ NEFT/NECS/ECS etc.

Issuance of FIRC to the beneficiaries for inward remittance should be only by


the Bank which has received the proceeds in Foreign Currency i.e. the Bank
which converts the foreign currency into Rupees should only issue the FIRC.

As per the revised guidelines from RBI, in the RTGS/ NEFT/ NECS/ ECS
credit transactions, the responsibility to provide correct information in
the payment instructions, particularly the beneficiary account number
information rests solely with the remitter/ originator.

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Destination branches (branch which is crediting beneficiary accounts) will


rely only on the account number information for the purpose of affording
credit.

NECS/ECS-Credit
o

The destination branches would be held liable to pay interest at the


current RBI LAF Repo Rate plus two percent from the due date of
credit till the date of actual credit for any delayed credit to the
beneficiarys account even if no claim is lodged.

Banks should provide the option to the originating customer to choose


between these NEFT & RTGS at the time of initiation of the funds transfer.

High value reporting : Branches have to report, well in advance, all high
value transaction of Rs.5 Crores and above (both inflow and outflow) which
are routed through NEFT/RTGS/Clearing along with the details to Money
Market Desk at Treasury over telephone.
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Liability Insurance for Retail Loans

Name of the insurance company offering the insurance : Life Insurance


Corporation of India

Types of Retail Loans to be included under Liability Insurance :


1. All Housing Loans (Existing & Future) may be covered under "Liability
Insurance"
2. All other Retail Loans where immovable property is taken as security
under Mortgage may be covered under Liability Insurance

Single premium to cover the entire duration of the loan is payable up front at
the time of disbursement of the loan or thereafter.

The premium can be loaded on to the loan amount and recovered over the
loan duration as a part of the EMI.

All new and existing Retail Loan Borrowers between 18 years to 59 years of
age as on last birthday are eligible for cover.

The first named borrowers life is covered. The premium is to be paid as per
the age of the first named borrower.

Maximum Maturity Age : 65 years

Minimum Period

Minimum loan amount : Rs. 10000/-

Maximum Cover Available : Upto Rs.75 Lakh

Maximum Liability Covered : Sanctioned Limit of the Retail Loan or the


outstanding liability as per repayment schedules whichever is lower.

Lien Period : There is no cover for the first 45 days except in the case of
death due to accident.

Type of Cover : Risk Cover for Outstanding Liability

In the event of the death of the borrower, the insurance company will pay
the liability as per repayment schedule in the loan account and the property
will be released from the mortgage without any burden on the dependants

Mode of Payment of Premium : One Time Single Premium Payment basis


and must be debited to the Retail Loan account

Medical Examination: Medical examination is required depending on the


quantum of loan and the age of the borrower.

: 3 years

age up to 57 years :
Loan upto Rs.20 lakhs : Simple Declaration of Good Health
No medical requirements

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For others

: Medical examination required

To simplify the procedure and quicken the processing time, Liability


insurance has been classified under two heads- (a) Liability Insurance with
simple declaration Scheme A and (b) Liability Insurance with Medical
Requirements (as Scheme B).

Scheme A covers the borrowers (i) Up to 57 years for Loans up to Rs. 20


Lakh

At present it has been proposed to computerise the Scheme A only. The


Simple Declaration of Good Health obtained from the borrowers can be
tagged and kept along with the Loan documents at the Branch itself as it is
required only in case of Claims.

With regard to accounts that fall under Scheme B, the branches may
forward the relevant application duly filled in along with the necessary
documents required to be furnished and the premium by means of a DD
drawn on CCO Chennai, favouring LIC OF INDIA, directly to Retail Banking
and marketing Dept., Central Office.

Vouching for Scheme A is based on system generated lot entry.

Foreclosure of the Loan


: In case of foreclosure of loan, proportionate
premium will be refunded by the insurance company depending on the loan
repayment period elapsed on request by the customer lodged through the
bank.

Commission : 10% of premium collected

srn/04.04.2013

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Loan Secure

Loan Secure is an Insurance Policy. It offers protection for the Bank in the
unfortunate event of borrower being affected by
Named Critical illnesses (Major Medical Illness & Procedures)
Personal accident and Permanent total disability
Loss of job
Fire and allied perils (Dwelling & Contents)
Earthquake and Terrorism (optional covers)

Loan Secure can be extended to;


Housing Loan
Educational Loan
Vehicle loan
Clean Loan
MSME Loan customers
Or any other Multipurpose loans for Individual/Proprietor or Joint
partnership.

The product offers coverage for the period of 3 years which can be renewed
thereafter for same period or for a minimum period of one year.

Two types of coverages are offered; 1. Fixed Sum Insured (Loan sanctioned)
2. Reducing Balance (Loan outstanding)

Age limit: Minimum 20 years & Maximum 50 years

Medical requirements:
Free Medical Limit upto Rs.1 Crore
Pre Insurance Medical checkup for cases Rs.1 Crore and above
cases for pre-existing disease declared

Free Look in period: 15 days from the date of receipt of documents

Lien Period: 90 days from commencement of period of insurance

Suicide Clause is not covered but attempted suicide clause is covered.

NPA accounts can also be covered under this policy

Income Tax Rebate: Premium Paid Under Section - A Critical Illness will be
eligible for Tax Rebate u/s 80 D Of Income Tax Act,1969

Banks commission: 15 % of the net premium


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IOB HEALTH CARE PLUS

A product for total family care including parents

A Health Insurance Scheme that provides for hospitalization expense in case


of accidents, sudden illness and any surgery required in respect of any
disease.

This is a floater policy for our individual SB, CD and NRI customers and
their immediate family members, in the age group of 3 months to 65
yrs

sum insured ranges from Rs. 50,000 to Rs. 5 lacs

Accidental death can also be covered for an additional premium.

Upper age limit for entry is 65 years (subject to renewal cover available up
to 80 years).

As regards children, the cover is available for male child up to 21 years and
for female child upper age limit is up to 25 years or till their marriage
whichever is earlier.

Claims on account of pre-existing diseases will be covered only after 3 claim


free years

Ambulance charges up to Rs. 1000 is reimbursable per policy period

Cost of health check up allowed @ 1% of the sum assured after 3


continuous claim free years

In the case of hospitalization of children below 18 years, an amount of Rs.


1000 as out of pocket expenses to any of the parent is payable

Maternity benefit and baby care expenses are also reimbursed up to 5% of


the sum insured

Treatment of NRIs in Indian Hospitals is allowed

Income tax benefit is available U/S 80D for the premium paid

Cashless access to networked hospitals is available through Third Party


Administrator. Customers belonging to the states of Tamil Nadu,
Pondicherry, Andhra Pradesh, Karnataka and Kerala will be serviced by M/s
TTK Health Care TPA Pvt. Ltd. and rest of India other than these States
will be serviced by E-Meditek (TPA) Services Ltd.

In case of death in hospital, funeral expenses are reimbursed up to Rs. 1000


over and above the sum insured subject to original illness/accident claim
admitted under this Policy

Does not cover domiciliary hospitalization expenses

for the first 30 days of enrolling the policy, there is no cover except in the
case of death due to accident

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No Medical Examination required

Premium rates will be calculated based on the age of the Prime member
(applicant). Different age-bands viz., 0-25, 26-35, 36-45, 46-55, 56-65, 6670 and 71-80 are being introduced. For fixing the Premium, the completed
age will be taken into consideration.

Co-Pay Concept: The concept of co-pay is introduced in the Scheme with


regard to claim by members who are above 55 years. 20% of co-payment is
applicable on each and every claim of Insured above 55 years of age.

USGI has extended a grace period of 15 days from the due date for
renewal of the policy. Now branches can even renew Health Care Plus polices
within 15 days from the date of expiry of the same

srn/01.01.2013

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Sale of Gold coins

Retail sale of Gold was launched in our Bank in April 2006.

We are at present selling gold coins to the general public as well as our staff
members including retired staff.

Features of gold coin being sold by us;


Denominations

: wt. 2, 4, 8,10, 20, 50 and 100 grams.

Source

: imported from Switzerland with international


assaying certificate

Fineness

: 999.9 %

Price

: At rate announced by our central office on daily


basis and available in intranet & internet.
a. Rs. 25 per gram on the card rate
b. for purchase of 4 and 8 gram coins only

Concessions to staff
members

c. The maximum amount, a staff can purchase from all


the branches of our bank in an accounting year should
not exceed total value of Rs.100,000 and a declaration
to this effect should be obtained from the staff
member.
d. All payments towards purchase should be routed
through the respective staff members accounts.

Concession to retired staff members:


a. A concession of Rs. 25 per gram on the card rate
b. only 4 and 8 grams are permitted to be purchased
c. The maximum amount a retired staff member can purchase from all the
branches of our Bank in an accounting year should not exceed the total
value of Rs. 1,00,000/- (Rupees one lac only) and a declaration to this effect
should be obtained from the concerned retired staff member
d. All payments towards purchase of Gold Coins should be routed through the
respective retired staff members account
e. Gold purchased from the Bank by the retired staff members are only
for their personal use and not for resale

Branches should accept only DD/cheques/RTGS/NEFT towards sale of gold


coins.

Ensure compliance of KYC norms including source of money for purchase


applicable for both customers and non-customers for each sale.
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A. General

Nomination

Section 45ZA to 45ZF of the Banking Regulations Act. permit banks to accept
nomination in respect of Deposit accounts, Safe custody of articles and Safe
Deposit locker facility.

Nomination facility is available only to individuals.

Nomination facility is not available for accounts of representative capacity.

Variation and cancellation may be made any time during the currency of
deposit.

Signature of the account holders in forms for making nominations, for


cancellation of nominations and for variation of nominations need not be
attested by witnesses. Only thumb impression of the account holder is
required to be attested by two witnesses.

Nomination can be changed any number of times by the depositor.

Banks should acknowledge the receipt of the duly completed form of


nomination, cancellation and /or variation of the nomination. Such
acknowledgement should be given to all the customers irrespective of whether
the same is demanded by the customers.

When a bank account holder has availed himself of nomination facility, the
same may be indicated on the passbook with the legend "Nomination
Registered". This may be done in the case of term deposit receipts also.

Any individual can be nominated to receive the money.

Claim of the nominee has to be settled irrespective of the claim from the legal
heirs unless restricted by court through a specific order.

Claim is settled in favour of nominee by closing the account and making the
payment against the nominee's discharge on stamped receipt.

B. Deposit Accounts

Nomination is accepted for all types of deposits.

The nomination forms (DA1, DA2 and DA3) have been prescribed in the
Nomination Rules.

Nomination facility is available for joint deposit accounts also. Branches to


ensure that customers opening all deposit accounts including joint accounts
with or without Either or Survivor mandate are offered the nomination
facility.

Only one individual in his / her personal capacity can be made as a nominee in
respect of particular deposit account.

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In case of proprietary concern branches should extend nomination facility as


the deposit held by a proprietary concern is construed as the one standing in
the name of the individual i.e .Sole proprietor.

No nomination facility is available for Minor's Special Fixed Deposit Account


and Minor's Special S.B.a/c.

Where the nominee is a minor, it shall be lawful for the depositor making the
nomination to appoint any person to receive the amount of the deposit in the
event of death of the depositor/s during the minority of the nominee.

Banks, in addition to the legend Nomination Registered, they should also


indicate the name of the Nominee in the Pass Books / Statement of Accounts /
FDRs, in case the customer is agreeable to the same.

In the case of a joint deposit account the nominee's right arises only after the
death of all the depositors.

C. Clarification on Nomination for Deposits created by Sweep in facility

No separate nomination need be obtained for the deposits created out of autosweep facility since the SB account from which auto sweep is made, forms the
base account for which nomination is already available.

However when the depositor wants to withdraw from the special scheme, the
existing term deposit created by auto-Sweep will be allowed to be continued as
normal deposits if the depositor so desires and at such time separate term
deposit opening form with nomination should be obtained.

D. Safe Custody

No nomination in respect of person jointly depositing articles for safe custody.

All other formalities are same as those applicable for deposit accounts.

E. Safe Deposit Locker

Nomination facility available both for individual and joint hirers.

In case of joint hirers, branch may accept more than one nominee upto the
limit of the number of joint hirers.

If the sole locker hirer nominates a person, banks should give to such nominee
access of the locker and liberty to remove the contents of the locker in the event
of the death of the sole locker hirer.

In case the locker was hired jointly with the instructions to operate it under
joint signatures, and the locker hirer(s) nominates person(s), in the event of
death of any of the locker hirers, the bank should give access of the locker and
the liberty to remove the contents jointly to the survivor(s) and the
nominee(s).

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In case the locker was hired jointly with survivorship clause and the hirers
instructed that the access of the locker should be given over to "either or
survivor", "anyone or survivor" or "former or survivor" or according to any other
survivorship clause, banks should follow the mandate in the event of the death
of one or more of the locker-hirers.

After removal of the contents of the locker as aforesaid, preceded by an


inventory, the nominee and surviving hirer(s) may still keep the entire contents
with the same bank, if they so desire, by entering into a fresh contract of hiring
a locker.

F. Preparing Inventory

Banks should prepare an inventory before returning articles left in safe custody
/ before permitting removal of the contents of a safe deposit locker. The
inventory shall be in the appropriate Forms set out for the purpose.

Banks are not required to open sealed/closed packets left with them for safe
custody or found in locker while releasing them to the nominee(s) and surviving
locker hirers / depositor of safe custody article.

Further, in case the nominee(s) / survivor(s) / legal heir(s) wishes to continue


with the locker, banks may enter into a fresh contract with nominee(s) /
survivor(s) / legal heir(s) and also adhere to KYC norms in respect of the
nominee(s) / legal heir(s).

srn/04.04.2013

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Foreign Contribution (Regulation) Act, 2010


1. Government of India, Ministry of Home Affairs has brought into force the
Foreign Contribution (Regulation) Act, 2010 with effect from May 1, 2011.
2. With the coming into force of the Act, Foreign Contribution (Regulation) Act,
1976 stands repealed.
3. As the Preamble suggests, the Foreign Contribution (Regulation) Act, 2010,
is intended to consolidate the law regulating the acceptance and utilisation
of foreign contribution or foreign hospitality by certain individuals or
associations or companies and to prohibit acceptance and utilisation of
foreign contribution or foreign hospitality for any activities detrimental to the
national interest and for matters connected therewith.
4. The Act extends to the whole of India, to its citizens outside India and also to
associate branches or subsidiaries outside India, of companies or body
corporate, registered or incorporated in India.
5. The following are the persons prohibited from accepting foreign contribution:

Candidate for election;

Correspondent, columnist, cartoonist, editor, owner, printer or publisher


of a registered newspaper;

Judge, government servant or employee of any entity controlled or owned


by the Government;

Member of any Legislature;

Political party or office bearers thereof;

Organisations of a political nature as may be specified;

Associations or companies engaged in the production or broadcast of


audio news or audiovisual news or current affairs programmes through
any electronic mode or form or any other mode of mass communication;

Correspondent or columnist, cartoonist, editor, owner of the association


or company.

6. Registration for the acceptance of foreign contribution

Section 11 of the Act mandates that except as otherwise provided in the


Act, no person having a definite cultural, economic, educational, religious
or social program shall accept foreign contribution, unless such person
obtains a certificate of registration from the Central Government.

In case a person falling in the above category is not registered with the
Central Government, it can accept foreign contribution only after
obtaining prior permission of the Central Government.

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The Central Government is also authorised to suspend or cancel the


registration so granted.

Every person who has been granted a certificate under Section 12 shall
have such certificate renewed within six months before the expiry of the
period of the certificate.

7. Associations which were granted certificates of registration or prior


permission under Section 6 of the Foreign Contribution (Regulation) Act
1976, will continue to be eligible to receive foreign contribution under the
Act and such registration shall be valid for a period of five years from the
date on which the Act came into force.
8. The Act imposes a prohibition, on persons registered and granted certificate
or has obtained prior permission under the Act, from transferring such
contribution to any other person, unless such other person is also registered
and had been granted a certificate or obtained the prior permission under
the Act
9. Foreign contribution to be received through a scheduled bank

Section of 17 is of special importance to bankers. It states that every


person who has been granted a certificate or given prior permission
under Section 12 shall receive foreign contribution in a single account
only through such one of the branches of a bank as he may specify in his
application for grant of certificate.

Such person can open one or more accounts in one or more banks for
utilising the foreign contribution received by him.

However, no funds other than foreign contribution shall be received or


deposited in such account or accounts.

The Act makes it mandatory for every bank or authorised


foreign exchange to report to such specified authority (a) the
amount of foreign remittance (b) the source and manner in
foreign remittance was received and (c) other particulars, in
and manner as may be prescribed.

person in
prescribed
which the
such form

10. The amount of foreign contribution lying, unutilised in the exclusive foreign
contribution bank account of a person whose certificate of registration has
been cancelled shall vest with the banking authority concerned till the
Central Government issues further directions is the matter.
11. In case a person whose certificate of registration has been cancelled
transfers/has transferred the foreign contribution to any other person, the
above condition would apply to the person to whom the fund has been
transferred
12. Every bank has to send a report to the Central Government (through our
Central Office) within 30 days of any transaction in respect of receipt of
foreign contribution by any person who is required to obtain a certificate of

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registration or prior permission under the Act, but who was not granted
such certificate or prior permission as on the date of receipt of such
remittance.
13. It has been made a duty of the bank concerned to send a report to the
Central Government within 30 days from the date of such last transaction
in respect of receipt of any foreign contribution in excess of one crore
rupees or equivalent thereto in a single transaction or in transactions within
a duration of thirty days, by any person, whether registered or not under the
Act.
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Public Provident Fund


Features
Only one account can be opened in the name of a person.

Twelve deposits can be made in a financial year.

Minimum deposits in a year is Rs.500 and maximum is Rs. 1,00,000/(w.e.f 01.12.2011).

Loan is admissible from the third year. Loan amount is limited to 25 % of at


the end of two years preceding.

The rate of interest charged on the loan taken by the subscriber of a PPF
account on or after 01.12.2011 shall be 2% per annum.

Fresh loan is not allowed when previous loan or interest thereof is


outstanding.

Withdrawal is permissible from seventh financial year from the year of


opening, limited to one in a financial year.

Amount of withdrawal is limited to 50 % of balance at the end of the fourth


preceding year less amount of outstanding loan or 50% of balance at the
end of immediate preceding year of withdrawal less amount of outstanding
loan, if any whichever is less.

A subscriber can close the account in the 16th financial year. The account
can also be continued with or without subscription, for further blocks of 5
years.

Deposits are qualified for Income Tax rebate under section 80C of Income
Tax Act.

Deposits completely exempted from wealth tax. Interest is completely tax


free.

Bank earns an income of Rs.45/ per receipt transaction and for payment
Rs.90/lakh (turnover basis).

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IOBS INTERNATIONAL CREDIT CARD SCHEME

1. Our credit card is a global card valid not only in India and Nepal but also
throughout the world
2. Our Banks Vendor for Credit cards : M/s Yalamanchili Consultancy
Services (P) Ltd (YCS)
3. Type of Credit Cards:

Our credit cards are affiliated to VISA International.

Classic Cards :The cards issued with the limit slabs of Rs.10000/-,
Rs.25000/-, and Rs.50000/-

Gold Cards : The cards issued with the limits of Rs.60000/- and above
and up to Rs.500000/- ( maximum credit limit)

The limits are to be fixed on the basis of income as follows


Rs.5000 - less than Rs.8000

Rs. 10000

Rs. 8000 -less than Rs.20000

Rs. 25000

Rs. 20000- less than Rs. 40000

Rs. 50000

Rs.40000 and above

Rs.100000

4. Staff eligibility: All confirmed employees of our Bank irrespective of the


cadre with a minimum take home pay of Rs.4000/- are eligible for credit
cards
5. Billing and Payment Options
Each card would be billed once in a month. The details of the billing cycle
are given below.
Billing cycle: 21st of a month to 20th of succeeding month
Billing date: 20th of every month
Pay by date: 10th of subsequent month
6. Interest Rate
For Staff: Linked to BPLR.
For Customers : 24.0% p.a. (Annualized, at present)
(Interest applicable on Outstanding Balance only.)
7. CEILINGS IN CARD TRANSACTIONS

Cash withdrawal - 40% of Credit Limit

Purchase at Jewellery Shops - 50% of Credit Limit

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Per day Ceiling Cash through ATM Gold cards /Classic cards
Rs.25000/-Rs.15000/

Per day cap on all transactions: 50% of credit limit

8. Baggage Insurance: The baggage of IOB-VISA cardholders will be covered


for a maximum sum of Rs.25,000/- while on travel. The coverage is
operative whilst on inland travel outside the city/town of domicile. The
maximum liability covered per cardholder during a policy year is
Rs.25000/
9. Purchase Protection :Any item purchased through IOB-VISA is insured
against the risk of fire, riots, strike, malicious damage, terrorism and theft
during transit (from the place of purchase to the residence) and whilst
kept/situated at the premises of the cardholder, subsequently totally for a
period of 30 days from the date of purchase for a maximum sum of
Rs.25,000/- per year.
10. Insurance:

For Gold Cards:


Personal Accident Death due to
Air crash
Road / Rail

i. Self

Rs.10.00 lac

ii. Spouse

Rs. 2.00 lac

i. Self

Rs. 2.00 lac

ii. Spouse

Rs. 1.00 lac

For Classic Cards :


Personal Accident Death due to
Air crash
Road / Rail

i. Self

Rs.4.00 lac

ii. Spouse

Rs.2.00 lac

i. Self

Rs.2.00 lac

ii. Spouse
Rs.1.00 lac
11. Compensation In case of erroneous debits arise out of fraudulent or other
transactions;

The Bank would compensate the customer forthwith without demur,


where the bank is at fault.

The Bank would compensate the customer even when neither the bank
nor the customer is at fault and the fault lies somewhere in the system.

Where it is established that the bank had issued and activated the
credit card without the written consent of the recipient, the bank would
not only reverse the charge immediately but also pay a penalty without
demur to the recipient amount to twice the value of charges reversed.

srn/04.04.2012

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Debit Card

1.

Our Bank issues VISA Debit Cards with BIN 422132.

2.

Our bank issues the following 4 types of cards with


VISA Debit Card - Classic
VISA Debit Card - Gold
VISA Debit Card Platinum
VISA Debit Card - SIGNATURE

3.

Eligible customers for using debit cards: Cards can be issued only in the
name of Individuals. The following account holders are eligible for issuance
of Debit Card.

SB Individuals Single, A or S, Minor accounts operated by Guardian.

Visually impaired customers.

CD Individuals Single, A or S.

CD Proprietary Firms (Card will be issued in the name of the


Proprietor).

CC- Individuals single, A or S (the customers who enjoy cash credit


limits against deposits and other readily realizable securities (except
shares) for personal purpose are eligible for Debit Cards.

4.

When a customer has forgotten his PIN and has keyed wrong PIN in any
ATM for more than 5 times his card will be blocked temporarily.

5.

The cash bins in our ATMs are configured for 50, 100 & 500
denominations notes.

6.

Withdrawal of cash from the ATM owned by the account holding bank is free
of charges to the customer.

7.

Withdrawal of cash from other Banks ATM is also possible. The charges are
given below:

For SB customers, five transactions per month is permitted free of


charges.

The number of free transactions permitted per month at other bank


ATMs to Savings Bank account holders shall be inclusive of all types of
transactions, financial and non-financial.

For SB Customers, maximum cash withdrawal would be Rs.10000 per


transaction.

For SB customers, transactions exceeding 5 times in a month attract levy


of service charges of Rs. 20/- per transaction. These transactions shall be
inclusive of all types of transactions, financial or non-financial.

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In case of Non-SB customers, there will not be any free cash withdrawals
and cash withdrawals attract service charges of Rs.20/- per transaction.

8.

The maximum number of currency notes our Banks ATM can dispense
through the dispensing slit: 40.

9.

FAST CASH: The facility to withdraw cash, in pre-defined slabs from 500 to
50000.

In this option the transaction will be completed before the disbursement


of cash and card will be ejected, so that the customer can leave
immediately after collecting the card and cash,

10. Further, Cards which have not been used for more than 6 months are
automatically blocked with Suspended status.
11. Accounts with continuous zero balance for 30 days gets automatically
blocked.
12. Insurance for Cash in ATM. The cash inside the ATM is covered under the
master policy taken by Central Office. The policy covers ATM cash up to
RS.20 lacs.
13. ATM Maintenance, Cash Management, Consumables Management and Cash
Reconciliation are outsourced(for outsourced model): TCBIL, as outsourcing
agent.
14. M/s Scientific Security Management Services Ltd., an agent of TCBIL is
the Cash Replenishment Agency (CRA).
15. In addition to the Outsourced Model, Bank is now installing ATMs through
M/s AGS Transact Technologies Ltd. under Banks Owned Model.
16. ATM branch is permitted to hold the captured card for two working days
(excluding the day of capture) only.
17. It is mandatory for the banks to reimburse the customers; the amount
wrongfully debited on account of failed ATM transactions, within a
maximum period of 7 working days from the date of receipt of the customer
complaint.
18. For any failure to re-credit the customers account within 7 working days
from the date of receipt of the complaint, the bank shall pay compensation
of Rs.100/-, per day, to the aggrieved customer, by the issuing bank.
19. Any Customer is entitled to receive such compensation for delay, only if a
claim is lodged with the issuing bank within 30 days of the date of the
transaction.
20. The complaints submitted by the customers are lodged in the online
complaint register on the same day,
21. This compensation shall be credited to the customers account automatically
without any claim from the customer, on the same day when the bank
affords the credit for the failed ATM transaction.

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22. The issuing bank is entitled to claim such compensation paid to the
customer from the acquirer bank, if the delay is attributed to the latter. By
the same logic the ATM network operators shall compensate the banks for
any delay on their part.
23. All disputes regarding ATM failed transactions shall be settled by the issuing
bank and the acquiring bank through the ATM System Provider only.
24. Other Charges
The following debit card holders are exempted from the payment of the
above Annual Maintenance Fee.

SB account holders under Special Schemes, like, SB-SILVER and SBGOLD category.

SB account holders under SB-Students Scheme.

Staff Members

Annual fee of Rs.100 + service tax is collected from the Debit Card
holders only from 2nd year onwards. No fee is collected from the card
holder till one year from the date of generation of the Debit card
collect Rs.100/= plus applicable Service Tax for re-issue of cards if
lost/stolen/damaged and
Rs.20/= plus applicable Service Tax for re-issue of PINs to customers
25. Renewal of cards
Our Bank is presently issuing Debit cards with 10 years validity.
But for Student cards validity period is 5 years.
Only active Cards i.e. cards which have been used atleast once during the
past 6 months are renewed automatically.
26. Add on cards
Add on card is an additional facility provided to SB account holders
(except students accounts) that enables their family members to avail
Debit card facility for the same account, without becoming a joint holder
for that account.
Add on cards can be issued even for Joint accounts with E or S /A or
S operations, provided all the account holders sign the application.
The number of Add on cards that can be issued to an account will be
restricted to one.
The Add on card holder will be treated as a Mandate holder.
Add on card holder must be KYC compliant and branches should
obtain KYC documents
The name of the Add on cardholder cannot be added in the same
account.

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All the existing terms and conditions for normal Debit cards will apply for
Add on cards also.
only Personalised cards will be issued
Daily Cash withdrawal limit will be fixed separately for Add on cards.
Add on card holders will also be allowed to make 5 free transactions in
other Bank ATMs in a calendar month, which is similar to regular card
holders.
If the primary card is hot listed, then the add-on cards also will get hot
listed automatically.
Add on cards will be issued free of charges like normal debit cards.
However, Annual fee will be levied for usage of add on card from second
year onwards.
27. While Label ATMs:

28.

ATMs set up, owned and operated by Non-bank entities are known as
White Label ATMs" (WLAs).

This requires authorisation from RBI under the Payment and Settlement
Systems (PSS) Act 2007.

These Non-bank entities must have net worth of at least Rs 100 crore as
per the last audited balance sheet.

These entities provide the banking services to the customers of banks in


India, based on the cards (debit/credit/prepaid) issued by banks.

The WLAO's role would be confined to acquisition of transactions of all


banks' customers and hence they would need to establish technical
connectivity with the existing authorised shared ATM Network Operators
/ Card Payment Network Operators.

Merchant Discount Rates (MDR) for transactions undertaken with debit


cards as under: (RBI cir. Dt.28.06.2012)
Not exceeding 0.75% of the transaction amount for value upto Rs
2000/-;
Not exceeding 1% for transaction amount for value above Rs 2000/-.
*****************

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Debit Card Schemes

Features

VISA DEBIT CARD - CLASSIC

Eligibility

All SB accounts,
CD/CC accounts in the name of
individuals or Proprietary concerns

Daily Cash
withdrawal
limit (Rs,)
Daily limit (Rs)
for usage in
Merchant
Establishments
(PoS)
Daily limit
(Rs.) for usage
in Internet
(E-com)
Charges for
issuance of
Card (Rs.)
Annual
Maintenance
fee

VISA DEBIT CARD - GOLD


All SB accounts and CD/CC
accounts in the name of
Individuals or Proprietary
concerns, with an average
balance of Rs.50,000/- per
quarter in their accounts.

VISA DEBIT CARD - PLATINUM


All SB accounts and CD/CC
accounts in the name of
Individuals or Proprietary
concerns, with an average
balance of Rs.75,000/- per
quarter in their accounts.

For new accounts, the card can


be issued at the discretion of
the Regional Heads and the
review of the average balance
can be done once in a quarter

For new accounts, the card can


be issued at the discretion of the
Regional Heads and the review
of the average balance can be
done once in a quarter

20,000

30,000

50,000

50,000

75,000

2,00,000

50,000

75,000

2,00,000

NIL

150

200

Rs.100/- plus service tax from


the second year onwards

Rs.100/- plus service tax from


the second year onwards

Rs.150/- plus service tax from


the second year onwards

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Features

Eligibility

VISA DEBIT CARD SIGNATURE


All SB accounts and CD/CC accounts in
the name of Individuals or Proprietory
concerns, with an average balance of
Rs.1 lakh per quarter in their accounts.
For new accounts, the card can be issued
at the discretion of the Regional Heads
and the review of the average balance can
be done once in a quarter.

Daily Cash
withdrawal
limit (Rs,)
Daily limit (Rs)
for usage in
Merchant
Establishments
(PoS)
Daily limit
(Rs.) for usage
in Internet
(E-com)
Charges for
issuance of
Card (Rs.)
Annual
Maintenance
fee (Rs.)
Remarks

121
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50,000

General

All the Debit cards issued by our Bank can be used abroad
besides usage in our Country.

All the Four type of cards can be issued as Personalised


cards.

However, Insta cards can be issued under the category


Classic Cards only.

For using the cards in internet for e_Commerce


transaction, all the type of card holders should register for
Verify by Visa (vbv) password.

2,70,000

Eligibility for Staff members:

All Staff members will be eligible for Gold cards free of


cost, with no renewal charges. Staff members can continue
to avail this facility subsequent to their retirement from
our Bank.

All Executives will be eligible for Platinum Cards and they


can continue to avail the same even after their
retirement.

All General Managers/EDs/CMD will be eligible for


Signature cards and can continue to utilise this facility
subsequent to their retirement

2,70,000

300

200
High spending power with a no pre-set
spending limit or a minimum of
US$6000 spending limit.
US$ 1,00,000 personal travel accident
insurance (or local currency equivalent).

srn/10.02.2013

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Tax Deduction at Source

1. The following are some basic rules pertaining to deduction of taxes at


source:

Tax is to be generally deducted at the time of credit or payment, whichever is


earlier.

Tax is deductible if the payment / credit exceeds or is likely to exceed the


threshold limits specified in various sections.

Tax has to be deducted as per rates specified.

Tax need not be deducted or can be deducted at lower rates based on


certificate, if any, obtained by the deductees from their jurisdictional
Assessing Officer, well in time.

Tax is not deductible under Section 193,194A if the recipient submits a


declaration in Form No 15G / 15H under the provisions of Section 197A,
before payment or credit to him.

These declarations are not valid if PAN has not been furnished.

Tax under Section 195 has to be deducted as per rates in force or the rates
specified in the Double Taxation Avoidance Agreements (DTAA) entered
into by the Central Government, whichever is lower.

For NRO Accounts, both PAN and Country Details to be furnished for
claiming DTAA Tax rate. Otherwise, prevailing tax rate of 30.90% will be
deducted.

2. Threshold limits of payments for TDS purposes with effect from July 1,
2010 are given below:
Section

Nature of payment

194 A

Interest Payment

Threshold
limit (Rs)
10,000

Payment to Contractors
Consideration for single contract

30,000

194 C

194 H
194 I
194 J
195

Aggregate Consideration for all


contracts during the year
Commission or Brokerage
Rent of land building or furniture
Rent of Plant, machinery or equipment
Fees for professional or technical
services
If the recipient is a non-resident noncorporate person and payment/credit
may or may not exceed Rs.1 Crore

TDS
rate(%)
10
1

75000

5,000

10

180000

10
2

30000

10
30.90

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If the recipient is a non-domestic


company and aggregate payment or
credit does not exceed ` 1 Crore

41.20

If the recipient is a non-domestic


company and aggregate payment or
credit exceeds ` 1 Crore

42.024

3. Penalty for Failure to deduct tax : Simple Interest is payable @ 1% ( per month
or part) from the tax deductible date till date of actual deduction
4. Penalty for failure to deposit TDS: Simple Interest is payable @ 1.5% (per month
or part) for the amount from date of deduction till date of payment.

Customers have an obligation to furnish their PAN in every document


pertaining to every transaction, which falls under the list of specified
transaction or else have to furnish Form No 60.

All the Forms (Form No 60) so received have to be forwarded to the


jurisdictional CIT (CIB), in two instalments covering the periods April 1 to
September 30 and October 1 to March 31 of every year, on or before October
31 and April 30 respectively.

Please note that where PAN is not furnished by the deductee, the tax has to
be deducted at the applicable rates or @ 20%, whichever is higher.
Tax deducted in respect of income or amount credited or paid in the
month of March shall be paid to the credit of Central Government on or
before 30th day of April
Tax deducted in other months shall be paid to the credit of Central
Government on or before the seventh day from the end of the month
in which the tax has been deducted.
Tax deducted shall be remitted only electronically by way of internet
banking facility of any authorised Bank.

5. Statement of deduction of tax Submission of Quarterly E TDS Returns


Quarterly Statement of Tax deduction shall be electronically submitted as
follows :a. Quarterly TDS Statement for Salaries in Form No 24 Q
b. Qtly TDS Statement for other payments to Residents in Form No 26 Q
c. Qtly TDS Statement for payments to Non - Residents in Form No 27 Q
The quarterly statements shall be delivered to the Director General of
Income-tax (Systems) or authorised persons i.e. TIN facilitators.
The due dates for furnishing the above returns electronically to the Director
General of Income tax ( Systems) or any other authorised person are :-

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S No Quarter ending date

Due date

30th June

15th July

30th September

15th October

31st December

15th January

31st March

15th May

The certificate for deduction at source shall be in Form No 16 ( for Salaries ) and
in Form No 16A ( Payments other than salaries)
TDS certificate in Form No.16 is to be issued annually whereas TDS certificate
in Form No.16A is to be issued quarterly.
TDS certificate in Form No.16A shall be compulsorily generated through TIN
central system and issued.
Form No 16A shall have to be issued quarterly, within 15 days from the due
date for submitting quarterly E TDS returns.
Duplicate TDS certificates can be issued if the original certificate is lost by the
deductee and a request is made for issue of duplicate.

For defaults in furnishing statements fee @ Rs 200/- per day till return is filed,
to be deposited before filing of such TDS return. The maximum amount of fees
leviable is up to the TDS amount.
Penalty for failure to furnish TDS statements within the time prescribed or
furnishing incorrect information in the TDS statements submitted shall be a
sum which shall not be less than Rs 10000/- and may extend to Rs 100000/-.

6. Tax Deducted at Source on Interest on Time Deposits (Sec. 194 A)

Income tax should be deducted at source as aforesaid only if the interest paid or
credited to each depositor exceeds Rs.10,000 (per branch) during the Financial
Year.

Whenever any account in Term Deposits, SCSS or SB/CDCC-Liqui is closed, all


the accounts with the same customer-id will be pooled, projected-interest from
all those accounts for the related financial year will be aggregated, and if it
exceeds the threshold limit, then applicable TDS will be deducted for the
amount of interest paid. The same principle will be applied while applying the
periodical interest made to the deposits on monthly / quarterly / half yearly
basis.

If the interest on outstanding term deposits is insufficient to meet the TDS


liability, the balance TDS will be deducted from the principal amount of the
outstanding term deposits

Interest on Savings Bank and Recurring Deposits should not be considered


while determining whether interest exceeds Rs.10,000 or not.

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In the case of a Deposit in Joint names, the applicability of the provision of


Sec.194.A with reference to the limit of Rs.10,000 should be considered only in
the hands of the first holder.

Interest on minor deposits should be clubbed with interest on deposits of


Parents/Guardian

For NRIs, only NRO deposits are subject to tax deduction at source. Rates for
deduction of tax from interest paid on such NRO deposits are subjected to
DTAA.

Tax need not be deducted at source from interest paid on any other deposits
held by NRIs.

Interest paid or credited to the following depositors is not subject to tax


deduction.
a. Any Banking Company to which Banking Regulation Act 1949 applies or a
Co-operative Society engaged in carrying on the business of banking
b. Any Financial corporation established by or under a Central, State or
Provincial Act, e.g. the Industrial Finance Corporation and the State
Financial Corporation
c. Life Insurance Corporation of India
d. Unit Trust of India
e. Any Company, or a Co-operative Society carrying on the business of
Insurance

wherever the depositors produce a valid Certificate issued by the Income Tax
Officer (in Form 15 AA) authorising the bank not to deduct tax at source in
respect of the person named in the Certificate, tax need not be deducted at
source in such cases

if a person (not being a company or firm) furnishes a declaration in duplicate (in


Form 15G) & senior citizens (in form 15H) to the effect that the tax on his
estimated total income of the previous year shall be NIL, branches need not
deduct tax at source.

It is mandatory for all the deductors to furnish particulars of amount paid or


credited on which tax was not deducted in view of the furnishing of declaration
in 15G/15H forms under sub-section (1) or sub-section (1A) or sub-section (IC)
of section 197A of Income Tax Act , 1961 by the payee.

7. PAN has been made mandatory for the following transactions;

Payment in cash exceeding Rs 25,000 at any one time to a tour operator or to


an authorised person as defined in clause( c ) of Section 2 of the Foreign
Exchange Management Act , 1999 in connection with tour to any foreign
country

Making application to Banking Company to which the Banking Regulation


Act, 1949 apply or to any other company, for issue of debit card.

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8. TDS on the deposits made as directed by court.

Deposited in the bank directly or through the court.

The bank shall in accordance with the provisions of the Act, deduct tax at
source on the interest accruing on the above mentioned deposit(s) as per
existing procedure and at the rates in force.

The certificate of deduction of tax shall be issued by the bank in the name of
the depositor.

If more than one person has been directed to deposit any specified amount,
the amount of TDS shall be corresponding to each such depositor for the
portion of interest accrued in its respective share in the total amount
deposited and TDS certificates shall be accordingly issued by the bank.

At the time of making deposit of the amount ordered by the court, the
depositor(s) shall submit a prescribed declaration with the court for record
purpose and to facilitate the administration of TDS.

The Registrar/Prothonotary and Senior Master or any person authorized by


the court will pass the information furnished therein to the bank concerned
for TDS properly in the name of the depositor(s) in accordance with the
provisions of the Act.

The above procedure shall not apply to:


Any deposit in the bank held or dealt by the court or any other person
appointed by the court in the capacity of being an administrator or
receiver or any authority of similar nature; or
any deposit which has not been made by any specific depositor but has
arisen due to attachment made by the Court; or
The cases of "representative assessee" within the meaning of section 160
of the Act.

srn/11.04.2013

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KYC/AML
(Some points related to Foreign Exchange Transactions)

A bank shall refuse to enter into a correspondent banking relationship with


shell bank.

Shell Bank is a bank which is incorporated in a country where it has no


physical presence and is unaffiliated to any regular financial group.

No shell bank (Sh. Bank) is permitted to operate in India.

Wire Transfers

Wire transfer is a transaction carried out on behalf of an originator person


(both natural and legal) through a bank by electronic means with a view to
making an amount of money available to a beneficiary person at a bank.

The originator and the beneficiary may be the same person.

The originator is the account holder, or where there is no account, the person
(natural or legal) that places the order with the bank to perform the wire
transfer.

All cross-border wire transfers shall be accompanied by accurate and


meaningful originator information.

Cross-border transfer means any wire transfer where the originator and the
beneficiary bank or financial institution are located in different countries.
It may include any chain of wire transfers that has at least one cross-border
element.

Domestic wire transfer means any wire transfer where the originator and
receiver are located in the same country.

Information accompanying all domestic wire transfers of Rs.50000/- and


above must include complete originator information.

In case of non-cooperation from the customer, efforts shall be made to


establish his identity and Suspicious Transaction Report (STR) shall be
made to FIU-IND.

In Interbank transfers and settlements both the originator and beneficiary


are banks or financial institutions. In these transactions there are
ordering Bank and beneficiary bank. In some cases, intermediary bank
may also be involved. In interbank transfers and settlements, the wire
transfer requirements are exempted.

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Money Transfer Service Scheme (MTSS)


Money Transfer Service Scheme (MTSS) is a quick and easy way of
transferring personal remittances from abroad to beneficiaries in India.
Only personal remittances such as remittances towards family
maintenance and remittances favouring foreign tourists visiting India are
permissible
Amounts up to Rs.50,000/- may be paid in cash. Any amount exceeding this
limit shall be paid only by means of cheque/ DD/ P.O. etc. or credited
directly to the beneficiary's bank account.
However, in exceptional circumstances, where the beneficiary is a foreign
tourist, higher amounts may be disbursed in cash.
Requests for payment in cash in Indian Rupees to resident customers
towards purchase of foreign currency notes and/ or Travellers' Cheques from
them may be acceded to the extent of only US $ 1000 or its equivalent per
transaction.
Requests for payment in cash by foreign visitors/ Non-Resident Indians
(walk in customers) may be acceded as detailed below:
Location/Category of Branches

Amount per
tourist/travellor

1.

AD branches in Metro centres (Mumbai,


Chennai,Delhi, Kolkata, Bangalore, Hyderabad
and Ahmedabad)

$ 1000

2.

AD and NAD branches at Mahabalipuram, Agra,


Jaipur, Udaipur, Panjim, Puri, Shimla, Rishikesh

$ 1000

3.

All other AD branches

4.

All other NAD branches

Sl.No

$ 500
NIL

All purchases made by a person within one month may be treated as single
transaction for the above purpose and also for reporting purposes.

A customer ID has to be created for the first transaction of the calendar month
and the same ID will be referred for the subsequent transactions.

In all other cases, Branches should make payment by way of 'Account Payee'
cheque/demand draft only

In all cases of sale of foreign exchange, irrespective of the amount involved, for
identification purpose the passport of the customer should be insisted upon

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and sale of foreign exchange should be made only on personal application and
after verification of the identification document.

A copy of the identification document should be retained by the Branch.

Payment in excess of Rs.50,000/- towards sale of foreign exchange should be


received only by crossed cheque drawn on the bank account of the applicant's
firm/company sponsoring the visit of the applicant/ Banker's cheque/ Pay
Order/ Demand Draft. Such payment can also be received through debit cards/
credit cards/prepaid cards provided (a) KYC/AML guidelines are complied with.

Banks and financial institutions are required to verify the identity of the
customers for all international money transfer operations.

Maintenance of record

Bank shall maintain proper record of transactions as mentioned below:


All cash transactions of the value of more than Rs.10 Lakh or its equivalent
in foreign currency;
all series of cash transactions integrally connected to each other which have
been valued below Rs. 10 Lakh or its equivalent in foreign currency where
such series of transactions have taken place within a month and the
aggregate value of such transactions exceeds Rs.10 Lakh;
all transactions involving receipts by non-profit organisations of value more
than Rs.10 lakh or its equivalent in foreign currency
all cash transactions, where forged or counterfeit currency notes or bank
notes have been used as genuine and where any forgery of a valuable
security or a document has taken place facilitating the transaction;
All suspicious transactions whether or not made in cash and by way of as
mentioned in the Rules.

In case of money changing activities and cross border Inward Remittance under
Money Transfer Service Schemes, all series of cash transactions integrally
connected to each other would have been valued below Rs.10 lakh or its
equivalent in foreign currency where such series of transactions have taken
place within a month.

Banks shall maintain for at least 10 years from the date of transaction
between the bank and the client, all necessary records of transactions, both
domestic or international, which will permit reconstruction of individual
transactions (including the amounts and types of currency involved if any) so as
to provide, if necessary, evidence for prosecution of persons involved in criminal
activity.

Bank shall ensure that records pertaining to the identification of the customer
and his address (e.g. copies of documents like passports, identity cards, driving

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licenses, PAN, card, utility bills etc.) obtained while opening the account,
undertaking transactions and during the course of business relationship, are
properly preserved for at least 10 years after the business relationship is
ended/ from the date of cessation of the transactions/ business relationship.
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Foreign Exchange

1. Sodhani Committee: Report of the expert group regarding foreign exchange


markets in India, 1995.
2. FEMA 1999
Effective from 01.06.2000.
This act extends to whole of India and also to all offices outside India
which are controlled by persons resident in India.
3. Sec.46 of the Act empowers Govt. of India to make Rules on any matter to
carry out the provisions of this Act.
4. Sec.47 of the Act authorises the RBI to make regulations to carry out the
provisions and rules made there under.
5. Sec 10 to 12 of the Act authorises RBI to appoint different banks, companies
etc., as Authorised Persons to deal in foreign exchange
6. The Authorised persons can be broadly classified into four categories
a) Authorised dealers category -I eg.; Scheduled commercial Bank, State Co
operative Banks. Permitted to do all kinds of foreign exchange
transactions as per RBI guidelines.
b)

Authorised Dealers category II eg: Well Run & financially strong RRB,
Co Operative Banks, upgraded FFMCs etc. They are authorised to deal
only specified non-trade related current account transactions.

c) Authorised Dealers category III.Certain financial and other institutions


which are required to do foreign exchange transactions incidental to their
activities eg: NABARD, IFC
d) Authorised Dealers category IV Full pledged moneychangers eg: Thomas
Cook (I) Ltd, Trade Links etc
7. Different categories of branches of an authorised dealer
a) Category A Branches : These branches are not only permitted to handle
all types of business but also maintain and operate banks NOSTRO
Account at Foreign Centre.
b) Category B branches : These branches are permitted to handle all types
of foreign exchange transactions and to operate banks NOSTRO
Accounts.
c) Category C branches : Not permitted to independently handle foreign
exchange transactions. These branches can rout their FX transactions
through their designated AD branches.

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Offences under FEMA & penalties


8. In the case of contravention of any provisions of FEMA or its rules a person
can be imposed a penalty upto three times the sum involved in such
contravention
a) Amount of contravention is not quantifiable he can be charged a penalty
upto Rs 2 lacs.
b) In case the contravention is a continuing one further penalty Rs 5000/per day can be imposed on him.
9. The Act provides four types of authorities for adjudication/ imposed
penalties etc
1) Adjudicating Authority
2) Special Director (Appeal)
3) Appellate Tribunal for Foreign Exchange (ATFE) to hear appeals against
orders of 1 & 2
4) The high court to hear appeals against orders of Appellate tribunal
10. Directorate of Enforcement (DOE) is rested with the responsibility of
detecting & investigating offences committed under FEMA. DOE will refer to
adjudicating authority.
11. Powers of RBI over Authorised persons
Chapter IV Sn 13 provides that in case an authorised person contravenes
the directions or fails to submit any report, RBI is empowered by FEMA to
impose penalty up to Rs 10,000. In case the contravention continues it can
imposes an additional penalty of Rs 2000/- per day for the period of such
continuation
12. Hard currencies - One which is freely convertible to other currencies (1)
GBP, (2) USD, (3). JPY, (4).Euro. These currencies are also called convertible
currencies.
13. EURO: Common currency of 17 countries of Europe belonging to European
Union. It has come into existence from 01.01.1999. The countries are :
1.

Austria

6.

France

11.

Luxemburg

16.

Slovenia

2.

Belgium

7.

Germany

12.

Malta

17.

Spain

3.

Cyprus

8.

Greece

13.

The
Netherlands

4.

Estonia

9.

Ireland

5.

Finland

10.

Italy

14.
15.

Portugal
Slovakia

The states, known collectively as the eurozone,

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14. Foreign Exchange Markets


Foreign Exchange market is over the counter market. No exact location
for the market. Trading takes place over telephone, normally. 24 hours
markets, 5 days a week.
Depending on the parties, the market is divided into three segments.
a. Merchant market (Retail market)
b. Inter Bank market (for cover deals)
c. International Market
15. Settlement of foreign exchange transactions: Through
(a) Nostro accounts (b)Vostro accounts.
Other accounts are;
(c) Loro accounts

(d)Mirror account.

16. Buying & Selling of foreign exchange


The terms buy & Sell always viewed from the ADs point of view.. Eg. In
case of buying transaction, the AD buys/acquires foreign exchange from the
customer and gives/parts with rupees. In case of sale transaction, the AD
gives/delivers foreign exchange and takes payment in rupees.
17. Buying & Selling rates
The rate at which an AD buys and sells foreign exchange are called exchange
rates.
(a)TT Buying rate

(b) Bills Buying rates

(c)TT Selling rates

(d) Bills selling rates.

TT Buying rate: This rate is applied to those buying transactions where the
AD has already received the foreign exchange to the credit of its Nostro
account
Bills Buying Rate: This rate is applied to those buying transactions where
AD will receive the foreign exchange to its Nostro account at a date
subsequent to the date of buying. These rates are applied when AD purchase
a cheque/Bill on DP terms drawn at a foreign centre.
TT Selling rate: applied to all transactions which do not involve handling of
documents and other instruments for collection.

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Bills Selling rate: applied when AD is required to handle such documents.


Bills selling rate is computed by adding margin (profit) to TT selling rate, the
margin being handling charge for the bill.
TC selling rate = TT selling rate + a maximum of margin of 0.5%.
FC Note selling rate = TC selling rate + a maximum of 0.5%.
18. Quoting Foreign exchange rates
Direct method : This is called home currency quotation.
currency is the variable unit.
Eg:

1 USD

In this home

INR 54.20

Indirect method: In this foreign currency is the variable unit


Eg:

INR 54.20 = 1 USD

Different types of transactions and rate application.


PURCHASE
SALE
1. Clean Inward remittances TTB 1. Issuance of TT/DD/MT etc.
(MT, TT, DD) where cover has
already been provided in
NOSTRO
2. Realization of instruments TTB 2. Cancellation of purchase
sent on collection.
like:
i. Bill purchased/discounted
returned unpaid.
ii. Bill purchased/discounted
transferred to collection
account.
iii. Refund of earlier inward
remittance converted to
rupees.
3. Cancellation of DD/MT/TT TTB 3. Cancellation
of
forward
etc.
purchase contract
4. Cancellation of Forward Sale TTB 4. Import Bills payment.
contract.
5. Purchase/discounting of bills BB
5. Sale of foreign currency
and other instruments
notes
and
Travellers
i. Where bank has to claim
cheques.
cover after payment.
ii. Where drawing bank at
one centre remits cover for
credit to a different centre.
6. Foreign currency notes and ***
Travellers cheques

TTS

TTS

TTS
BS
***

*** AT THE DISCRETION OF THE AUTHORISED DEALER.


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19. Value date in foreign exchange transaction

MERCHANT MARKET

SPOT

FORWARD

Rate decided today


and transaction
today

Rate decided today


Transaction at a future date

INTER BANK MARKET


INTERNATIONAL MARKET

CASH

TOM

SPOT

FORWARD

Rate today &


Settlement
the same
day/working
day

Rate today &


Settlement on
first
succeeding
working day

Rate today &


Settlement on
second
succeeding
working day

Rate today &


settlement from
the third
succeeding
working day

20. Notional rate:


Weekly average of daily rates for different currencies advised by FEDAI on every
Friday.
Inter-Bank Rates:
Let us assume that in the inter-bank market, the quote for USD is as under:
1 USD = Rs.54.39 / Rs.54.41
This is called a two-way quote. By quoting like this, the quoting dealer
conveys that he is prepared to buy 1 USD at Rs. 54.39 and is prepared to sell 1
USD at Rs.54.41.

The first rate is called the BID rate and the second is the Ask rate.

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Card Rates: Card rates are released by the Dealing room for various currencies
and as per extant guidelines in our Bank. They should be used for values less
than Rs. 50,000 only when finer rates are not warranted for non-customers or
for negligible value transactions. But such transactions should also be reported
to the dealing room and appropriate telex serial number should be obtained.
21. All the foreign currency assets (FCTL, WCFC, RDBF, RUBF, WCDL, etc.) and
foreign currency contingent liabilities (LC, LG, Buyers Credit, etc.) are
maintained in the CBS System,
by applying the Bills Selling Rate
prevailing on the date of transaction.
22. Actual market rate will be applied only for our foreign currency assets and
contingent liabilities.
23. Notional Rate is applied for
FCNR/EEFC/RFC/DDA Accounts.
24.

the

foreign

currency

liabilities,

i.e.

Service tax on Forex transactions

In case of any foreign exchange transaction, when conversion of currency is


there, Service Tax at the following rate has to be paid w.e f. 01.04.2012.
a. 0.12 % of the gross amount of currency exchanged for an amount upto Rs.
1,00,000/- , subject to the minimum of Rs. 30/-.
b. Rs.120 and 0.06 % of the gross amount of currency exchanged for an
amount exceeding Rs.1,00,000/- and upto Rs. 10,00,000.
c. Rs. 660 and 0.012 % of the gross amount of currency exchanged for an
amount exceeding Rs.10,00,000/- subject to maximum amount of
Rs.6,000/-.
In addition to the above, Education Cess of 3% on Service Tax has also to be
collected for all forex transactions from the customers.

Service Tax thus collected from any customer for any forex transaction,
calculated as above, either manually or by the system shall be parked in
the above new GL head 2377. The amount available in the said GL Head
at the end of every month will be remitted to the Government account by
Central Office before 5th of succeeding month.

25. Arbitrage: An arbitrage transaction consists of purchase of one currency in one


centre & an almost simultaneous sale of the same currency in another centre
with an objective to make profit due to the exchange difference prevalent in
these two centres.
3 types - (1) Arbitrage in space (simple/two point)
(2) Arbitrage in time (compound/3 point)
(3) Arbitrage in interest rate

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26. Transaction in foreign exchange


All transactions in foreign exchange can be broadly classified into two
categories namely (a) Capital Account transactions and (b) Current account
transactions.
Capital Account transactions are transactions which alter the assets and
liabilities (including contingent liabilities) outside India of person resident in
India or assets and liabilities in India of persons resident outside India.
Eg: a. a resident in India buys/sells immovable property situated outside India
b. A resident borrows foreign exchange from outside India
c. A resident issued guarantee in favour of a non-resident
d. If a Non-resident (i.e. resident outside India) keeps his deposits with a
bank in India, it changes his asset position in India and is therefore a
capital account transaction.
Types of capital account transactions
RBI, vide notification No.FEMA/1/RB/2000 classifies all capital
account transactions into two categories namely
(a) Prohibited transactions and (b)permissible transactions.
Prohibited transactions:(1) Business of Chit fund (2) Nidhi company
(3) Agricultural & plantation activities (4) Real Estate business and
construction of farm houses (5) Trading in Transferable Development
Rights (TDRs).
TDR means certificate issued by the Central/State Govt. in respect of
land acquired for public purposes without monetary compensation
and such certificates being transferable in part or whole.
Current Account Transactions:A transaction which is not a capital account
transaction is called a current account transaction.
Eg: a. if an exporter receives payment towards the export made by him, it is
a revenue receipt for him. This is a profit & loss account item and not
a balance sheet item.
b. Payment of imports
c. Remittance for living expenses of parents/spouse/children living
abroad, remittance in connection with travel, education, medical
expenses etc.
27. Asian Clearing Union (ACU)

A clearing union can be defined as a multilateral payments


arrangement that periodically offsets the debits and credits accumulated
by each member against the other members in the process of trade and
other transactions.

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The Asian Clearing Union (ACU) was established with its head quarters at
Tehran, Iran on December 9, 1974 at the initiative of the United Nations
Economic and Social Commission for Asia and Pacific (ESCAP), as a step
towards securing regional co-operation.

The ACU is a system for clearing payments among the member countries
on a multilateral basis.

The central banks and monetary authorities of Iran, India, Bangladesh,


Bhutan, Nepal, Pakistan, Sri Lanka, Myanmar and Maldives are the
members of the ACU.

Members of Asian clearing Union have to settle their transactions under


ACU mechanism.

The Asian Monetary Unit is the common unit of account of ACU and is
equivalent in value to one U.S. dollar.

The Asian Monetary Unit may also be denominated as ACU dollar ACU
Euro which shall be equivalent in value to one US Dollar and one Euro,
respectively.

All instruments of payment are required to be denominated in Asian


Monetary Unit.

Settlement of such instruments may be made by authorised dealers


through operation on ACU dollar Accounts

28. There is no restriction for inward remittance of foreign exchange from other
countries to India except that it should be received through authorised
banking channels.
29. A Non-resident can be issued foreign exchange by way of TC/DD/currency
note without limit to the debit of their NRE/FCNR accounts.
30. Resident can be issued /foreign exchange by way of TC/DD/currency note
without any limit to the debit of their RFC/EEFC a/cs.
31. Cash payment is allowed against Foreign Travellers Cheque upto USD 1000
or equivalent per transaction, in tourist centre /towns and upto USD 500 in
other centres
32. CHIPS

- Clearing House Inter-Bank Payment System (in Newyork)

33. CHIPS-UID Clearing House Inter-Bank Payment System Universal


Identification code
34. FED-WIRE. Communication net work of federal reserve of US is FED-WIRE
35. CHAPS - Clearing House automated Payment System (UK)
36. CHATS - Clearing House Automated Transfer System (Hongkong)

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37. REUTER Computer based data Bank which provides access to real time
data.
38. SWIFT
SWIFT Society for World Wide Inter-Bank Financial Telecommunication
Registered Office/head quarters at LA HULPE in Brussels in Belgium.
SWIFT No. - 11 characters. Of which first 4 indicates name of the Bank.
The next 2 the code of the country, the next two the code of the city and the
last three Branch code.
Standardized format MT stands for Message Type.
M-Field Mandatory field in Swift Message
O-field Optional field in Swift Message
STP Straight through Processing
SWIFT service is available for 24 hours in a day.
Where a SWIFT message fails STP Scrutiny, there will be a need for manual
intervention which is technically known as REPAIR.
39. Foreign exchange can be released maximum 60 days ahead of the journey
date.
Compensation for delayed payment : Authorised Dealers shall pay or send
Intimation, as the case may be, to the beneficiary in two working days from
the date of receipt of credit advice / Nostro statement.
In case of delay, the bank shall pay the beneficiary interest @ 2 % over its
savings bank interest rate. The bank shall also pay compensation for
adverse movement of exchange rate, if any, as per its compensation
policy.
40. Bringing of Foreign Exchange to India
A person is permitted to bring India Foreign exchange in the form of
Currency cheque, TC/in any other form without limit. However when he
brings Foreign currency note above US$ 5000 or currency note & TC
exceeding US$ 10000 (or equivalent) he is required to submit the customs
authorities. Currency Declaration form ( CDF). The limit is per person per
visit.
41. Holding /Possessing of Foreign Exchange allowed - US$ 2000
Foreign Coins - any amount without any limit
Foreign currency & Travelers Cheque up to US$ 2000...
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42. Bringing and taking of Indian Currency

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A resident can send or take out side India Indian Currency up to RS 7500/per person. Similarly a resident on a temporary visit abroad can bring in to
India Indian currency up to Rs.7500/-. However these limits are not
applicable for visit to/from Nepal/Bhutan. In respect of Nepal & Bhutan
there is no limit of taking out or bringing in Indian Currency note up to
denomination 100. A resident can take outside India Commemorative coins
not exceeding two coins each.
Similarly currency of Nepal & Bhutan can be taken out of India or brought
to India without any limit.
43. Submission of returns;
STAT - 10

Monthly

Inflow/outflow of deposits in RFC scheme.

ENC

Fortnightly

By AD branch to RBI giving details of export


bills.

XOS

Half Yearly

Details of all eXport Bills OutStanding


beyond prescribed period of 6 months.
(above USD 25000)

BEF

Half Yearly

Statement giving details of default in nonsubmission of Bills of Entry in case of import.


(above USD 100000)

IBS

Quarterly

International Banking Statistics. This return


provides the details of international assets
and international liabilities held by the
country as a whole.

EBW

Half yearly

Details of write offs of export bills direct


to Regional Office of RBI

Form - A1

Application form obtained from importers for


sale/release of foreign exchange for the
purpose of import, exceeding USD 25000.

Form - A2

Application form obtained for sale/release of


foreign exchange for purpose other than
for import for amount exceeding USD
25000

Form A3

Application form sale/release of foreign


exchange in INR by giving credit to Vostro
A/c. For every debit or credit.

Form A4

In case of debit or credit exceeding USD


10000 NRE accounts.

44. Packing credit can be given at a concessional rate for a maximum of 360
days.

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45. FIRC (Foreign Inward Remittance Certificate)


FEDAI advised that FIRCs may be issued at the written request of the
customer specifying the purpose for which the same has been requested.

AD branches should issue FIRC on security stationery only duly signed


by authorized officials in respect of the following cases.
a. Advance payment for exports
b. Receipt of export proceeds by an AD bank other than the one who
handles/handled GR form
c. Inward remittances covering FDIs/FIIs

Validity of FIRC should clearly specified in security paper as 1 year


FIRC is issued for record purpose only and is not to be utilized for
repatriation purpose.
In all other cases, AD branches may issue a suitable certificate, on their
letter head, duly signed by authorized officials, incorporating full
particulars of the remittance.
46. Export Credit Guarantee Corporation of India Ltd.

The pre-shipment and post-shipment Export advances (excluding LC bills) of


IOB are covered under Export Credit Insurance for Bank (ECIB).

As per RBI directive, the premium under Whole Turnover post shipment
has to be borne by Banks themselves. For packing credit cover, insurance
premium is borne by the exporters/customers.

As per ECIB policy, insurance cover up to Rs.1.00 Crore (discretionary


limits) in case of pre-shipment advances/post shipment advances, no prior
approval from ECGC is required subject to the terms and conditions of the
ECIB.

For any limit sanctioned to any exporter customer exceeding the above
discretionary limit, the same is to be notified to ECGC and their prior
approval is to be obtained.

47. Forward contracts: are hedging tools to insulate against the foreign
exchange movements. The same is available to all exporters, importers,
residents and non-residents. Forward contracts can be booked based on the
underlying contract or based on the past performance subject to conditions.
SME units and resident individuals are permitted to book forward
contracts even without underlying contract subject to conditions.
Ad branches should obtain the forward contract agreements for every
contract entered into with the customer and forward a copy of the same
to Treasury(foreign) on the same day without fail.

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AD branches should diarise for the due date of the contracts and ensure
delivery as per contract terms. At no cost, delivery should be made
after the due date.
Forward contracts will be automatically cancelled on the 3rd working day
after the maturity date of the contract. For the purpose of computing the
working days, Saturdays will be excluded.
If the contract is cancelled on the 3rd day at the instance of
Treasury(foreign), the loss so incurred will be passed on to the branch,
for recovery from the customer.
If for any reason, the delivery could not be made by the customer before
the due date of contract, which will amount to cancellation. AD branches
should inform Treasury (foreign) about the same.
exporters are allowed to cancel and rebook forward contracts to the
extent of 25 percent of the contracts booked in a financial year for
hedging their contracted export exposures
48. Persons Resident in India: Section 2(u) of FEMA provides the definition of
Persons Resident in India. It states that:
Persons Resident in India means:
i.

A person residing in India for more than 182 days during the course of
the preceding financial year but does not includeA. A person who has gone out of India or who stays outside India, in
either case:
a. For or on taking up employment outside India, or
b. For carrying on outside India as business or vocation outside
India, or
c. For any other purpose, in such circumstances as would indicate
his intention to stay outside India for an uncertain period;
B. A person who has come to or stays in India, in either case, otherwise
than
a. For on taking up employment in India, or
b. For carrying on in India a business or vocation in India, or
c. For any other purpose, in such circumstances as would indicate
his intention to stay in India for an uncertain period;

ii. Any person or body corporate registered or incorporated in India,


iii. An office, branch or agency in India owned or controlled by a person
resident outside India
iv. An office, branch or agency outside India owned or controlled by a person
resident in India.

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49. when a person resident outside India, who has established in India in
accordance with the Foreign Exchange Management (Establishment in India of
Branch or Office or other Place of Business) Regulations, 2000, a branch,
office or other place of business, excluding a liaison office, acquires any
immovable property in India in accordance with the provision of said
regulation, the said person has to file with the Reserve Bank a declaration in
the form IPI to those regulations, not later than ninety days from the date
of such acquisition
50. A person resident outside India who is a citizen of India or a Person of Indian
Origin (PIO) acquiring immovable property in India under General Permission
need not submit Form IPI.
51. A person resident in India is free to hold, own, transfer or invest in foreign
currency, foreign security or any immovable property situated outside India if
such currency, security or property was acquired, held or owned by such
person when he was resident outside India or inherited from a person who
was resident outside India.
52. An investor can retain and reinvest the income earned on investments made
under the Liberalised Remittance Scheme.
53. For the purpose of converting foreign assets/deposits for reporting in
Form A Return for maintenance of CRR- banks may be guided by the RBI
Reference rate announced on the Reserve Banks web site at around 12:30
pm (instead of indicative rates announced by FEDAI at 12 noon). The change
may be brought into effect from the reporting fortnight ending July 13, 2012.
54. Facility of non-resident guarantee under the general permission for non-fund
based facilities (such as Letters of Credit/guarantees/Letter of
Undertaking (LoU) /Letter of Comfort (LoC) ) entered into between two
persons resident in India is available. The method of discharge of liability by
the non-resident guarantor under the guarantee and the subsequent
repayment of the liability by the principal debtor would continue, as hitherto,
as detailed in A.P. (DIR Series) Circular No. 28 dated March 30, 2001.
55. Remittance of salary
A citizen of a foreign state, resident in India, being an employee of a foreign
company or a citizen of India, employed by a foreign company outside India
and in either case on deputation to the office/branch/subsidiary/joint venture
in India of such foreign company may open, hold and maintain a foreign
currency account with a bank outside India and receive the whole salary
payable to him for the services rendered to the office/branch/subsidiary/joint
venture in India of such company, by credit to such account, provided that
income tax chargeable under the IT act 1961 is paid on the entire salary as
accrued in India
srn/01.05.2013
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Non-Resident Ordinary Rupee (NRO) Account


A. Eligibility
Any person resident outside India (as per Section 2 of FEMA), may open and
maintain NRO account with an Authorised Dealer or an Authorised bank for the
purpose of putting through bonafide transactions denominated in Indian
Rupees.

Opening of accounts by entities of Bangladesh / individuals & entities of


Pakistan nationality / ownership require prior approval of the Reserve Bank.

Opening of accounts by individual/s of Bangladesh does not require prior


approval of the Reserve Bank.

Foreign nationals of non-Indian origin on a visit to India can open NRO


account with funds remitted from outside India through banking channel or
by sale of foreign exchange brought by him to India.
a. The balance in the NRO account may be converted by the Authorised
Dealer bank into foreign currency for payment to the account holder at
the time of his departure from India provided the account has been
maintained for a period not exceeding six months and the account has
not been credited with any local funds, other than interest accrued
thereon.
b. In case the account has been maintained for a period more than six
months, applications for repatriation of balance will have to be made by
the account holder concerned on plain paper to the Regional Office
concerned of the Reserve Bank.

B. Joint Accounts with Residents / Non- Residents


The accounts may be held jointly with residents and / or with non-residents
C. Types of accounts
NRO accounts may be opened / maintained in the form of;
(a) current (b) savings (c) recurring or (d)fixed deposit accounts
D. Change of resident status of account holder
(a) From Resident to Non-resident

When a person resident in India leaves India for a country (other than Nepal
or Bhutan) for taking up employment or for carrying on business or vocation
outside India or for any other purpose indicating his intention to stay
outside India for an uncertain period, his existing account should be
designated as a Non- Resident (Ordinary) Account.

When a person resident in India leaves for Nepal or Bhutan for taking up
employment or for carrying on business or vocation or for any other
purposes indicating his intention to stay in Nepal or Bhutan for an uncertain
period, his existing account will continue as a resident account. Such
account should not be designated as Non-Resident (Ordinary) Account
(NRO).

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(b) From Non- resident to Resident

NRO accounts may be re-designated as resident Rupee accounts on return


of the account holder to India for taking up employment, or for carrying on
business or vocation or for any other purpose indicating his intention to stay
in India for an uncertain period.

Where the account holder is only on a temporary visit to India, the account
should continue to be treated as non-resident during such visit.

E. Operation of NRO account by Power of Attorney holder

Powers have been delegated to the authorized dealers/banks to allow


operations on an NRO account by Power of Attorney granted in favour of a
resident by the non-resident individual account holder provided such
operations are restricted to:
a. All local payments in Rupees including payments for eligible investments
subject to compliance with relevant regulations made by the Reserve
Bank; and
b. Remittance outside India of current income in India of the non-resident
individual account holder, net of applicable taxes.
c. The resident Power of Attorney holder is not permitted to repatriate
outside India funds held in the account other than to the non-resident
individual account holder nor to make payment by way of gift to a
resident on behalf of the non- resident account holder or transfer funds
from the account to another NRO account

F. Facilities to a person going abroad for studies

Persons going abroad for studies are treated as Non-Resident Indians (NRIs)
and are eligible for all the facilities available to NRIs. Educational and other
loans availed of by them as residents in India will continue to be available to
them as per FEMA Regulations

G. Remittance of current income

Remittance outside India of current income like rent, dividend, pension,


interest, etc. in India of the account holder is a permissible debit to the NRO
account.

The remittance facility in respect of sale proceeds of immovable property is


not available to citizens of Pakistan, Bangladesh, Sri Lanka, China,
Afghanistan, Iran, Nepal and Bhutan.

The facility of remittance of sale proceeds of other financial assets is not


available to citizens of Pakistan, Bangladesh, Nepal and Bhutan

H. Transfer of Funds from Non-Resident Ordinary (NRO) account to NonResident External (NRE) Account

NRI shall be eligible to transfer funds from NRO account to NRE account
within the overall ceiling of USD one million per financial year subject to
payment of tax, as applicable.

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Such credit of funds shall be treated as eligible credit to NRE accounts.

H. TDS on interest income

Government of India has entered into Double Tax Avoidance Agreements


(DTAA) with certain countries to mitigate the hardship faced by non
residents who are subject to tax in both the countries

Tax to be deducted at source shall be at the general rate prescribed (30%) or


the rate specified in DTAA whichever lower plus applicable surcharge/cess.

Senior citizens are not eligible for interest, applicable to vardhan


scheme, under NRO term deposits.
srn/11.02.2013
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Non-Resident External Rupee (NRE) Account

1. Non-Resident Indian (NRI) and Persons of Indian Origin (POI) are eligible to open
NRE accounts. (Individuals / entities of Bangladesh / Pakistan nationality/
ownership require prior approval of RBI)
2. Joint account

Joint accounts can be opened in the names of two or more non-resident


individuals.

Non-Resident Indian (NRI), may be permitted to open NRE / FCNR(B)


account with their resident close relative on former or survivor basis. The
resident close relative shall be eligible to operate the account as a Power of
Attorney holder in accordance with extant instructions during the life time of
the NRI/ PIO account holder.

3. Nomination facility
Available. The nominee can be a resident or a non-resident or even a foreign
national. ADs are delegated with powers to allow repatriation of settled funds to
the non-resident nominee
4. Currency in which account is denominated
Indian Rupees
5. Eligible credits in the NRE accounts
a.

Rupee proceeds of remittances to India in any permitted currency

b.

Proceeds of personal cheques drawn by the account holder on his foreign


currency account and of travelers cheques, bank drafts etc

c.

Proceeds of foreign currency/bank notes tendered by account holder


during his temporary visit to India, provided;
i.

the amount was declared on a Currency Declaration Form (CDF),


where applicable, and

ii.

The notes are tendered to the authorised dealer in person by the


account holder himself and the authorised dealer is satisfied that
account holder is a person resident outside India.

d.

Proceeds of account payee cheques in addition to demand drafts/bankers


cheques, issued against encashment of foreign currency to the NRE
account of the NRI account holder where the instruments issued to the
NRE account holder are supported by encashment certificate issued by AD
Category-I/II.

e.

Transfers from other NRE/FCNR accounts.

f.

NRI shall be eligible to transfer funds from NRO account to NRE account
within the overall ceiling of USD one million per financial year subject to
payment of tax, as applicable. Such credit of funds shall be treated as
eligible credit to NRE accounts.

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g.

Interest accruing on the funds held in the account.

h.

Interest on Government securities and dividend on units of mutual funds,


provided the securities/units were purchased by debit to the account
holders NRE/FCNR account or out of inward remittance through normal
banking channels.

i.

Maturity proceeds of Government securities including National


Plan/Savings Certificates as well as proceeds of Government securities and
units of mutual funds sold on a recognised stock exchange in India and
sale proceeds of units received from mutual funds, provided the
securities/units were originally purchased by debit to the account holders
NRE/FCNR account or out of remittances received from outside India in
free foreign exchange.

j.

Refund of share/debenture subscriptions to new issues of Indian


companies or portion thereof, if the amount of subscription was paid from
the same account or from other NRE/FCNR account of the account holder
or by remittance from outside India through normal banking channels.

k.

Refund of application/earnest money made by the house building agencies


on account of non-allotment of flat/plot, together with interest, if any (net
of income tax payable thereon), provided the original payment was made
out of NRE/FCNR account of the account holder or remittance from
outside India through normal banking channels and the authorised dealer
is satisfied about the genuineness of the transaction.

l.

An individual resident in India may borrow a sum not exceeding USD


250,000/- or its equivalent from her / his close relatives outside India,
subject to the conditions mentioned in Regulation 5(6) of Foreign Exchange
Management (Borrowing or Lending in Foreign Exchange) Regulations,
2000. If the loan to the resident individual was extended by way of inward
remittance in foreign exchange through normal banking channels or by
debit to the NRE / FCNR(B) account of the lender, the repayment of such
loan by the resident individual may be allowed to credit in NRE / Foreign
Currency Non-Resident (Bank) [FCNR(B)] account of the lender concerned.

m.

Any other credit if covered under general or special permission granted by


Reserve Bank.

6. Repatriability
Balance available in NRE accounts is repatriable
7. Type of Accounts
Savings, Current, Recurring, Fixed Deposit
8. Period for fixed deposits
Deposits are accepted for the following maturities;
1 year to less than 2 years;
2 years to less than 3 years;

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3 years to less than 5 years


5 years up to 10 year
9. Rate of Interest
a. Fixed Deposits :

Rate of interest in respect of the accounts is deregulated. However, interest


rates offered by banks on NRE and NRO deposits cannot be higher than
those offered by them on comparable domestic rupee deposits

If a Fixed Deposit Receipt matures and proceeds are unpaid, the amount left
unclaimed with the bank will attract savings bank rate of interest

Conversion of NRE deposit into FCNR(B) deposit and vice versa before
maturity should be subject to the penal provision relating to premature
withdrawal

Banks are not permitted to allow the benefit of additional interest rate on
any type of deposits of non-residents including staff members

b. Savings Bank Account


Interest rate on NRE/NRO Savings Bank accounts is deregulated.
10.

11.

Foreclosure of term deposits


Deposits for any amount: 1% less than the applicable interest for the period
run is payable
Renewal of Overdue Deposits

Overdue period up to and inclusive of 14 days - Deposit can be renewed from


maturity date and the interest rate will be appropriate rate on the date of
maturity.

Overdue period is more than 14 days - Interest for the overdue period is paid
separately at simple rate prevailing on the date of deposit or renewal
whichever is lower applicable for the period of overdue.

The deposit amount should be placed as fresh deposit at least for the
minimum period for which such deposits are accepted.

If an overdue deposit renewed after paying the interest for the overdue period
is closed before completing the minimum period for which such deposits are
accepted, no interest is paid on the deposit and the interest paid for the
overdue period is also recovered.

12.

Operations by Power of Attorney holder:


For operational convenience, the NRI depositor can authorise a person
through a power of attorney to operate his account. The POA holder is
allowed to withdraw for local payments.

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The power of attorney holder is not permitted to

Repatriate funds outside India from the account to a person other than the
depositor himself.

Make payment by way of gift to a resident on behalf of the account holder.

Transfer funds from the account to another NRE account.

Advances to third parties against such deposits should not be granted on the
basis of Power of Attorney

13.

Loans

Rupee loans in India and Foreign currency Loan in India & outside India
can be allowed to depositor/third party without any ceiling subject to usual
margin requirements

In case of FCNR deposits, the margin requirement shall be notionally


calculated on the rupee equivalent of the deposits

The facility of premature withdrawal of NRE/FCNR deposits shall not be


available where loans against such deposits are to be availed of.

srn/01.05.2013

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Foreign Currency Non Resident (B) Deposits FCNR (B)

A. Nature of Deposit
The deposits under the Scheme mean term deposits received by the bank for a
fixed period and withdrawable only after the expiry of the said fixed period and
includes Reinvestment Deposits and Cash Certificates or other deposits of
similar nature. Recurring Deposits should not be accepted under the FCNR(B)
Scheme.
B. Non-Resident Indian (NRI), may be permitted to open FCNR(B) account with
their resident close relative (relative as defined in Section 6 of the Companies
Act, 1956) on former or survivor basis. The resident close relative shall be
eligible to operate the account as a Power of Attorney holder in accordance with
extant instructions during the life time of the NRI/ PIO account holder.
C. Exchange risk in respect of FCNR(B) accounts is to be borne by the bank.
D. Other features of the Schemes
a. AD banks in India are permitted to accept FCNR (B) deposits in any
permitted currency by RBI A.P. (DIR Series) Circular No. 36 dt.October 19,
2011. It may be noted that 'Permitted currency' for this purpose would mean
a foreign currency which is freely convertible as defined in FEMA.
b. In our Bank the Scheme covers deposits in Pound Sterling, US Dollar,
Canadian Dollar, Australian Dollar, EURO, Japanese Yen, Newzealand
Dollars(NZD) and Swiss Francs(CHF) from non-resident individuals of Indian
nationality or origin (NRIs).
c. Minimum amount of Deposits:
USD : 1000
AUD : 1000

GBP : 1000
CAD: 1000

EUR : 1000
JPY

: 100,000

NZD : 1000
CHF : 1000

d. Repatriation of funds in foreign currencies is permitted.


e. The deposits should be accepted under the Scheme for the following
maturity periods:
(a) One year and above but less than two years
(b) Two years and above but less than three years
(c) Three years and above but less than four years
(d) Four years and above but less than five years
(e) Five years only
e. Transfer of funds from existing NRE accounts to FCNR(B) accounts and vice
versa, of the same account holder, is permissible without the prior approval
of Reserve Bank of India.

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E. Manner of payment of Deposit


a. The interest on the deposits accepted under the scheme should be paid on
the basis of 360 days to a year.
b. The interest on FCNR(B) deposits should be calculated and paid in the
manner indicated below:
i.

In respect of deposits for more than 1 year, at intervals of 180 days


each and thereafter for the remaining actual number of days. However,
the depositor will have the option to receive the interest on maturity
with compounding effect.

ii.

The benefit of additional interest on any type of deposits of nonresidents should not be allowed.

F. Premature withdrawal of deposits

a. Banks on request from the depositor should permit premature withdrawal of


deposits under the FCNR(B) Scheme.

b. Where premature withdrawal of FCNR(B) deposits take place before


completion of the minimum stipulated period of one year, in which case no
interest is payable.
c. Conversion of FCNR(B) deposits into NRE deposits or vice-versa before
maturity should be subject to the penal provision relating to premature
withdrawal
Recovery of Swap Charges
1. The rules for recovery of swap charges on premature closure of FCNR (B)/RFC
deposits are applicable where the principal amount of individual deposit is USD
50,000 and above/GBP 30,000 and above/EUR 50,000 and above and JPY
7,000,000 and above.
2. In the case of FCNR (B) deposits (subject to the stipulation given in para 1
above), if the deposit has not run for 6 months, no swap charges will be
recovered but overdue interest paid, if any at the time of renewal of the deposit
will be recovered. Branches should note that no interest is payable on such
deposits as the deposit would not have run for the minimum period of 12
months as per RBI stipulation.
3. If the FCNR (B) deposits (subject to the stipulation given in para 1 above), has
run for more than 6 months but not for 12 months, no swap charges will be
recovered and the Overdue interest paid, if any at the time of renewal of the
deposit will also be NOT recovered. Branches should note that no interest is
payable on such deposits as the deposit would not have run for the minimum
period of 12 months as per RBI stipulation.
4. If the deposit has run for 12 months and above, the existing rules will be
applied (SWAP charges or Penal interest whichever is higher will be recovered).

G. Quantum of loans

Rupee loans in India and Foreign currency Loan in India & outside India

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can be allowed to depositor/third party without any ceiling subject to usual


margin requirements

In case of FCNR deposits, the margin requirement shall be notionally


calculated on the rupee equivalent of the deposits

The facility of premature withdrawal of NRE/FCNR deposits shall not be


available where loans against such deposits are to be availed of.

H. Interest payable on the deposit of a deceased depositor

In the case of a term deposit standing in the name/s of -

a. Deceased individual depositor, or


b. Two or more joint depositors, where one of the depositors has died, interest
should be paid in the manner indicated below :
i.

At the contracted rate on the maturity of the deposit;

ii. In the event of the payment of the deposit being claimed before the
maturity date, the bank should pay interest at an applicable rate
prevailing on the date of placement of the deposit, without charging
penalty;
iii. In the event of death of the depositor before the date of maturity of the
deposit and the amount of the deposit being claimed after the date of
maturity, the bank should pay interest at the contracted rate till the date
of maturity. From the date of maturity to the date of payment, the bank
should pay simple interest at the applicable rate operative on the date of
maturity, for the period for which the deposit remained with the bank
beyond the date of maturity.
iv. However, in the case of death of the depositor after the date of maturity of
the deposit, the bank should pay interest at a rate operative on the date
of maturity in respect of savings deposits held under RFC Account
Scheme, from the date of maturity till the date of payment;
v. If, on request from the claimant/s, the bank agrees to split the amount of
term deposit and issues two or more receipts individually in the name/s
of the claimant/s, it should not be construed as premature withdrawal of
the term deposit for the purpose of levy of penalty provided the period
and aggregate amount of the deposit do not undergo any change.
Note: In the case of claimant/s being residents, the maturity proceeds may be
converted into Indian rupees on the date of maturity and interest be paid for the
subsequent period at the rate applicable to a deposit of similar maturity under
the domestic deposit scheme.
H. Addition or deletion of name/s of joint account holders
At the request of all the joint holders, branches can allow the addition or
deletion of name/s of joint account holder/s if the circumstances so warrant or
allow an individual depositor to add the name of another person as a joint
holder. However, in no case should the amount or duration of the original
deposit undergo a change in any manner whatsoever. The bank should
ascertain the reasons from the applicants for doing so and also satisfy

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themselves about the bona fide nature of the request. Further, opening of
accounts in the names of Pakistani/Bangladeshi nationals, though of
Indian origin, will require approval of the Reserve Bank from the exchange
control angle.
H. Payment of interest on FCNR(B) deposits of NRIs on return to India

Branches can allow FCNR(B) deposits of persons of Indian nationality/origin


who return to India for permanent settlement to continue till maturity at
the contracted rate of interest, if desired.

Except the provision relating to rate of interest and reserve requirements as


applicable to FCNR(B) deposits, for all other purposes, such deposits should
be treated as resident deposits from the date of return of the account holder
to India.

Premature withdrawal of such FCNR(B) deposits should be subject to penal


provisions of the Scheme.

Banks should convert the FCNR(B) deposits on maturity into Resident Rupee
Deposit Account or RFC Account (if eligible) at the option of the account
holder.

I. Conversion of FCNR(B) Accounts of Returning Indians into RFC Account Waiver of Penalty
The penal provisions would not be applicable in the case of premature
conversion of balances held in FCNR(B) deposits into Resident Foreign Currency
Accounts by Non-Resident Indians on their return to India.
J. Rate of Interest
Maturity
Period
1 year to less
than 3 years
3 - 5 years

Existing

Revised

LIBOR/Swap plus 125 basis


points
LIBOR/Swap plus 125 basis
points

LIBOR/Swap plus 200 basis


points
LIBOR/Swap plus 300 basis
points

As per extant guidelines, branches are advised that interest on FCNR(B)


deposits with maturity period upto one year is to be paid on simple interest
basis, i.e. no compounding effect is to be permitted.

The benefit of additional interest rate on any type of deposits of nonresidents should not be allowed. No additional interest for account of staff
members also.

K. Prohibitions

No branch should accept or renew a deposit over 5 years;

srn/21.04.2013

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Exchange Earners Foreign Currency Account


A person resident in India may open with, an AD Category I bank in India, an
account in foreign currency called the Exchange Earners Foreign Currency
(EEFC) Account.
Resident individuals may be permitted to include resident close relative(s) as
defined in the Companies Act, 1956 as a joint holder(s) in their EEFC/RFC
bank accounts on former or survivor basis. However, such resident Indian
close relative, now being made eligible to become joint account holder, shall not
be eligible to operate the account during the life time of the resident account
holder.
An exchange earner is allowed to credit 100% of foreign exchange earnings to
the EEFC account. subject to the condition that;
The sum total of the accruals in the account during a calendar month
should be converted into Rupees on or before the last day of the succeeding
calendar month after adjusting for utilisation of the balances for approved
purposes or forward commitments.
Accordingly, balances outstanding in an EEFC account as on July 31, 2012
and those balances that would accrue in the account with effect from August
1, 2012 shall get converted to Rupee balances on or before close of business
on September 30, 2012.
Similar procedure may be followed for accruals during the subsequent
months
The facility of EEFC scheme is intended to enable exchange earners to save on
conversion/transaction costs while undertaking forex transactions in future.
This facility is not intended to enable exchange earners to maintain assets in
foreign currency, as India is still not fully convertible on Capital Account.
Branches are also instructed to ensure before placing request for purchase of
Foreign Currency from FED on behalf of the customer that the customer has
fully utilized his balance in EEFC account and that there is no available balance
in the said account.
This account shall be maintained only in the form of non-interest bearing
current account.
No credit facilities, either fund-based or non-fund based, shall be permitted
against the security of balances held in EEFC accounts.
AD Category I banks may permit their exporter constituents to extend trade
related loans / advances to overseas importers out of their EEFC balances
without any ceiling
AD Category I banks may permit exporters to repay packing credit advances
whether availed in rupee or in foreign currency from balances in their EEFC
account and / or rupee resources to the extent exports have actually taken
place
Exchange risk in respect of EEFC accounts is to be borne by the Bank.
srn/10.02.2013

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FEDAI Rules
FEDAI :
Registered as non-profit making company under the provisions of Sec 25 of
Companies Act
Head Office at Mumbai and local offices at Chennai, Delhi, Calcutta and
Bangalore
Objective: to regulate the dealings of ADs, both interse & with public,
brokers, RBI & all other bodies.
Fix business hours
Rule 1 : Hours of Business

The exchange trading hours for Inter-bank forex market in India would be
from 9.00 a.m. to 5.00 p.m.

Customer transactions are undertaken by the ADs only upto 4.30 p.m. on all
working days.

Cut-off time limit of 05.00 p.m. is not applicable for cross currency
transactions

For the purpose of Foreign Exchange business, Saturday will not be treated
as a working day

Known holiday is one which is known at least 2 working days before the
date. A holiday that is not a known holiday is defined as a suddenly
declared holiday.

Rule 2 : Export Transactions

Foreign Currency bills will be purchased/discounted/negotiated at the ADs


current bill buying rate or contracted rate

Interest for the normal transit period and/or usance period shall be
recovered upfront simultaneously

For crystallisation of FC liability into Rupee liability, the AD shall apply its
TT selling rate of exchange

After receipt of advice of realisation, the AD will apply TT buying rate or


contracted rate (if any) to convert foreign currency proceeds.

Overdue interest shall be recovered from the customer, if payment is not


received within normal transit period in case of demand bills and on/or
before notional due date/actual due date in case of usance bills.

In case of early realisation, interest for the unexpired period shall be


refunded to the customer.

Normal transit period comprises of the average period normally involved


from the date of negotiation/purchase/discount till the receipt of bill
proceeds.

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Normal Transit period of some of the transactions are given below;


Bills in Foreign Currencies 25 days
Exports to Iraq under United Nations Guidelines Max. 120 days
Bills drawn in Rupees under Letters of Credit (L/C)
a. Reimbursement provided at centre of negotiation - 3 days
b. Reimbursement provided in India at centre different from centre of
negotiation - 7 days
c. Reimbursement provided by banks outside India - 20 days
d. Exports to Russia under L/C where reimbursement is provided by
RBI - 20 days
Bills in Rupees not under Letter of Credit - 20 days
TT reimbursement under Letters of Credit (L/C)
a. Where L/C provides for reimbursement by electronic means - 5
days
b. Where L/C provides reimbursement claim after certain number
of days from the date of negotiation

The conversion of foreign currency proceeds of export bills sent for collection
or of goods sent on consignment basis shall be done at prevailing TT buying
rate or the forward contract rate, as the case may be.

Rule 3 : Import Transactions

Retirement of import bills - Exchange rate as per forward sale contract, if


forward contract is in place or Prevailing Bills selling rate, in case there is
no forward contract.

Rule 4 : Clean Instruments

Outward remittance shall be effected at TT selling rate of the bank ruling on


that date or at the forward contract rate.

Payment of foreign inward remittance;


Foreign currency remittance up to an equivalent of USD 10,000/- shall
be immediately converted into Indian Rupees.
Remittance in excess of equivalent of USD 10,000 shall be executed in
foreign currency. The beneficiary has the option of presenting the
related instrument for payment to the executing bank within the period
prescribed under FEMA.
The applicable exchange rate for conversion of the foreign currency
inward remittance shall be T T buying rate or the contracted rate as the
case may be.
Compensation for delayed payment :

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a. AD shall pay or send Intimation, as the case may be, to the


beneficiary in 2 working days from the date of receipt of credit advice
/ Nostro statement.
b. In case of delay, the bank shall pay the beneficiary interest @ 2 %
over its savings bank interest rate. The bank shall also pay
compensation for adverse movement of exchangerate, if any, as per its
compensation policy.
Rule 5: Foreign Exchange Contracts

If the fixed date of delivery or the last date of delivery option is a known
holiday; the last date for delivery shall be the preceding working day.

In case of suddenly declared holidays, the contract shall be deliverable on


the next working day.

Value next day contract shall be deliverable on the working day


immediately succeeding the contract date.

A spot contract shall be deliverable on second succeeding working day


following the contract date.

A forward contract is a contract deliverable at a future date, duration of the


contract being computed from spot value date at the time of transaction.

Merchant quotations: The exchange rate shall be quoted in direct terms.

Settlement of all merchant transactions shall be effected on the principle of


rounding off the Rupee amounts to the nearest whole Rupee.

RULE 6: Early Delivery, Extension and Cancellation of Foreign Exchange


Contracts

Extension of contract:
Foreign exchange contracts where extension is sought by the customers
shall be cancelled (at an appropriate selling or buying rate as on the date
of cancellation) and rebooked simultaneously only at the current rate of
exchange.
The difference between the contracted rate, and the rate at which the
contract is cancelled, shall be recovered from/paid to the customer at the
time of extension.
Such request for extension shall be made on or before the maturity
date of the contract.

Rate at which cancellation is to be effected:


Purchase contracts shall be cancelled at T.T. selling rate of the
contracting AD.
Sale contracts shall be cancelled at T.T. buying rate of the contracting
AD.

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Where the contract is cancelled before maturity, the appropriate forward


T.T. rate shall be applied.
Notwithstanding the fact that the exchange contract between the
customer and the bank becomes impossible of performance, for
whatever reason, the exchange contract shall not be deemed to have
become void. Hence the customer shall forthwith apply to the AD for
cancellation.
In the absence of any instructions from the customer, a contract which
has matured shall be cancelled by the bank on the 3rd working day
after the maturity date.
When a contract is cancelled after the maturity date, the customer shall
not be entitled to the exchange difference, if any, in his favour.
Rule 7: Business through Intermediaries

Exchange brokers, Multi Bank Portals (MBP), Electronic Order Matching


Systems (EOMs) are some of the commonly used intermediaries in foreign
exchange markets.

Rule 8 : Interbank Settlement

Interest for delayed delivery


In the event of late delivery of any currency (including Indian Rupee) in
foreign exchange contract, interest for the number of days of delay
(regardless of the causes for delay) shall be payable by the seller-bank.
The interest for the overdue period shall be payable at the rate of 2%
over the benchmark rate of the currency concerned
The benchmark rates for INR is NSE MIBOR overnight rate.

Settlement of Forward Contracts effective from 1 Oct 2012


All the member banks should become member of CCILs Forex Forward
Guaranteed Settlement segment.
All interbank Forex Forward contracts should be subjected to the CCILs
Forex Forward Settlement segment
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srn/07.04.2013
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Exports

Exporter should have a ten-digited importer-exporter code (IEC) number


allotted by DGFT.

DGFT operated under the Ministry of Commerce and it lays down policies
and regulations relating to physical movement of goods into/from India.

If the goods to be exported are not under (Open General License) OGL, the
exporter should have the required license/quota permit to export the goods.

Declaration as regards export of goods and services:Every exporter of goods or software in physical form or through any other
form, either directly or indirectly, to any place outside India, other than
Nepal and Bhutan, shall furnish to the specified authority, a declaration in
one of the forms set out in the Schedule and supported by such evidence as
may be specified, containing true and correct material particulars including
the amount representing

GR forms
GR forms should be completed by the exporter in duplicate and both the
copies submitted to the Customs at the port of shipment along with the
shipping bill.
Within 21 days from the date of export, exporter should lodge the
duplicate copy together with relative shipping documents and an extra
copy of the invoice with the AD Category I banks named in the GR form.
After the documents have been negotiated / sent for collection, the AD
Category I banks should report the transaction to Reserve Bank in
statement ENC.
The duplicate copy of the form together with a copy of invoice etc. shall
be retained by the AD Category I banks and may not be submitted to
Reserve Bank.

Waiver of submission of GR Forms


Export of goods not involving any foreign exchange transaction directly
or indirectly requires the waiver of GR/PP procedure from the Reserve
Bank.
AD Category I banks may consider requests for grant of GR waiver from
exporters for export of goods free of cost, for export promotion up to 2 %
of the average annual exports of the applicant during the preceding three
financial years subject to a ceiling of Rs.5 lakhs

SDF
The SDF should be submitted in duplicate (to be annexed to the relative
shipping bill) to the Commissioner of Customs concerned, for exports
declared to Customs Offices notified by the Central Government which

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have introduced Electronic Data Interchange (EDI) system for processing


shipping bills notified by the Central Government
The manner of disposal of EC copy of shipping Bill (and form SDF
appended thereto) is the same as that for GR forms. The duplicate copy of
the form together with a copy of invoice etc. shall be retained by the AD
Category I banks and may not be submitted to Reserve Bank.

PP Forms
The manner of disposal of PP forms is the same as that for GR forms.
Postal Authorities will allow export of goods by post only if the original
copy of the form has been countersigned by an AD Category I banks.
Therefore, PP forms should be first presented by the exporter to an AD
Category I banks for countersignature.
The AD Category I banks will countersign the forms after ensuring that
the parcel is being addressed to their branch or correspondent bank in
the country of import and return the original copy to the exporter, who
should submit the form to the post office with the parcel.
The duplicate copy of the PP form will be retained by the AD banks to
whom the exporter should submit relevant documents together with an
extra copy of invoice for negotiation/collection, within the prescribed
period of 21 days.
AD Category I banks may, however, countersign PP forms covering
parcels addressed direct to the consignees, provided:
An irrevocable letter of credit for the full value of the export has been
opened in favour of the exporter and has been advised through the AD
Category I banks concerned or
The full value of the shipment has been received in advance by the
exporter through an AD Category I banks or
The AD Category I bank is satisfied, on the basis of the standing and
track record of the exporter and the arrangements made for
realisation of the export proceeds, that he could do so.

The duplicate copies of GR / SDF / PP / SOFTEX Forms should, continue to


be held by AD Category I banks until the full proceeds are realised, except
in case of undrawn balances

Delay in submission of shipping documents by exporters


In cases where exporters present documents pertaining to exports
after the prescribed period of 21days from date of export, AD Category I
banks may handle them without prior approval of Reserve Bank,
provided they are satisfied with the reasons for the delay

ACU Mechanism
Participants in the Asian Clearing Union will have the option to settle
their transactions either in ACU Dollar or in ACU Euro

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Relaxation from ACU Mechanism- Indo-Myanmar Trade. Trade


transactions with Myanmar can be settled in any freely convertible
currency in addition to the ACU mechanism

Liquidation of Post-Shipment Rupee Export Credit


The Post-shipment credit is to be liquidated by the proceeds of export
bills received from abroad in respect of goods exported / services
rendered.
Further, subject to mutual agreement between the exporter and the Bank
it can also be repaid / prepaid out of balances in Exchange Earners
Foreign Currency Account (EEFC A/C) as also from proceeds of any other
unfinanced (collection) bills.
In order to reduce the cost to exporters (i.e. interest cost on overdue
export bills), exporters with overdue export bills can also extinguish their
overdue post shipment rupee export credit from their rupee resources.
Even though the post shipment liability is liquidited by such repayment,
the corresponding GR form will remain outstanding and the amount
should be shown outstanding in XOS statement. The exporters liability
for realisation would continue till the export bill is realised.

Realisation and Repatriation of export proceeds


It is obligatory on the part of the exporter that the amount representing
the full value of goods or software exported should be realized and
repatriated to India within a period of 9 months from the date of export
(valid till 30.09.2013)
The stipulation of 9 months or extended period thereof for realisation of
export proceeds is not applicable for units located in Special Economic
Zones (SEZs).
The Regional Office concerned of the RBI should be kept informed by the
AD Branch, quoting the reasons for the delay in realizing the proceeds, if
any one of the following warning signals occur:
The Exporter fails to arrange for delivery of the proceeds within 12
months or
If the Exporter seeks extension beyond 12 months

Extension of time and Self write-off by the exporters


For export proceeds due within the prescribed period during a financial
year all exporters have been allowed to write off outstanding export dues
which does not exceed 10% of the export proceeds due during the
financial year for non-status holders and 5% for status holders.

Write off by AD Category I banks


An exporter who has not been able to realise the outstanding export dues
despite best efforts, may approach the AD Category I banks with a
request for write off of the unrealised portion. AD Category I banks may
accede to such requests if the aggregate amount of write off during a

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financial year does not exceed 10 % of the total export proceeds


realised by the concerned exporter through the concerned AD
Category I banks during the previous financial year.

Extension of Time
Reserve Bank of India has permitted the AD Category I banks to extend
the period of realisation of export proceeds beyond 12 months from the
date of export, up to a period of six months, at a time if the AD Category
I bank is satisfied that the exporter has not been able to realise export
proceeds for reasons beyond his control.
In cases where the exporter has filed suits abroad against the buyer,
extension may be granted irrespective of the amount involved /
outstanding.

Advance Payments against Exports


AD Category- I banks to allow exporters to receive advance payment for
export of goods which would take more than one year to manufacture
and ship and where the export agreement provides for shipment of
goods extending beyond the period of one year from the date of receipt of
advance payment subject to the following conditions:i.

The AD Category-I bank should ensure that export advance received


by the exporter should be utilized to execute export and not for any
other purpose i.e., the transaction is a bona-fide transaction;

ii. There should be no instance of refund exceeding 10% of the advance


payment received in the last three years;
iii. The rate of interest, if any, payable on the advance payment does not
exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points;
iv. The documents covering the shipment are routed through the AD
Category I bank through whom the advance payment is received
and
v. In the event of the exporter's inability to make the shipment, partly or
fully, no remittance towards refund of unutilized portion of advance
payment or towards payment of interest should be made without the
prior approval of the RBI.

Interest rate on export credit in foreign currency has been de-regulated with
effect from May 5, 2012.

Part Drawings /Undrawn Balances


In certain lines of export trade, it is the practice to leave a small part of
the invoice value undrawn for payment after adjustment due to
differences in weight, quality, etc. to be ascertained after arrival and
inspection, weighment or analysis of the goods. In such cases, AD
Category I banks may negotiate the bills, provided:

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i.

The amount of undrawn balance is considered normal in the


particular line of export trade, subject to a maximum of 10 % of the
full export value.

ii. An undertaking is obtained from the exporter on the duplicate of


GR/SDF/PP forms that he will surrender/account for the balance
proceeds of the shipment within the period prescribed for realisation.

Direct of dispatch of shipping documents liberalization


As a part of liberalization and to simplify the procedure, category-1 banks
are
allowed to regularize cases of dispatch of shipping documents by the
exporter direct to the consignee or his agent resident in the country of the
final destination of goods, upto USD 1 million or its equivalent, per export
shipment subject to the following conditions:
i.

The export proceeds have been realized in full

ii. Export customer account KYC compliant etc.

Project Exports and Service Exports


Export of engineering goods on deferred payment terms and execution of
turnkey projects and civil construction contracts abroad are collectively
referred to as Project Exports

Export of Currency
Any export of Indian currency of value exceeding Rs.7500/- will require
prior permission of Reserve Bank.

Release of foreign currency & coins


Authorised Dealers and Full Fledged Money Changers are permitted to
sell foreign exchange in the form of foreign currency notes and coins,
Up to USD 3,000 or its equivalent, to the travellers proceeding to
countries other than Iraq, Libya, Islamic Republic of Iran, Russian
Federation and other Republics of Commonwealth of Independent States.
up to USD 5,000 or its equivalent to the travellers proceeding to Iraq or
Libya, out of the overall foreign exchange released
Full foreign exchange may be released in the form of foreign currency
notes and coins to the travellers proceeding to the Islamic Republic of
Iran, Russian Federation and other Republics of Commonwealth of
Independent States.
Authorised Dealers may accept payment in cash up to & inclusive of Rs.
50,000 (Rupees fifty thousand only) against sale of foreign exchange for
travel abroad (for private visit or for any other purpose).

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Submission of statements:
XOS Statement giving details of export bills outstanding beyond 6
months from the date of export as at the end of June and December every
year.
EBW Statement A half yearly return to report the details of write offs of
export bills
BEF Statement - furnishing details of import transactions exceeding
USD 100,000 in respect of which importers have defaulted in submission
of appropriate document evidencing import within 6 months from the
date of remittance.
In case of all imports, where value of foreign exchange remitted/paid for
import into India exceeds USD 100000 or its equivalent, it is obligatory
on the part of the AD branches through whom the relative remittance
was made, to ensure that the importer submits;
a. The exchange control copy of the bill of entry for home consumption
or
b. The exchange control copy of the bill of entry for warehousing, in case
of 100% EOU units or
c. Custom Assessment Certificate or Postal Appraisal form as evidence
that the goods for which the payment was made have actually been
imported to India.

Export of Goods and Services - Forwarders Cargo Receipt


ADs may accept Forwarders Cargo Receipts (FCR) issued by IATA approved
agents, in lieu of bill of lading, for negotiation/collection of shipping
documents, in respect of export transactions backed by letters of credit, if
the relative letter of credit specifically provides for negotiation of this
document in lieu of bill of lading even if the relative sale contract with
the overseas buyer does not provide for acceptance of FCR as a shipping
document, in lieu of bill of lading.

Bank Realisation Certificate (BRC)


Any Export Organization applying for benefits under Foreign Trade Policy
is required to furnish valid BRC which is a conclusive proof of realisation
of export proceeds.
Bank Realisation Certificate is issued by Banks based on the realisation
of payment against export by an Exporter
Electronic Bank Realization Certificate e-BRC was made mandatory w.e.f.
17.8.2012 by DGFT
Details that are required for generation of Bank Realisation Certificate
are culled out from the CBS by the System automatically during the
Dayend Process for all the export bills realised during the day. This data
is transmitted electronically to DGFT Online Server through a secured
mode by Treasury -Central Office.

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The e-BRC is applicable for the following:

Direct Export

Deemed Export

Other - Export documents supported by VPP, PPR, Courier, Softex


Form, etc.,
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Import of Goods and Services

Import of Goods and Services into India is being allowed in terms of Section
5 of the Foreign Exchange Management Act 1999

Import trade is regulated by the Directorate General of Foreign Trade


(DGFT) under the Ministry of Commerce & Industry, Department of
Commerce, Government of India

AD Category I banks should ensure that the imports into India are in
conformity with the Foreign Trade Policy in force and Foreign Exchange
Management (Current Account Transactions) Rules, 2000.

AD Category I banks should follow normal banking procedures and adhere


to the provisions of Uniform Customs and Practices for Documentary Credits
(UCPDC), etc. while opening letters of credit for import into India on behalf of
their constituents

Applications by persons, firms and companies for making payments,


exceeding USD 5000 or its equivalent, towards imports into India must be
made in Form A1

Except for goods included in the negative list which require license under the
Foreign Trade Policy in force, AD Category - I banks may freely open letters
of credit and allow remittances for import.

Where foreign exchange acquired has been utilised for import of goods into
India, the AD Category I bank should ensure that the importer furnishes
evidence of import viz., Exchange Control copy of the Bill of Entry, Postal
Appraisal Form or Customs Assessment Certificate, etc., and satisfy himself
that goods equivalent to the value of remittance have been imported

Remittances against imports should be completed not later than six months
from the date of shipment, except in cases where amounts are withheld
towards guarantee of performance, etc.

Deferred payment arrangements, including suppliers and buyers credit,


providing for payments beyond a period of six months from date of shipment
up to a period of less than three years, are treated as trade credits.

Remittances against import of books may be allowed without restriction as


to the time limit, provided, interest payment is as per norms.

Crystallisation foreign currency: As per FEDAI Rules

Import of Foreign exchange


A person is permitted to bring India Foreign exchange in the form of
Currency cheque, TC/in any other form without limit. However when he
brings Foreign currency note above US$ 5000 or currency note & TC
exceeding US$ 10000 (or equivalent) he is required to submit the
customs authorities. Currency Declaration form (CDF). The limit is
per person per visit.

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Import of Indian Rupees/currency notes


Any person resident in India who had gone out of India on a temporary
visit, may bring into India at the time of his return from any place
outside India (other than from Nepal and Bhutan), currency notes of
Government of India and Reserve Bank notes up to an amount not
exceeding Rs.7,500/- per person.
A person may bring into India from Nepal or Bhutan, currency notes of
Government of India and Reserve Bank notes other than notes of
denominations of above Rs.100 in either case.

Advance Remittance for import of goods


If the amount of advance remittance exceeds USD 100,000 or its equivalent,
an unconditional, irrevocable standby Letter of Credit or a guarantee from
an international bank of repute situated outside India or a guarantee of an
AD Category I bank in India, if such a guarantee is issued against the
counter-guarantee of an international bank of repute situated outside India.

Advance Remittance for the import of services


Where the amount of advance exceeds USD 500,000 or its equivalent, a
guarantee from a bank of international repute situated outside India, or a
guarantee from an AD Category I bank in India, if such a guarantee is
issued against the counter-guarantee of a bank of international repute
situated outside India, should be obtained from the overseas beneficiary.

Procedure for waiver of guarantee for above USD 2,00,000


The guidelines for effecting advance remittances of more than USD 200,000
are as follows:
The importers are classified into three, viz., Non-Customers, Public
Sector Undertakings and Customers.
For Non-customers no waiver of overseas bank guarantee is permitted.
In
case
of
the
importer
being
a
Public
Sector
or
a
Department/Undertaking of Government of India/State Government/s
branches are permitted to waive overseas bank guarantee for effecting
advance remittances of more than USD 2,00,000 subject to a specific
waiver from Ministry of Finance, Government of India.
The clearance/approval should be given duly taking a view on the
customers standing, track record, sales turnover, line of business,
usefulness of the services to be imported in the business, customers
capacity to raise funds, financial position including implications,
integrity, etc.
For our customers,
Waiver of overseas bank guarantee for making advance remittances for
import of goods above USD 200,000 and up to USD 500,000, import of
services above USD 100,000 and up to USD 500,000 may be permitted
by General Managers heading the respective Regions in respect of

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Regions headed by General Managers and the Corporate Credit General


Managers in respect of other Regions.
Waiver of overseas bank guarantee for making advance remittances for
import of aircrafts/aviation related products in excess of USD 5 Mio but
up to USD 50 Mio may be permitted by CMD.

Import documents received by the importer directly from overseas suppliers


Import bills and documents should be received from the banker of the
supplier by the banker of the importer in India.

AD Category I bank should not make remittances where import bills have
been received directly by the importers from the overseas supplier where the
value of import bill exceeds USD 300,000.

Evidence of Import : Physical Imports


In case of all imports, where value of foreign exchange remitted/paid for
import into India exceeds USD 100,000 or its equivalent, it is obligatory on
the part of the AD Category I bank through whom the relative remittance
was made, to ensure that the importer submits the Exchange Control copy
of the Bill of Entry.
Where import has been made by post, AD Category I bank through whom
the relative remittance was made, to ensure that the importer submits
Customs Assessment Certificate or Postal Appraisal Form, as declared by
the importer to the Customs Authorities.

Evidence of Import - Non Physical Imports


Where imports are made in non-physical form, i.e., software or data
through internet / datacom channels and drawings and designs through
e-mail/fax, a certificate from a Chartered Accountant that the software
/ data / drawing/ design has been received by the importer, may be
obtained.
AD Category I bank should advise importers to keep Customs
Authorities informed of the imports made by them under this clause.

Documents evidencing import into India should be preserved by AD Category


I bank for a period of one year from the date of its verification by internal
inspectors/auditors.

AD Category I bank should forward a statement on half-yearly basis as at


the end of June & December of every year, in form BEF furnishing details
of import transactions,
exceeding USD 100,000 in respect of which
importers have defaulted in submission of appropriate document evidencing
import within 6 months from the date of remittance, to the Regional
Office of Reserve Bank under whose jurisdiction the AD Category I bank is
functioning, within 15 days from the close of the half-year to which the
statement relates.
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INCOTERMS

Trading between countries is fraught with difficulties. In order to facilitate


exporting, several international "sets of rules" have been created. In the area of
sending goods and responsibility for delivery and customs clearance, most
countries recognize INCOTERMS 1000, published by the International Chamber of
Commerce (ICC). This set of definitions was first published in 1936 and is now in
its 6th revision.
The standardized INCOTERMS:

Define responsibilities for carriage, customs clearance and risk, including who
pays for loading onto and from transport, and the production of documents.

Define delivery. Such delivery may be a useful start point for any credit given to
the customer.

Shorten the contract of sale: simply refer to the term of delivery and the
INCOTERMS edition (e.g. FOB Incoterms 2000).

Are Internationally recognized, reducing cultural and language difficulties


It is to be noted that Incoterms are not:

The contract. They are simply a set of definitions and rules.

A means of transfer of property rights or a definition of transfer of property


rights.

Provision for relief from unforeseen events.

The risks of the various legs of transport are assigned to the customer or seller in
Incoterms. It follows that the party taking the risk will buy insurance for the risk of
loss or damage in transit.
INCOTERMS OUTLINED:
There are 11 different INCOTERMS and they have been grouped into 4 different
categories.
Group 1 - The E Term (Departure)
EXW - Ex Works

This group has only one term (EXW).

Under this shipping term the seller provides the goods for collection by the
buyer at the seller's own premises.

The buyer arranges insurance against damage to the goods in transit.

This term requires the least effort by the seller, but should not be used where
the buyer cannot carry out export formalities.

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Group 2 - The F Terms (Free, Main Carriage Unpaid)


FCA _ Free Carrier

F AS - Free alongside ship

FOB - Free on Board

The seller must deliver the goods to a carrier appointed by the buyer and
located in the seller's country.

The buyer arranges insurance against damage to the goods in transit.

Group 3 - The C Terms (Main Carriage Paid)


CFR - Cost and Freight

CIF - Cost, Insurance and Freight

CPT - Carriage paid to

CIP - Carriage and Insurance paid to

In this group the seller assumes the responsibility for the main contract of
carriage.

These terms provide for the seller contracting for carriage on usual terms at his
own expense.

In the terms CIF and CIP the seller arranges and pays for insurance against
damage to the goods in transit.

Group 4 - The D Terms (Delivered/Arrival)


DAT Delivered At Terminal

DAP delivered At Place

In this group the seller has to bear all costs and risks of bringing the goods to
the country of destination.

The seller arranges and pays for insurance against damage to the goods in
transit.

1. Ex-Works (Ex-Factory.EX-Godown):
When such a price is quoted, it is stipulated that the foreign buyer should take
delivery of the goods at the exporter's premises and all the risks and expenses
thereafter should be borne by him ie. the exporter is responsible for the delivery
of the goods at his works or factory. The other cost and risk involved in bringing
the goods from the place of the exporter to the desired destination will be on the
buyer's account. This term represents the minimum responsibility and
obligation.
2. FCA (Free Carrier-named point):
This term is used particularly in case of "multimodal" transport. The seller's
responsibility is fulfilled when he delivers the goods into the custody of the
carrier at the named point.

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3. F. A. S. (Free Alongside Ship):


This price includes all the costs incurred in delivering the goods alongside the
vessel at the port of export or other place named, but does not include charges
for loading the goods on board the vessel. It also does not include ocean freight
charges and marine insurance premium. The exporter's obligations are fulfilled
as and when the goods have been placed by him alongside the vessel and
notified to the buyer. The buyer is responsible to bear all costs and risks of loss
or damage to the goods thereafter.
4. F.O. B. (Free On Board):
Free on Board price is inclusive of Ex-Works price, packing charges,
transportation charges up to the place of shipment, wharfage and portage,
custom dues, export duties, cost of checking of quality measure, weight or
quantity, if any, which an exporter incurs while delivering the export goods to
the foreign buyer on board the ship. In this type of term the Bill of Lading must
carry the wording 'Shipped on Board' and it must bear the signature of the
carrier or his authorised representative together with the date on which goods
were 'boarded'.
5. CPR (Cost & Freight):
This price covers F. O. B. value of the goods plus freight charges of transporting
goods to the port of destination. In this term although the exporter bears the
cost of carriage to the named destination, the risk is already transferred to the
buyer at the port of shipment itself.
6. C.I.F. (Cost, Insurance and Freight)
This type of contract includes F.O.B. price plus cost of ocean freight and marine
insurance up to the port of destination. In this term, the exporter has to obtain
insurance at his cost against the risks of loss or damage to the goods during the
carriage.
7. CPT (Carriage Paid to)
This term is used for land transport by rail, road and inland waterways. The
seller is responsible for the carriage of goods to the agreed destination and has
to pay freight up to the first carrier/agreed point.
8. CIP (Freight, Carriage and Insurance paid):
This term is similar to "Carriage Paid to. But in this case the seller has to
arrange and pay for the insurance against the risk or loss or damage to the
goods during carriage.
9. D. A. T. (Delivered at Terminal):
This rate may be used irrespective of the mode of transport selected and may
also be used where more than one mode of Transport is employed. DAT means
the seller deliver the goods at a named terminal at the named port (or) place of
destination.

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10.

DAP (Delivered AT Place)


This may be used irrespective of mode of transport selected and may also be
used where more than one mode of transport is employed.

11. DDP (Delivered Duty Paid)


Under this term seller is responsible to make the goods available to the buyer
at his risk and cost at the buyer's premises or any other named destination
and incur all costs including "duty (taxes, fees, charges and Value Added Tax
levied upon importation) and making the transport documents or warehouse
warrant available to the buyer to enable him to take the delivery of goods.
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Letter of Credit

Letter of Credit: is an irrevocable arrangement which constitutes a definite


undertaking of the issuing bank to honour a complying presentation.
The meaning of the term honour includes (1) to pay at sight if the credit is
available at sight payment, (2) to incur a deferred payment undertaking and pay at
maturity if the credit is available by deferred payment, (3) to accept a bill of
exchange drawn by the beneficiary and pay at maturity if the credit is available by
acceptance.
The term complying presentation has been defined by Uniform Customs and
Practice for Documentary Credits (UCPDC) 600 to mean a presentation (of
documents) that is in accordance with (i) the terms and conditions of the credit, (ii)
the applicable provisions of these rules (articles of UCPDC 600) and (iii)
international standard of banking practice.
A. Parties in an LC Transaction
A transaction in a letter of credit may involve several parties at different stages
i.e.from the issue of the LC till making payment of the bills to the seller as
promised in the LC. The various parties with different rights and responsibilities
are the following:
a. Applicant: Normally applicant is the buyer of goods who submits application to
the LC issuing Bank and on whose behalf LC is opened on the basis of terms
and conditions of purchase agreement.
b. Beneficiary: Beneficiary is normally the seller of goods in whose favour LC is
opened and who has to get payment from the buyer.
c. Issuing/Opening Bank: The bank, which issue the LC undertaking to make
payment upto the amount specified in the LC on submission of documents as
per terms of LC
d. Advising Bank: The Bank through whom the LC is advised to the beneficiary
(seller) thereby assuring genuineness of the credit. Advising Bank is normally
situated in the country/place of beneficiary.
e. Second advising bank: Article 9 of UCPDC 600 introduced the concept of a
second advising bank. Article 9 (c) provides that an advising bank may utilize
the services of another bank (second advising) to advise the credit to the
beneficiary.
f. Confirming Bank: This is a Bank normally in the exporters country which adds
its confirmation to the LC, thereby undertaking the responsibilities of payment/
negotiation/acceptance under the credit, in addition to that of the Issuing Bank
g. Negotiating Bank : The Bank, which negotiates the documents, received under
the LC.

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i. Paying Bank or Nominated Bank : The Bank nominated and authorised by the
issuing Bank to make payment under the LC.
e. Reimbursing bank: The Bank authorised to honour the reimbursement claim
in settlement of negotiation/ acceptance/payment. It is normally the Bank with
which issuing Bank maintains an account, from where payment will be made.
B. Different types of LC
On the basis of availability of documents, there are two types of LC s
1.Documentary
Credit :It is made available to the beneficiary against
submission of documents as stipulated in the LC by him.
2.Clean LC ; When a letter of credit does not require to have documents of
title to bills drawn under it.
1. Irrevocable credit
2. Irrevocable confirmed credit
3. Revolving credit
4. Transferable LC
5. Back-to-back credit
6. Anticipatory Credit
a. Red clause LC
b. Green clause LC
7. Stand by LC
8. Payment Credit
9. Acceptance Credit
10. Deferred Payment LC
1. Irrevocable credit: The issuing Bank commits itself irrevocably to
honour its obligation under the credit, provided the beneficiary complies
with all conditions. As per UCPDC 600, LC means only irrevocable LC.
2. Irrevocable confirmed credit: The confirming bank undertakes to
honour its commitment regardless of whether or not the issuing Bank is
in a position to reimburse the amount specified in the LC.
3. Revolving credit: It is a commitment on the part of the Issuing Bank to
restore the credit to the original amount after it has been utilised. It is
either cumulative or non-cumulative. The revolving is restricted to
certain number of times.
4. Transferable LC : The beneficiary specified in the transferable LC has
the option of requesting the transferring bank/advising bank to transfer
the credit fully or in part to another beneficiary/many beneficiaries.

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5. Back-to-back LC: is a new LC opened on behalf of the beneficiary of a LC on


the basis of an already existing, non-transferable LC in favour of another
beneficiary.
6. Red Clause LC: As per instructions from importer, the issuing bank may
incorporate a RED CLAUSE in the LC whereby the exporter will be entitled to
draw a portion or whole of the LC amount from his bank or the Bank named in
the LC for purchase, processing & packing of the goods to be shipped, even
before negotiation of documents.
7. Green Clause LC: In addition to the credit facilities available under red clause
LC the exporter also gets finance for warehousing and insurance charges at the
port where the goods are stored pending availability of ship.
8. Stand by LC: is a Performance guarantee declaration in the broadest sense. It
is mainly used in USA, because American banks are prevented from giving
performance guarantees by the regulations in that country
9. Payment LC : If the bill under the LC is payable at sight
10.

Acceptance Credit : If the bill under the LC is in usance terms

11. Deferred payment LC : A commercial letter of credit, under which payment is


deferred for a specified period of time after goods are shipped. These credits are
often used to allow time for the independent inspection of goods, such as food
entering the country, with a provision that payment will not be made if goods
are rejected
C. Documents required:
Generally the following documents are stipulated in LC
1. Transport documents
2. Insurance documents
3. Bills of exchange
4. Commercial invoice
5. Certificate of origin
6. Packing list
7. Quality certificate
8. Beneficiarys certificate
D. Uniform Customs & Practice for Documentary Credits [UCPDC 600]
Letter of Credit (LC) is one of the major components in International trade
and it facilitates smooth flow of goods and its value simultaneously. LC
transactions are
governed by Uniform Customs & practice published by
International Chamber of Commerce (ICC), Paris.
Uniform Customs & Practice for Documentary Credits (UCPDC) 600, ICC
2007 revision came into force from 1st July 2007.

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E. Some changes made in UCPDC 600


1. Negotiation: As per UCPDC 600, by negotiation (i.e. purchase of drafts, etc., by
the nominated bank and giving of value thereof to beneficiary) on or before the
banking day on which reimbursement is due to the nominated bank. On this,
the obligation to reimbursement bank is due only at maturity.
2. Banking day: Banking day means a day on which a bank is regularly opened
at the place at which an act subject to these rules (UCPDC 600) is to be
performed. The significance of this definition is that if a bank is opened on a
Saturday for business other than handling of trade related foreign exchange
business (which would include acts covered by UCPDC), then, in respect of
documents received on Monday the maximum time of five banking days
available with the banker for completing scrutiny of documents and notifying
the presenting bank of its refusal to accept the document would expire as at the
close of the following Monday Saturday not being counted as if it would be a
banking day not for UCPDC purposes.
3. Responsibilities of Advising Bank: In terms of article 9(b) of UCPDC 600, the
LC advising bank has an additional responsibility to satisfy itself that its advice
to the beneficiary accurately reflects the terms and conditions of the credit
received.
4. Second advising Bank: UCPDC 600 also introduced the concept of a second
advising bank. Article 9 provides that an advising bank may utilize the
services of another bank (second advising) to advise the credit to the beneficiary.
5. Period of time available with the bank for scrutiny of documents:
UCPDC 600 says that the period of time available with each bank - (nominated
bank, confirming bank, issuing bank) for determining if the documents
presented under the credit are in compliance with the stipulated terms, - is a
maximum of five banking days following the day of presentation.
6. Amendments: Partial acceptance of amendment is not allowed and will be
deemed to be notification of rejection of the amendment.
7. Commercial invoice: Beneficiary must present documents invoices in the same
currency as in the credit. Nominated bank may accept invoices for an amount
in excess of the credit provided; it has not honoured or negotiated for an
amount in excess of that permitted by the credit.
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OUTWARD REMITTANCES
1. General
Outward remittances refer to flow of foreign exchange out of India. Thus all
sales of foreign exchange result in outward remittances.

Sale of foreign exchange may be required in the following cases:


1. For imports.
2. Travel of residents outside India.
3. Repatriation of proceeds out of NRE accounts.
4. Remittances by foreigners' employed/ settled in India.
5. Expenses incurred abroad like medical expenses, education, tuition fees,
advertisements etc.

For release of foreign exchange to persons resident in India for travel abroad,
authorized dealers are to be guided by the Rules made by the Govt. of India
under Section 5 of Foreign Exchange Management Act, 1999 which are detailed
in terms of Foreign Exchange Management (Current Account Transactions)
Rules, 2000 notified by the Government of India.

On the issue of endorsement of passports with a view to further simplifying the


procedures, it has now been decided that henceforth ADs and FFMCs need not
make any endorsement on the passports of the travellers availing of foreign
exchange for tourism and private purposes.

Travellers can, however, seek endorsement on their passports, of foreign


exchange released, at their option, if they consider it necessary for their record.

2. FEMA in its Sec 5 provides that there would be no restriction to sell or


draw foreign exchange to/from an Authorised person if such sale or
withdrawal is due to a current account transaction except to the extent of
restrictions imposed by the GOI By making rules for this purpose.
3. Restricted transactions:
All restricted transactions are classified into three categories namely:
(a) Transactions which are prohibited
(b) Transactions to be permitted with prior approval of GOI
(c) Transactions to be permitted with prior approval of RBI.
4. Advance remittance: ADs can allow advance remittance for any current
account transaction for which release of foreign exchange is admissible.
Provided this amount doesnt not exceed USD 200,000. Where the advance
remittance exceeds this amount the AD can release the same after obtaining a
guarantee from a bank of international repute.

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5.

Authorised dealers can release foreign exchange upto the respective prescribed
limit as given below without RBIs prior permission.
Purpose

ADs discretion

1. For Going abroad for employment

USD 100,000

2. For emigration

USD 100,000

3. Remittance for maintenance of close relatives


abroad per annum

USD 100,000

4. For private travels in one financial year (except


to Nepal & Bhutan)

USD 10000

5. Business travel

USD 25000

6. For attending conference

USD 25000

7. For specialized training

USD 25000

8. For study abroad against self declaration

USD 100,000

9. For medical treatment abroad against self


declaration (without doctors estimate)

USD 100,000

RBIs prior permission is required for release of foreign exchange


exceeding this amount.

Foreign exchange
journey date

6. Liberalised
individuals

remittance

can be released maximum 60 days ahead of the


scheme

upto

USD

2,00,000/-

for

resident

In February 2004, the RBI introduced the scheme permitting the resident
individual to remit upto USD 25,000 in a calendar year for any current or
capital account transaction. The amount was further enhanced on different
dates and the latest during September 2007 to USD 2,00,000 per financial year.
Only resident Indians are permitted to avail remittance facility under
Liberalised Scheme. Individual who are minors are also eligible under the
scheme. But Corporates, partnership firms, HUFs , Trusts are not
eligible
Under Liberalized remittance scheme, residents are permitted to remit up to
USD2,00,000 per financial year for current/capital account transactions.
Any resident individual intending to avail this remittance facility has to
designate a branch of an AD through which he has to make all remittances
under this scheme.
Remittance for Gifts and donations can be included under Liberalised
remittance scheme.

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The remittances under the scheme are over and above all other remittances
allowed to resident individuals as described in Schedule III of FEMA.
The remittance can be used for investment in mutual funds, venture funds,
unrated debt securities, promissory notes, bank accounts, for closure of loan
taken abroad etc.
Remittance under Liberalised scheme should not be made to:
a) Nepal, Bhutan, Mauritius or Pakistan or any country declared by FATF
(Financial Action Task Force) as non-cooperative countries.
b) Any purpose prohibited under FEMA
c) Remittance to individuals committing acts of terrorism.
7. Gift in Rupees by Resident Individuals to NRI close relatives
A resident individual to make a rupee gift to a NRI/PIO who is a close
relative of the resident individual [close relative as defined in Section 6 of the
Companies Act, 1956] by way of crossed cheque /electronic transfer.

The amount should be credited to the Non-Resident (Ordinary) Rupee


Account (NRO) a/c of the NRI / PIO and credit of such gift amount may be
treated as an eligible credit to NRO a/c.

The gift amount would be within the overall limit of USD 200,000 per
financial year as permitted under the Liberalised Remittance Scheme (LRS)
for a resident individual.
It would be the responsibility of the resident donor to ensure that the gift
amount being remitted is under the LRS and all the remittances under the
LRS during the financial year including the gift amount have not exceeded
the limit prescribed under the LRS.
8. A Non-resident can be issued foreign exchange by way of TC/DD/currency note
without limit to the debit of their NRE/FCNR accounts. Resident can be
issued /foreign exchange by way of TC/DD/currency note without any limit to
the debit of their RFC/EEFC a/cs.
9.

Time limit for surrender of foreign exchange


Sl.No.
1
2.
3
4

Source of foreign exchange


Repatriation of assets/inheritance/
gifts and repatriation of lawful
income/services rendered outside
India
foreign exchange received from a
Non-resident on his visit to India
Unspent/unused amount of foreign
exchange taken for purpose other
than travel
Unspent amount of foreign exchange
taken for travel

Time limit for surrender


180 days from the date
of receipt
180 days from the date
of receipt
180 days from the date
of acquisition
180 days from the date
of return to India

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10.

Facilities for NRIs/PIO/Foreign Nationals

Remittance of current income


Remittance outside India of current income like rent, dividend,
pension, interest, etc. in India of the account holder is a permissible
debit to the NRO account.
AD banks may allow repatriation of current income like rent,
dividend, pension, interest, etc. of NRIs who do not maintain an NRO
account in India based on an appropriate certification by a Chartered
Accountant, certifying that the amount proposed to be remitted is
eligible for remittance and that applicable taxes have been
paid/provided for.
NRIs/PIO have the option to credit the current income to their NonResident (External) Rupee account, provided the Authorized Dealer
bank is satisfied that the credit represents current income of the nonresident account holder and income tax thereon has been deducted /
provided for.

Remittance of assets by a foreign national of non-Indian origin


A foreign national of non-Indian origin who has retired from an
employment in India or who has inherited assets from a person
resident in India or who is a widow of an Indian citizen who was
resident in India, may remit an amount not exceeding USD one
million, per financial year (April-March), on production of
documentary evidence in support of acquisition / inheritance of
assets, an undertaking by the remitter and certificate by a Chartered
Accountant in the formats prescribed by the Central Board of Direct
Taxes vide their Circular No.10/2002 dated October 9, 2002.

These remittance facilities are not available to citizens of Nepal and


Bhutan.

Remittance of assets by NRI/PIO


A NRI or a PIO may remit an amount up to USD one million, per financial
year, out of the balances held in his NRO account / sale proceeds of
assets (inclusive of assets acquired by way of inheritance or settlement),
for all bonafide purposes, subject to the satisfaction of the Authorized
Dealer bank, and on production of an undertaking by the remitter and
certificate by a Chartered Accountant in the formats prescribed by the
Central Board of Direct Taxes vide their Circular No.10/2002 dated
October 9, 2002.
The remittance facility in respect of sale proceeds of immovable property
is not available to citizens of Sri Lanka, China, Afghanistan & Iran
The facility of remittance of sale proceeds of immovable property/other
financial assets is not available to citizens of Pakistan, Bangladesh,
Nepal and Bhutan.
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Repatriation of sale proceeds of residential property purchased by


NRIs/PIO out of foreign exchange
Repatriation of sale proceeds of residential property purchased by NRI /
PIO is permitted to the extent of the amount paid for acquisition of
immovable property in foreign exchange received through banking
channels.
The facility is restricted to not more than two such properties.
The balance amount can be credited to the NRO account and can be
remitted under USD one million facility.

AD banks may permit repatriation of amounts representing the refund of


application / earnest money / purchase consideration made by the house
building agencies / seller on account of non-allotment of flat / plot /
cancellation of bookings / deals for purchase of residential / commercial
property, together with interest, if any (net of income tax payable thereon),
provided the original payment was made out of NRE / FCNR (B) account of
the account holder, or remittance from outside India through normal banking
channels and the Authorized Dealer bank is satisfied about the genuineness
of the transaction. Such funds may also be credited to the NRE / FCNR (B)
account of the NRI / PIO, if they so desire.

Facilities for students


Students going abroad for studies are treated as Non- Resident Indians
(NRIs) and are eligible for all the facilities available to NRIs under FEMA.
As non-residents, they will be eligible to receive remittances from India
a. up to USD 100,000 from close relatives in India, on self declaration,
towards maintenance, which could include remittances towards their
studies also and
b. Up to USD 1 million per financial year, out of sale proceeds of assets /
balances in their NRO account maintained with an Authorised Dealer
bank in India.

International Credit Cards


Authorised Dealer banks have been permitted to issue International Credit
Cards to NRIs/PIO, without prior approval of the Reserve Bank. Such
transactions may be settled by inward remittance or out of balances held
in the cardholders FCNR(B) / NRE / NRO accounts.

Release of foreign exchange


Out of the overall foreign exchange being sold to a traveller, exchange in
the form of foreign currency notes and coins may be sold up to the limit
indicated below:
a. Travellers proceeding to Islamic Republic of Iran, Russian Federation
and other Republics of Commonwealth of Independent States - full
exchange may be released

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b. Travellers proceeding to Iraq or Libya - not exceeding USD 5000 or its


equivalent
c. Travellers proceeding to countries other than Iraq, Libya, Islamic
Republic of Iran, Russian Federation and other Republics of
Commonwealth of Independent States - not exceeding USD 2000 or its
equivalent.

Payment in Rupees

ADs may accept payment in cash up to Rs. 50,000 (Rupees fifty


thousand only) against sale of foreign exchange for travel abroad (for
private visit or for any other purpose). Wherever the sale of foreign
exchange exceeds the amount equivalent to Rs.50,000, the payment
must be received only by
a. a crossed cheque drawn on the applicants bank account, or
b. crossed cheque drawn on the bank account of the firm/company
sponsoring the visit of the applicant, or
c. Bankers Cheque / Pay Order / Demand Draft or
d. Debit / credit / prepaid cards provided
i.

KYC/AML guidelines are complied with

ii. sale of foreign currency / issue of foreign currency TCs is within


the limits (credit / prepaid cards) prescribed by the bank and
iii. The purchaser of foreign currency / foreign currency TCs and the
credit/debit/prepaid card holder is one and the same person.

Advance Remittance Import of services


Authorised Dealers may allow advance remittance for import of services.
However, where the amount exceeds USD 500,000 or its equivalent, a
guarantee from a bank of International repute situated outside India or a
guarantee from an Authorised Dealer in India, if such a guarantee is issued
against the counter-guarantee of a bank of International repute situated
outside India, should be obtained from the overseas beneficiary.

Issue of Guarantee- Import of services


Authorised Dealer may issue guarantee on behalf of their customers importing
services, provided:
the guarantee amount does not exceed USD 500,000;
AD is satisfied about the bonafides of the transaction;
AD ensures submission of documentary evidence for import of services in
the normal course; and
The guarantee is to secure a direct contractual liability arising out of a
contract between a resident and a non-resident.

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International Debit Cards


Banks authorised to deal in foreign exchange are issuing International Debit
Cards (IDCs) which can be used by a resident for drawing cash or making
payment to a merchant establishment overseas during his visit abroad.
IDCs can be used only for permissible current account transactions and the
item-wise limits as mentioned in the Schedules to Rules as amended from
time to time, are equally applicable to payments made through use of these
cards.

11. Obtention of mandatory forms Remittances to Non-Residents


a) As and when a customer approaches the branches for effecting any
outward remittance, the branch concerned should insist for submission
of Form 15CA and 15CB.
b) The person making the payment (remitter) will obtain a certificate from a
Chartered Accountant in Form 15CB.
c) The remitter will then access the website www.tin-nsdl.com to
electronically upload the remittance details to the department in Form
15CA (undertaking). The information to be furnished in Form 15CA is to
be filled using the information contained in Form 15CB (certificate).
d) The remitter will then take a print out of the filled up Form 15CA (which
will bear an acknowledgement number generated by the system) and sign
it. Form 15CA can be signed by the person authorized to sign the return
of income of the remitter or a person so authorized by him in writing.
e) The duly signed Form 15CA and Form 15CB will be submitted in
duplicate to the AD branch. The AD branch will in turn forward a copy of
the certificate and undertaking to the assessing officer concerned.
f)

If a remitter has obtained a certificate from the Assessing Officer, Form


15CB need not be submitted. However, duly filled up Form 15CA will
have to be submitted as per the procedure mentioned above.

12. FX4 CASH

For effecting remittances from India to various other countries, in


non-conventional currencies.

Tie up with Deutsche Bank

Branches can send multiple currency payments using this product


through Swift

13. CHINA EXPRESS


Routing of Payments to China through Deutsche Bank
Salient Features of China Express
Automatic identification of payments to China ;
Prioritisation and real time processing of payment

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MT 103 is sent directly to the beneficiary bank and not a correspondent


Bank during China business hours which guarantees timely advising to
the beneficiary bank;
Elimination of intermediary bank charges / deduction;
Automatic intermediary bank selection;
Debit confirmation (MT 900) will be relayed to the Branch on real time
basis as soon as the payment is processed;
Also an SMS confirmation will be sent to the remitter by Deutsche Bank
immediately after processing of payment.

srn/18.05.2013

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Inward Remittance facilities for NRIs in IOB

1. SWIFT

SWIFT - Society for World Wide Inter-Bank Financial Telecommunication

SWIFT No. - 11 characters. Of which first 4 indicates name of the Bank. The
next 2 the code of the country, the next two the code of the city and the last
three Branch code.

Standardized format; MT stands for Message Type.


Customer-customer funds transfer
Advice of cheque/draft
Request for stop payment
Status of Request for stop payment
Cash Letter Advice
Letter of Credit
Continuation of LC
Request for statement of account

MT
MT
MT
MT
MT
MT
MT
MT

- 103
- 110
- 111
112
- 450
- 700
- 701
- 950

SWIFT service is available for 24 hours in a day.

The current schedule of SWIFT charges are as follows.


Message type
Payment messages MT 103
LC amendments
Full text operative LC&LG
For all other outward messages

Charges
in Rs.
150
200
1000
500

2. Electronic Funds Transfer Arrangements


Under this arrangement, Treasury (Foreign) Dept. will receive secured
electronic message daily from the exchange companies and will credit the
beneficiaries account through CBS to the debit of the prefunded account of
the private exchange company with us.

We have Electronic Funds Transfer arrangement with the following


Exchange Houses.
Sl.No
1.
2.
3.
4.
5.
6.
7.
8.

Name of Private Exchange House


Al Fardan Exchange Co, Abu Dhabi
Al Razouki International Exchange Co, Dubai
Al Ansari Exchange, Abu Dhabi
Bahrain Exchange Company, Kuwait
Habib Exchange Company L.L.C, Abu Dhabi
UAE Exchange Centre L.L.C, Abu Dhabi
Wall Street Exchange Centre L.L.C, Dubai
Al Ahalia Money Exchange Bureau, Abu Dhabi

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9.
10.
11.
12.

City Exchange Company W.L.L, Doha


Modern Exchange Co L.L.C, Sultanate of Oman
Emirates India International Exchange, Dubai
Al Muzaini Exchange Co., Kuwait

RBI regulations on internet/web based remittances: (Ref: FX / 42 /2012-13 dt


11.06.2012)

Only personal remittances such as remittances towards family maintenance


and remittances favoring foreign tourists visiting India are permissible under
this arrangement.

Under Money Transfer Service Scheme (MTSS) the remitters and the
beneficiaries are individuals only

Any single remittance under the scheme shall not exceed US$2500/- or its
equivalent.

Not more than 30 remittances shall be received by a single recipient in a


year.)

Payments to the recipients in India should be made in Indian Rupees only.

All payments of Rs.50,000/- and above should be paid only by way of DD or


direct credit to the account of the recipient.

FIRC should not be issued to the recipients at any cost

3. MONEY HOME
A lock box facility enables the remitter in the US to effect quick remittance
to India. This product ensures hassle free remittance from U.S. to reach the
beneficiary within five working days.
Our Treasury (foreign) dept. at Central Office, after sighting the respective
credit in our nostro account will remit the proceeds to the branch concerned
with whom the beneficiary maintains his/her account by way of an IBSA for
the net amount.
4. e- CASH HOME
e-CASH HOME facilitates on line credit to accounts.
The facility is also extended for credit to accounts not only with our Bank
but also to accounts with any Bank in India.
The unique feature of this product is that the remitter and beneficiary need
not be a customer of IOB.
The remitter has to log on to our Banks web site www.iob.in and register
himself/herself, upon which an individual login-id unique to that particular
remitter will be generated by the system.
Thereafter the remittance particulars are keyed in after which the remitter
authorises debit of the amount to his bank account.

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The debit is carried out through Automated Clearing House (ACH) platform
in vogue in USA and our nostro account is credited.
5. Xpress Money

The remitter in UAE should make remittances UAE Exchange Centre


branches in his country.
The remitter is provided with a Xpin number (Xpress Money Personal
Identification Number) which he can inform along with other remittance
details to the receiver/beneficiary.

The transaction details available in their Money Transfer Payment System is


available for access to our designated branch concerned with Internet
facility.

The beneficiary has to submit Receive Now (RN) form to the designated
branch for claiming the amount and shall prove his identity by producing
valid photo identity.

The branch will make the payment after verification of transactions, identity
etc.

No charges shall be collected from the beneficiary at the time of payment.

Payment Procedure:

On receipt of claim in RN form from the beneficiary. Branch should call for
and verify any one of the photo identity of the beneficiary such as passport,
driving license, ration card, voters ID, PAN card, etc.

Branches should ensure that records pertaining to the identification of the


customer and his address (e.g. copies of documents like passports, identity
cards, driving licenses, PAN card, utility bills etc.) should be maintained for
atleast 10 years from the date of transaction between the bank and the
beneficiary.

If any of the required details is found missing or found to be incorrect, the


payment should not be made.

Branches debits their TTPR a/c. (TT Paid Reimbursable account code
2567) while making payment to the beneficiary and eliminates the Debit
Entry on receipt of IBSA from Rupee Section, treasury (foreign) dept.

No charges should be collected from the receiver at the time of payment even
if the same is paid by way of DD. DD should be issued in favor of receiver
only.

No payment should be made to Minors.

These remittances are not treated as foreign inward remittances and hence
they should not be credited to NRE accounts and are not available for
repatriation.

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Our bank is entitled to commission on each transaction handled by the


branches. The same would be passed on to the branches concerned
periodically by retrieving the data from our system.

6. MoneyGram

Our Bank has entered into an arrangement with M/s UAE Exchange &
Financial Services Ltd, Bangalore for introduction of a web based remittance
product named MoneyGram. 8 digit reference number is given.

The product MoneyGram is introduced as per the centralized System and


procedures are same as that of Xpress Money.

These remittances are not treated as foreign inward remittances and hence
they should not be credited to NRE accounts and are not available for
repatriation.

No charges shall be collected from the beneficiary.

7. EZ REMIT

Our Bank has entered into an arrangement with M/s BFC Forex & Financial
Services Pvt Ltd, Mumbai promoted by Bahrain Finance Company, Bahrain
for introduction of a web based remittance product named EZ REMIT.

Branches, when they are approached by beneficiaries of remittances under


this Web Based Scheme, will identify the customers and get the Forms
(Receive Now, etc.) filled up.

Branches should then take up with Treasury (Foreign) Dept. with the basic
details like amount of remittance, reference number (12 digit PIN number,
etc.), name of remitter, name and address of beneficiary, country of origin,
etc. and Agent Code (supplied by the service provider) through CHAT
facility.

Make payment to the customer as per the procedure, we follow for Xpress
money service.

These remittances are not treated as foreign inward remittances and hence
they should not be credited to NRE accounts

8. Western Union Money Transfer

Western Union Money Transfer is the product of Western Union Financial


Services Inc. (WUFS) to receive remittances from any part of the world to
reach the beneficiaries within minutes under Electronic Money Transfer.

Salient features:
The remitter abroad shall use WUFS agent in his country to remit the
amount along with the applicable charges in the necessary application
form.
The remitter is provided with a 10 digits Money Transfer Control
Number and he has to inform the number and remittance details to the
receiver/beneficiary.

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The transaction is then entered by them into the central system of WUFS
which will be accessible to any WUFS sub agent including IOB
The beneficiary has the option of drawing the amount in any of the
branches of IOB
The branch will make the payment after verification of transaction,
identity etc.
No charges shall be collected from the beneficiary at the time of payment
9. Draft drawing arrangements with various Exchange Houses and Banks.

We have a system wherein the branches in the drawing arrangements will be


permitted to view the details of the drafts payable by Exchange Houses &
Banks and effect payment, through CBS. This system was effective from
08.01.2009.

Presently we have arrangements to pay Rupee drafts issued by the following


Private Exchange Houses (PEH)
Bank Code
AFABDB
AFDOHA
BECKUW
BFCBAH
GLOMOM
OECKUW
OMUAOM
OREXDU
UAEECE
UAEKEW

Name of the Private Exchange


House
Alfardan Exchange Co., Abu Dhabi
Alfardan Exchange Co., Doha
Bahrain Exchange Co., Kuwait
Bahrain Finance Co., Bahrain
Global Money Exchange, Oman
Oman Exchange Co., Kuwait
Oman & UAE Exchange Center, Oman
Orient Exchange Co.,
UAE Exchange Center, Abu Dhabi
UAE Exchange Center, Kuwait

A/c
No.
110
107
109
97
113
77
112
114
86
111

And the following Banks,


Bank
Code
BCBKUA
MASDUB
GULKUW

Name of the Bank


Bank of Commerce, Berhad (CIMB
Bank)
Mashreq Bank, Dubai
Gulf Bank, Kuwait

A/c No.
240
510
525

Treasury (Foreign) loads the DD-ISSUE DATA files that are being received
from PEH into the core server on a daily basis.

The branches should use the program Payment of DDs- Private Exchange
Cos & Banks only, available in CBS menu (Module:fets Prog-name : exch).

Only the branches in the drawing arrangements should use this option and
only for payment of Rupee drafts issued by PEH and the three banks.

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The branches with drawing arrangements while matching the details of the
draft in CBS menu, the system will generate a corresponding credit, which
will be posted automatically.

However, in case of drafts issued by the three Banks listed above, even if the
data is not available, the system would permit the users to pay the draft and
the users should ensure that they enter the details in full in the relevant
columns for prompt reconciliation.

In order to comply with AML requirements and for a better follow up, our
Bank advised all the Exchange Companies to restrict issuance of rupee
drafts upto Rs.5.00 lacs.

Rupee drafts issued by Private Exchange Houses in excess of Rs.5.00 lacs


should be returned with the reason Exceeds arrangement.

8. Direct Credit by our Overseas Branches


Whenever a remitter approaches our overseas branches to effect a
remittance to his own account or to accounts of third parties maintaining
account with our branches, overseas branches will directly and
instantaneously credit the account of the beneficiary.

The facility has been initially introduced at Singapore and would be


extended to other centres. [FX/82/2009-10 dt.06.01.2010]
****************

srn/07.04.2013

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General Advances
1. Loans sanctioned to NBFCs for on-lending to individuals or other entities
against gold jewellery, are not eligible for classification under agriculture
sector.
2. Recommendations towards improvement of agricultural advances was given
by R.V.Gupta Committee
3. Ceiling for single Borrower Limit (Other than Infrastructure Projects)
Category of borrower
Individual /Proprietary
Concerns/ Trust/Society*

Maximum
Limit
Rs.100 Crores

Partnership firms
Ship Breaking Industry*
Film Industry*
Aviation Industry*

Rs.400 Crores
Rs.400 Crores
Rs.100 Crores
Rs.500 Crores

NBFCS*
RBI.

Rs.300 Crores

registered

with

NBFCs having gold loans to the extent


of 50% or more of its total financial Rs.300 Crore
assets.

Maximum limit with


approval of Board

20% of capital
Funds
10%/15% of
Capital Fund for
single NBFC/NBFC
AFC Asset Financing
Company)

7.5% of Banks
Capital Funds.

NBFCs, which have been exempted 15% of


20% of capital Funds
from the requirement of registration by Capital
Funds
RBI viz.
i.
Insurance Companies
registered under Section 3 of
the Insurance Act, 1938;
ii.
Nidhi Companies notified under
Section 620A of the Companies
Act, 1956;
iii.
Chit Fund Companies carrying
on Chit Fund business as
their principal business as per
Explanation to Clause (vii) of
Section 45-I(bb) of the Reserve
Bank of India Act, 1934;
iv.
Stock Broking Companies /
Merchant Banking Companies
registered under Section 12 of
the Securities & Exchange
Board of India Act; and v)
Housing Finance Companies
being regulated by the
National Housing Bank (NHB).
15% of Capital 20% of capital
All other borrowers
Funds
Funds

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4. Single borrower limit for infrastructure projects


Category of borrower
Individual /Proprietary
Concerns/Trust/Society
Partnership firms
NBFCs Registered with RBI.

Maximum
Limit
Rs.100 Crore
Rs.400 Crore
Rs.300 Crore

NBFCs having gold loans to Rs.300 Crore


the extent of 50% or more of its
total financial assets.
All other borrowers

Maximum limit with


approval of Board
@ 25% of capital
Funds
15%/20% of Capital
Funds
for
single
NBFC/ NBFC - AFC
(Asset Finance Co.) if
the NBFC is lending
to Infrastructure.
12.5%
of
Banks
Capital Funds.

20% of Capital
Funds

@ 25% of capital
Funds

Maximum Limit

Maximum limit
with approval
45% of capital
Funds

5. Group Borrower Limit


Group borrower limit
For projects
other than
infrastructure.

For Infrastructure
projects

40% of capital Funds.


However
aggregate limits
to Proprietary and
partnership firms in the
group
should
not
exceed Rs.500 crore.
50% of capital Funds
However aggregate limits to
Proprietary and partnership
firms in the group should
not exceed Rs.500 crore.

55% of capital
Funds

6. Exposure ceiling to NBFC

In the case of NBFCs, the Bank will restrict its aggregate exposure to
10% of gross domestic advances subject to single borrower exposure not
exceeding Rs.300 Cr. The exposure will include FB, NFB advances and
investments.

Single borrower limit for NBFCs predominantly engaged in lending


against gold: Within the above ceiling a sub ceiling of 1% of gross
domestic exposure for all such NBFCs, having gold loans to the extent
of 50% or more of its total financial assets, taken together

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7. According to the guidelines of RBI, No Non Banking financial company shall


contribute to the capital of a partnership firm or become a partner of such
firm.
8. NBFCs, registered with RBI are eligible for Bank Finance
Need based working capital facilities as well as term loans will be
extended to all NBFCs registered with RBI and engaged in equipment
leasing, hire-purchase, loan and investment activities

However, finance to Residuary Non Banking Companies (RNBCs) would


be restricted to the extent of their Net Owned Fund (NOF).

Finance can be extended to NBFCs against second hand assets financed


by them
Non-Corporate entities engaged in Non Banking Financial activities can
be granted MCC limits against immovable properly as per norms
applicable to MCC advances to others.
9. Financing to Chit companies
There is no ban on financing Chit Fund Companies. However it should
be ensured that the chit company, to whom finance is made, is not
engaged in schemes attracted by the provisions of the prize chits
and money circulation schemes (Banning) Act 1978
10.

Exposure ceiling for real estate advances


Sub-sector under Real Estate Advances

Sub-ceiling

Commercial Real Estate excluding liquirent CRE :Lendings secured by mortgages on commercial real estates
(office buildings, retail space, multipurpose commercial
premises, multifamily residential buildings, multi-tenanted
commercial premises, industrial or warehouse space, land
7%
acquisition, development and construction etc.) (excluding
liquirent CRE).
Liquirent CRE
Commercial Real Estate (Total)
Liquirent Non-CRE
Hotels, Hospitals and investment in Mortgaged Backed
Securities (MBS)
and other securitised exposures
Housing direct (includes total of residential mortgagesexcept indirect housing loans)
Housing Indirect
Non-Commercial Real Estate (Total)
Real Estate CRE & Non CRE (Total)

3%
10%
3%
3%
10%
4%
20%
30%

11.
Single/group Prudential exposure limits do not apply if the credit
facilities proposed fall under the following categories:

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Existing/additional credit facilities (including funding of interest and


irregularities)
a. Granted to weak/sick industrial units under rehabilitation.
b. Borrowers, to whom limits are allocated directly by the Reserve Bank of
India, for food credit.
c. Principal and interest are fully guaranteed by the Government of India.
d. Loans and advances granted against the security of Banks own term
deposits.
e. Exposure to NABARD.
12. Ceiling for Aggregate exposure limit for Trust/Society
The exposure to Trust and Society put together shall not exceed 3% of
gross domestic exposure subject to single borrower exposure not
exceeding Rs.100 Crores.
The ceiling of Rs.100 crore fixed for Single Trust/Society and 3% fixed
for aggregate Trust/Society accounts are not applicable in the following
cases.
i.

In the case of exposure to Trusts/Societies constituted by State /


Central Governments including Port Trust(s) or under Special
Statutes for specific purposes like infrastructure development etc.,
and

ii.

To accounts specifically exempted by the Board

In such cases (mentioned under i & ii above), the exposure can be upto
single borrower limit under prudential norms
13. Loans granted with repayment period (including holiday period) of 12
months and below are classified as Short Term Loans.
14. Loans granted with repayment period (including holiday period) of more
than 12 months are classified as Term Loans.
15. The maximum period for repayment of term loans other than Housing loan
shall not generally exceed 120 months including the holiday period. This
may however be increased upto 180 months for large projects involving
longer gestation period.
16. Financing MBA & Engineering Colleges
New accounts where the aggregate of the proposed credit facilities
(FB+NFB) is Rs.5 crore or above: grading has to be obtained from
ICRA Ltd.
17. Loans to Hotels and Hospitals

Loans to Hotels and Hospitals are not classified under Commercial Real
Estate sector if the ventures are run by the borrower themselves.

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Branches and ROs can sanction advances to these sectors viz.Hotels,


Hospital and Liquirent Non-CRE under their discretion available to
sanction limits for such category of borrower

18. Loan against Shares


a. Loans against the security of shares, debentures and PSU bonds if held
in physical form should not exceed the limit of Rs.10 lakhs per borrower
and Rs.20 lakhs per borrower if shares are held in demat form.
b. Advances against shares and debentures to individuals and share &
stock brokers shall be considered by the Bank in select regions, and that
too, in specified branches in such Regions.
c. At present a minimum margin of 50% will be maintained on advances
against shares/ Issue of guarantees on behalf of brokers.
d. Where the securities are held in dematerialized form, the requirement
relating to transfer of shares in banks name will not apply. Instead, lien
will be marked against such shares in DP.
19.

Granting Of Loans For Acquisition Of Kisan Vikas Patras (Kvps):


No loans will be sanctioned for acquisition of/investing in Small
Savings Instruments including Kisan Vikas Patras as per RBI
guidelines

20.

Margin on loans & advances

Bank recognizes margin as the borrowers share in the assets or


security
21.

Margin on MCC 50% of value of immovable properties

22.
In respect of MCC against immovable properties, sanctioning
authorities can prescribe lower margin at 40% subject to RBI guidelines
and subject to 2 out of 3 parameters mentioned below being complied with.

Rating of the borrowers should be IOB 4 and above.

Current Ratio should be minimum 1.20 & TOL/TNW upto 3:1.

Collateral security (e.g. Stocks / Book Debts) coverage should be not


less than 50%.

23. Unsecured exposure is defined as an exposure where the realizable value


of security, as assessed by the Bank/approved valuers/Reserve banks
inspecting officers is not more than 10 per cent, ab-initio, of the
outstanding exposure.

Banks outstanding unsecured guarantees, plus total outstanding


unsecured advances should not exceed 30% of its total outstanding
global advances.

24. The confirmation of balances in deposit and advances accounts of entities


should be sent directly to the respective auditors, besides sending to the
account holders.

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25.

Guarantees In Favour Of Banks:

Banks issue guarantees favouring other banks/FIs/other lending


agencies for the loans extended by the latter.

A cap of 10% on Bank's Tier 1 capital is fixed for the bank as a whole for
issuing such guarantees.

Of this, guarantees favouring single bank/FI will not exceed 1% of Tier 1


capital.

26.

Guidelines for Sanctioning Bridge Loans:

Bank will sanction bridge loans to companies for a period not exceeding
one year against expected equity flows/issues.

Bank will also extend bridge loans against the expected proceeds of NonConvertible Debentures, External Commercial Borrowings, Global
Depository Receipts and/or funds in the nature of Foreign Direct
Investments, provided the borrowing company has already made firm
arrangements for raising the aforesaid resources/funds

27.

Financing second hand machineries is subject to ;

The repayment of the term loan should be restricted to a maximum period


of 5 years or the residual life period of machinery/asset whichever is lower.
28.

Credit Information Reports;


Our Bank is a member in all the following 4 credit information
companies.
1. The Credit Information Bureau (India) Ltd (CIBIL),
2. Experian Credit Information Co. of India P. Ltd.,
3. Equifax Credit Information Services P. Ltd. and
4. Highmark Credit Information Services P. Ltd.

It is compulsory to draw Credit Information Reports (CIR) from Credit


Information Company in respect of advances for Consumer as well as
Commercial segment irrespective of the loan amount for fresh sanction
/ enhancement / renewal.

All the Branches are provided with User Ids and password for drawing
the reports in Consumer segment from CIBIL.

Regional Offices should draw reports in Commercial segment with the


User Ids they have.

After obtaining CIBIL report, branch should also ensure that the
borrower(s) / guarantor(s) names do not appear in the CIBIL DETECT
list which is available with Regional Offices.

CIBIL reports (commercial) should be generated at the time of renewal of


credit facilities also.
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29. Report on Overseas Buyers And Sellers


Branches can draw the reports either from
a. Dun & Bradstreet Information Services India Pvt. Ltd. or
b. From Experian Services India Private Limited.
30.

Approval grid :

As per Reserve Bank of India guidelines on Credit Risk Management,


each Bank should consider formation of Credit Approving Committees at
various operating levels.

The credit limits to be sanctioned above the delegated powers of Scale IV


(Single/Group/Scheme-wise) should be routed through the Approval
Grid.

It should be ensured that the Chairman of the Grid is not the credit
sanctioning/processing authority.

Approval Grid is only a recommendatory body. Based on the


recommendations of the Approval Grid, the credit proposals will
thereafter be put up to the appropriate sanctioning authority for
disposal.

At Central Office all new credit proposals falling beyond the powers of
HLCC(GM) and Overseas credit proposals are referred to an Approval
Grid before being recommended to sanctioning authorities.

Proposals seeking enhancement of any amount (both FB and NFB and


both for domestic and overseas credit) excluding adhoc limits falling
under the powers of HLCC(ED), CAC and MCB are to be routed through
Approval Grid".

At branch headed by AGM/DGM. Wherever sufficient number of officers


are not available on the roll for the constitution of approval grid at
Branches, Regional Head shall nominate the members from nearby
Branches and permit the Branch to constitute the grid.

Restructure / rephasement / rehabilitation proposals (including CDR)


will be routed through Approval Grid.

31. Different committees for credit are:


Credit Approval Committee (CAC headed by CMD).
Two Head Office Level Credit Approval committees at Central Office
namely HLCC(ED) and HLCC (GM) to cater to all eligible proposals at
Central Office level.
One committee at Regional office namely Regional Level Credit
Approval Committee (RLCC) to consider proposals at Regional offices.

With the setting up of the committees individual delegated powers above


the Branch Manager level cease to exist. The delegated powers are
vested with the committees.

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25% higher powers (for Secured and Unsecured advances) are


delegated for single borrowers with external rating AAA, AA and A
(This includes + or -symbols). The rating should be in force (within 12
months from the date of rating / review) and should cover the total
limit/exposure proposed.

Entry Level Rating for new proposals: For considering sanction of new
proposals of Rs.1 crore and above by Branches and RLCC, the credit
rating should be equivalent to IOB-5 and above (internal RAM rating) or
BBB and above (external rating by RBI approved rating agency).

Hurdle Credit Rating for existing accounts: Proposals (existing


account) involving enhancements, where the rating of the borrower
(existing account) is equivalent to IOB6 and below (internal RAM rating)
or BB and below (external rating by RBI approved rating agency), should
be referred to the next higher layer of sanctioning authorities

The decision of these committees shall be unanimous.

The system of routing the proposals through Approval Grid shall


continue for sanctioning of proposals by the Committees.

Minutes of the meetings of various committees at RO and CO shall be


duly recorded and signed by the Head and other members of the
respective committees.

Minutes of the meetings of RLCC, HLCC (GM) and HLCC (ED) shall be
reported to next higher committee respectively.

The Convener for each committee shall be as under.


HLCC (ED)

CSSD

HLCC (GM)

CSSD

RLCC

Head of the Credit Department (RO)

The convener is responsible for;


Circulation of Agenda Notes serially numbered.
Recording of Minutes.
Communication of Minutes to the respective Departments.
Keeping the minutes and original proposal under Safe Custody.
Placing the minutes to next layer for review in the following month

Frequency Of Meeting:
The committees shall meet on a weekly basis and as and when
required.

The quorum of the committees : 3

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32. Powers to grant excess are vested with Regional Head, GM, ED and CMD.
33. Since adhoc limits involve appraisal and documentation, such limits shall
be sanctioned by the respective Credit Approval Committees
34. Proposals with limits above Rs.1 crore (irrespective of Corporates or
Others) shall be routed through Approval Grid at Branch / Regional Office
before sanction by RLCC
35. Delegation of powers
The sanctioning authority shall exercise his/her delegated powers only
after regular loan proposals are prepared, needs assessed, compliance of
KYC norms and duly recommended at least by one officer of the bank
other than the sanctioning authority.
In single man branches, advances sanctioned by Branch Head under
Special Credit Schemes, Industrial and trade sectors require pre release
clearance by the Regional Head.
Rejected/declined proposals by higher authorities should not be
entertained at lower levels even if such sanctions fall within lower
functionaries delegated powers.
Proposals declined by one Branch or RO should not be entertained by
another Branch or RO without prior clearance of the Branch or RO which
has declined the proposal earlier.
The powers delegated to Branch Heads to sanction credit limits are
with reference to the scale of the sanctioning authorities only and not
in relation to the size of the Branch.
36. Discretionary power II line functionaries in branches

In Branches, headed by Managers in Scale IV and above, II line


Managers can exercise discretionary powers as applicable to their scale.
However, such sanctions made, shall be reviewed by the 1st line
Manager.

In Branches headed by Scale III officers, II line Managers in scale II and


above can exercise the delegated powers as applicable to their scale in
respect of the following advances. However, such sanctions made, shall
be reviewed by the 1st line Manager.
Demand Loan against domestic deposits to depositors and third
parties.
Demand Loan against NSC, policies of LIC and other private
insurance companies approved by IRDA.
Advances against gold ornaments (Agri Jewel Loan and other jewel
loan)
Clean Loan to salaried employees.
Pushpaka

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Pensioners loan.
Kissan Credit Card scheme.
37. The project launched in Tiruvallur and Nagapattinam Districts of
Tamilnadu to achieve Total Inclusive Growth for integrated Rural
development covering all aspects of social and economic life of people. : IOB
-Sampoorna'
38. With a view to simplify access to Bank Credit by exporters, especially small
and medium exporters, RBI has drawn up a scheme, in consultation with
select Banks and exporters.: Gold Card Scheme
39.

Trade Credit
o

Limit to traders upto which Balance sheet need not be insisted :Rs 1
lakh

Sanctioning limits to traders based on unaudited balance sheet : For


limits upto Rs 25 lakhs,

Non-insistence of approved valuers valuation on collateral securities


offered for securing limits to traders: upto Rs 1 lakh etc

40. A scheme for easy credit to High net worth Corporates will be continued to
be given thrust. : " Insta Fund ". Margin 10%
41. Term loan/project financing
The maximum period for repayment of term loans shall not generally
exceed 120 months including the holiday period. This may however be
increased upto 180 months for large projects involving longer gestation
period
Gestation/Holiday period for various project loans will vary from 3
months to 36 months.
However on any account the gestation
period should not go above 36 months.
Debt Service Coverage Ratio: While the desirable ratio would be
above 2:1, average DSCR of 1.5: 1 with minimum DSCR of 1.2: 1 can
be accepted on merits.
Solvency ratios: In general, debt equity ratio of less than 2:1 and
Total outside Liabilities to Tangible Net Worth (TOL/TNW) ratio of less
than 4:1 will be considered as reasonable requirements for any credit
proposal. These bench marks will generally be observed for new
connections.
42. Appraisal Of Infrastructure Projects
The desirable debt equity ratio is 3.5 to 4:1 and relaxation can be
given on case-to-case basis.
Likewise while the desirable and ideal DSCR ratio would be above 2:1,
an average DSCR of 2.0 with a minimum of 1.50 in any year can be
accepted.
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43. Upfront fee for Term loans

For Term Loans (for standalone Term Loan as well as Term Loan
sanctioned with other facilities) upfront fee @1.02% should be collected
in lieu of processing charges.

No ceiling/maximum amount is fixed for the collection of upfront fee.

Processing Fee on modifications effected on sanction terms: - When


a Customer, who is sanctioned credit facilities and the terms of sanction
have been accepted by him, approaches the Bank for modification of
certain terms of sanction already accepted, a charge of 0.25% on the
total fund based and non-fund based limits approved under the sanction
order should be levied subject to minimum of Rs.1000/= and
maximum of Rs.5 lakh (plus service tax) whenever such modifications
are approved by the sanctioning authority. The charges are applicable
sanction-wise and not limit-wise.

Whenever customers approaches for revalidation of sanctioned limit and


those limits are approved, a processing fee on revalidation of such
sanction should be levied on the limits covered under the sanction, at
0.25% on the total fund based and non-fund based limits revalidated,
subject to minimum of Rs.1000/= and maximum of Rs.5 lakh (plus
service tax).

Financial charges on term loan review/renewal : NIL

Commitment charges

Commitment charges @0.50% p.a will be levied uniformly for all the
working capital Fund Based, Non Fund Based limits and Term loan of
Rs.50 lakhs and above from the Banking System.

Such levy will be on the unutilised portion of the working capital FB and
NFB limits subject to tolerance level of 20% of each limit.

With regard to Term Loans, wherever the drawal is not made as per the
draw down schedule by the borrowers, commitment charges will be
levied on the undrawn amount if the undrawn amount is more than
20% of the amount committed for drawal

44. Lending Banks to ensure that the borrowing firms are making payments
of their statutory dues in time, strictly in compliance
of
the
provisions of the relevant statutes.

Why because some legislations like the employees Provident Fund


and Miscellaneous Provision Act 1952 declare priority to the dues
over others. This will lead to security value erosion.

Branches are to obtain a certificate from the borrowers auditors on


an annual basis stating that all statutory dues including EPF dues
have been paid by the borrower.

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45.

Construction Industry:
In case of construction industries the extant RBI guidelines based on
Accounting Standard (AS.7) issued by Institute of Chartered
Accountants of India (ICAI) is followed to arrive at the permissible bank
finance for borrowers with fund based working capital limits beyond Rs 2
crore.

46. Working capital Finance


Banks have been given freedom in evolving their own method of lending
and the Bank has evolved its own lending policy
Working capital limits upto Rs.2 crore (Rs.7.5 crore for Medium
Enterprises ME borrowers) will be assessed as per Nayak Committee
recommendations i.e. turnover method.
Borrowers enjoying working capital limits of above Rs.2 crore and upto
Rs. 10 Crore (above Rs.7.5 Crore and upto Rs.10 Crore for SME
borrowers) will be assessed as per the existing traditional method of
arriving at Maximum Permissible Bank Finance (MPBF) calling for the
CMA data and
Borrowers enjoying working capital limits of above Rs.10 Crore, option
will be given to the borrower to be assessed as per the cash budget
method or as per MPBF method.
For industries like sugar and tea wherein the pattern of financing the
peak cash deficit(s) is followed all along, the existing system of assessment
under the cash budget method will be followed.

Current Ratio: While it is desirable for a current ratio of 1.33:1 (1.25:1 for
MSE) as a benchmark, lower current ratio can be considered acceptable
on a case-to-case basis depending upon the components and quality of
current assets and current liabilities.

47. CC against book debts

48.

For sanctioning CC against book debts the age of which are not more
than 120 days, the minimum margin should be : 25%

Proposals involving advance against book debts of age above120 days


and not exceeding 180 days can be sanctioned from selected level only.

Lending By Inter Bank Participation (IBP) With Risk Sharing:


The Bank may participate in IBPCs with Risk Sharing issued by
scheduled commercial Banks with the approval of MCB to increase the
credit portfolio as and when required as per the guidelines for the
scheme outlined by RBI from time to time.
The interest rate shall be mutually agreed between the issuing and
participant banks
The IBPCs are not transferable and the tenor shall be minimum 91
days and maximum of 180 days.
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The aggregate amount of such participation in any account shall not


exceed 40% of the outstanding in the account at the time of issue and
it shall be maintained during the currency of participation.
In case where there is default in the underlying advances, the issuing
bank will take necessary action, in consultation with the participating
bank and share the recoveries proportionately.
49. Group/associates financing-NPS
In a group if any entity or associate is a non performing asset, was
granted OTS with sacrifice, or a suit filed account then irrespective of the
quantum of the limits, MCB alone has discretionary powers to finance to
any of the other associates in the group.
50. STOCK AUDIT:

51.

In respect of NPA accounts, which are under Private or Public sector,


with outstanding of Rs. 5 crore and above stock audit is to be done
once in a year as on October 31st of every year.

Borrowers [Standard Assets] in Private Sector whose fund based


working capital limits [inclusive of receivables] are Rs. 5 crore and
above - once in year i.e. as on October 31st every year.

The Watch Category/ Restructured borrowal accounts with fund based


outstanding of Rs.1 crore and above - once in a year as on 31st
October every year.

Stock audit should be conducted for non-fund based advances


pertaining to trading in goods for non-fund based exposures of Rs.5
crore and above.

Bills Financing
Bills financing facilities will be treated as a part of working capital
finance and accordingly, the bills limit shall be assessed and appraised
within the overall working capital limits sanctioned to the borrower
The Bills purchased/ discounted in respect of 'services'' will be treated
as unsecured advances for the purpose of exercise of discretionary
powers.
However, wherever such facilities are supported by collateral
securities, they will be construed as secured advances only for
balance -sheet /audit purposes

52.

Rating of Borrowal Accounts under Risk Assessment Model (RAM)

Credit Rating is a process which enables the Bank to assess the


inherent merits and demerits of a credit proposal.

It is a decisionenabling tool that helps the sanctioning authority to take


a view on acceptability of a credit proposal or otherwise.

The pricing of loan facilities above a prescribed cut-off are linked to the
rating of the borrowal account.

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The process of implementing Basel II framework and migrating towards


Internal Rating Based (IRB) approach, the historical internal credit
rating would play a vital part, as it is an important component to
estimate Probability of Default (PD). In order to achieve this, the bank
is required to internally rate all eligible borrowal accounts (as decided by
bank) continuously every year.

In our bank, it has been put in place to rate all eligible performing
borrowal accounts with credit limits (Fund based and / or Non Fund
based) of Rs. 1 Crore and above (Rs. 2 crore and above in case of Micro
and Small Entrepreneurs accounts)

TOP ratings of SMERA, CRISIL, CARE, ICRA & BRICK WORK enjoy
interest concession of 0.25% on the applicable rate.

NSIC with a view to encourage rating provides 75% subsidy in the fee
charged by top rating agencies for the first year

53.

Granting of loans to officers:

No officers or any committee comprising inter alia, an officer as member,


shall, while exercising powers of sanction of any credit facility, sanction
any credit facility to himself or to his /her relative.

Such a facility shall ordinarily be sanctioned only by the next higher


sanctioning authority.

In the case of Advances to Officers of Bank and their relatives, the


term credit facility will not include loans or advances against;
Government securities
Life Insurance policies
Fixed or other deposits
Temporary overdrafts for small amount i.e. upto Rs.25,000/ Casual purchase of cheques upto Rs.5,000/- at a time.
Loans and advances such as housing loans, car advances,
consumption loans, etc. granted to an officer of the bank under any
scheme applicable generally to officers.

54. In lending under consortium/multiple banking, Branches should obtain the


following certificates.

Diligence Report from Company Secretary/firm.

Certification of borrowal companies by chartered Accountants/


Company Secretary/cost accountants

Any sanction of fresh loans/adhoc loans/renewal of loans to


new/existing borrowers with effect from January 1, 2013 should be
done only after obtaining/sharing necessary information.

55. As per extant guidelines of RBI, consortium is not mandatory.

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56. Banks and notified All India Financial institutions are required furnish
details on wilful defaulters to RBI. The cut off limit for reporting willful
defaulters is Rs.25 lacs and above.
57. The exposure to hotels, hospitals etc. where the repayment primarily
depends on the operating profit from the business operations, quality of
goods and services; need not be treated as Commercial Real Estate (CRE).
58. Whenever the limits in the nature of loan for acquisition of capital assets
(other than working capital limits) sanctioned to a public limited company
or to a private limited company which is its subsidiary, together with its
other term loan borrowings exceed its paid up capital and free reserves, the
approval of such company in General Body Meeting is to be obtained for
such excess borrowings. Every such general body resolution delegating
power to borrow must specify the total amount outstanding at one time up
to which moneys may be borrowed by the company.
59. Definition Of Group:
a. As per RBI guidelines, the concept of Group and the task of
identification of the borrowers belonging to specific industrial groups is
left to the perception of banks / financial institutions. The guiding
principle in this regard being commonality of management and effective
control.
b. A group is defined by invoking associate/sister concern concept.
c. Where a proprietor or partner of a firm/director of one company is
proprietor or partner of another firm/director of another company, they
are called as associates falling within the purview of group concept.
d. Where a proprietor or partner of a firm /a director of one company/ a
company
is the guarantor of
another partnership firm/another
company where the guarantor has no financial stake (or has no
commonality of management and effective control ), then they are not
to be treated as associates falling within the purview of group concept.
e. Where common director /partners are employees/ institutional
nominees/ or have no financial stake, the group concept will not apply.
f. In case of common guarantors if they have substantial interest i.e 51%
or more stakes in one or any of the common concerns, then the account
should be treated as associate concern.
60. Advance against gold coins

Branches are permitted to extend Agricultural Jewel Loans and Jewel


Loans for other purposes including Jewel Loans to staff against pledge of
gold coins.

Gold coins are of 24 carat fineness sold by Banks only.

All the coins offered for loan should be appraised properly as done in
case of other jewel loans. Branch should take an undertaking from the
borrower that he / she has no objection to the gold coins being taken

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out of the sealed packets for the purpose of appraisal and is fully aware
that the coins cannot be repacked.

Per gram advance rate will be as applicable to 22 carat hallmarked


Jewellery,

61. Advance against bullion: Gold loan in the form of Bullion can be extended
to domestic jewellery manufacturers /traders for 3 months to 6 months for
working capital purposes.
62. No advances should be granted by the Bank for purchase of gold in any
form, including primary gold, gold bullion, gold jewellery, gold coins, units
of gold Exchange Traded Funds (ETF)
63. Charging/Compounding Of Interest On Loans And Advances

As per RBI guidelines, interest for all the loans and advances are to be
charged at monthly rests except agricultural advances and DRI Small
loans.

Interest is to be charged and compounded monthly on advances except


the above including Demand loans (including load against deposits),
Small loans, jewel loans etc.

64. Time frame


Export Credit: Branches / Offices should also adhere to the following time
frame prescribed by RBI for disposal of loan applications involving export
credit.
Loan amount

Disposal time frame

Fresh sanction/enhancement

45 days

Renewal

30 days

Adhoc limits

16 days

The following time-frame has to be adhered for disposal of applications


seeking finance from bank to avoid delay in implementation of project
Loan amount
Up to Rs.25000
Above 25000
upto 2,00,000
Above 2,00, 000

srn/10.05.2013

Disposal time from the


date of receipt of
application
15 days

Sanctioning
authority
Br/RO

4 weeks

Br/RO

30 days
45 days
90 days

BR
RO
CO
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RATIO ANALYSIS

A RATIO is an arithmetical expression of relationship between two related or inter


dependent items.

The relationship may be shown as a percentage or as a quotient or even as a ratio.

Ratios should be computed only for those relationships that are significant from a
bankers point of view.

RATIO ANALYSIS is a systematic interpretation of the financial statements through


the use of ratios between balance sheet items and profit & loss items so that the
strengths and weakness of the firm vis--vis other firms in the industry as well as
historical performance can be determined (trend analysis).

Ratios are only financial indicators. These indicators point the necessity for
investigation.

Ratio Analysis diagnoses the financial health by evaluating liquidity, solvency,


profitability etc.

Types of Ratios
The financial position of a firm can be described by studying its long term and short term
liquidity position, profitability and its operational activity.
Therefore the ratios can be generally classified into the following five broad categories:
A.
B.
C.
D.
E.

Liquidity Ratio
Solvency Ratio
Profitability Ratio
Activity ratios or Turnover Ratios
Leverage ratio

A. Liquidity Ratios

Liquidity Ratio indicates the ability of the business to pay its short term liability.

Traditionally two ratios are used to highlight the business liquidity. They are
Current Ratio and Quick Ratio.

a. Current Ratio
Current Ratio =

Current Assets
Current Liabilities

Current Assets include inventories, Sundry Debtors, trade receivables; short


term Loans and Advances, Short Term Investment, Deposit with Post Office,
Cash & Bank Balance etc.
These assets are convertible into cash within the operating cycle of the
business within a period of 12 months.
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Current Liabilities include Creditors for goods and services, Short Term
Loans, Book overdrafts, outstanding expenses etc. These liabilities mature
for payment within next 12 months.
The objective of finding of this ratio is to know as to whether the business
unit does have enough current assets to meet the payment schedule of its
current debts with a margin for possible losses.
Bench mark of this ratio is

1.33 : 1

Higher ratio may be good in the point of view of creditors.


A poor current ratio can be improved either by bringing in fresh term funds
or by ploughing back profit.
Diversion of funds reduces the current ratio badly.
Net Working Capital (NWC) : It is a common practice among banks to determine
the portion of funds invested in current assets from long term sources. This is
determined by calculating NWC as follows;
NWC = Current asset Current Liability
a. Quick Ratio: It is also known as acid test ratio. It is a more exacting measure
than Current Ratio. It concentrates on really liquid assets with value fairly
certain.
Quick Assets
Quick Ratio =
Current Liabilities
Quick Assets consist of only cash and cash equivalents.
Quick Assets = Current Assets - Inventories
Quick Ratio of 1: 1 is considered satisfactory
B. SOLVENCY RATIOS

Generally, Solvency Ratio is determined to find out Long Term solvency of a firm.

Main ratios under this category are ;

a. Debt equity ratio


It gives the relation between borrowed funds (debts) and Net owned funds
(TNW).
Debt Equity Ratio =

Long Term Funds


Tangible Net worth

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The purpose of calculating this ratio is to determine the relative stake of


outsiders and share holders.
DER is also calculated by dividing total outside liabilities by Tangible Net
Worth (TNW).
Debt Equity Ratio =

Total Outside Liability


TNW

b. Proprietary Ratio

Gives the relationship between own funds and total assets.

Proprietary Ratio =

Share Holders funds


Total Assets (excluding fictitious assets)

C. PROFITABILITY RATIOS

The efficiency in business is measured by profitability.

Some of the profitability ratio are :


a. Gross Profit Ratio
b. Net Profit Ratio
c. Operating Profit ratio
d. Return on Investment
e. Return on Assets

a. Gross Profit Ratio


It gives the relationship of Gross Profit to Net Sales of a firm, in percentage
terms
Gross Profit Ratio =

Gross Profit
Net Sales

X 100

Gross Profit = Net Sales Cost of sales (COS)


b. Net Profit Ratio
It establishes the relationship between net profit and sales, in percentage
terms
Net Profit Ratio =

Net Profit after Tax


Net Sales

X 100

c. Operating Profit Ratio


Operating Profit Ratio =

Operating Profit
Net Sales

X 100

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Operating profit = Gross profit operating expenses


d. Return on Investment (ROI)
This is also known as Return on Capital employed.
It establishes the relationship between Net Profit before interest and tax
(PBIT) and capital employed.
ROI =

PBIT
Capital Employed

X 100

Capital employed = TNW + term Liability + Current Liability


This measures the efficiency in use of funds employed.
e. Return on Assets (ROA)
Return on assets is the ratio of annual net income to average total assets of a
business during a financial year.
Return on assets indicates the profit earned on the amount invested in
assets.
It measures efficiency of the business in using its assets to generate net
income. It is a profitability ratio.
ROA =

Net Profit After Tax


Average Total Assets

Average total assets are calculated by dividing the sum of total assets at the
beginning and at the end of the financial year by 2.
Total assets at the beginning and at the end of the year can be obtained from
year ending balance sheets of two consecutive financial years.
Thus higher values of return on assets show that business is more profitable.
This ratio should be used only to compare companies in the same industry.
When a firm proposes to acquire expensive plant and equipment analysis is
made on its profitability using this ratio.
D. TURNOVER RATIOS

These are also known as performance ratios. This indicates how effectively the
facilities available to the firm are being utilized.

These ratios are usually calculated on the basis of sales or cost of sales.

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Turnover ratio for each type of asset is calculated separately.

Higher Turnover Ratio indicates better utilization of resource. Some of the


important ratios are :
a.
b.
c.
d.

Inventory Turnover Ratio


Debtor Turnover Ratio (Debtors velocity)
Creditors Turnover Ratio (Creditors velocity)
Capital Turnover Ratio

a. Inventory Turnover Ratio


Also known as stock turnover ratio
Establishes relationship between cost of goods sold during a given period and
average amount of inventory carried during that period
Indicate the efficiency in usage of investment in stock
Inventory Turnover Ratio =

Cost of goods sold


Average stock

Where, Cost of goods sold = Sales - Gross Profit


Average Stock =

Opening stock + Closing stock


2

b. Debtors velocity
Debtors velocity =

Net Credit sales


Average receivable

Average receivable includes debtors + Bills receivable


Purpose is to calculate average time taken to collect credit sales.
Month (or days) in a year
Debtors velocity
The period may increase due to reduction in demand due to poor quality,
industry recession, poor collection mechanism etc.
Debt Collection period =

c. Creditors Velocity
Shows relation between net credit purchases and average payables (trade
creditors & bills payable)
Net credit purchases
Creditors velocity =
Average Payables
Debt Payment period =

Month (or days) in a year


Creditors velocity

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d. Capital Turnover Ratio


shows efficiency of capital employed in the business
Capital Turnover ratio =

Net sales
Capital employed

E. LEVERAGE RATIOS:

Also known as gearing ratio.

Utilizing borrowed funds to give an increased return to share holders is known as


financial leverage.

A company is said to be highly geared when its fixed charge bearing funds are
disproportionately higher compared to shareholders funds.

Capital gearing ratio is one leverage ratio.


Capital gearing ratio =

Fixed charge bearing long term funds


TL + NW

A high ratio increases yield on equity. At the same time, if the firm is not able to
earn adequate profit, the debt may not be serviced and push the firm to debt
crisis.

Limitations of Ratio Analysis


Ratio Analysis is a widely used technique to evaluate financial health of a firm as also its
performance. But evaluation is subject to certain limitations:
1. Balance sheet is a statement of assets and liabilities as on a particular date. By
the time the statement is prepared/audited/published/analysed the value of
assets would have undergone changes.
2. The functionaries of the firm may succeed in bringing financial position of the
firm as on the date of balance sheet. The position may not be the same on other
days.
3. Inventory management/pricing is different from firm to firm within the industry.
This makes comparison difficult.
4. Evaluation of ratios depends largely on the intention and the ability of the person
who handles it.
5. Ratio is only an arithmetical expression and by itself has very little meaning
unless it is compared with some appropriate standard viz. historical and external.
6. Personal bias can affect the evaluation.

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7. Ratio Analysis is made only on money-value basis. Hence not realistic in


approach.
8. In Balance Sheet analysis, historical values are only considered. The changes in
price levels are ignored. Hence the ratios are unreliable.
9. Accounting principles of firm may differ which makes inter-firm comparison
difficult.
10. Management & Financial Policies of firms may differ from one another. Hence
similar ratio may not reflect similar state of affairs.
11. A ratio in isolation may not be useful to review the whole business. Hence, for
evaluation of financial strength of a firm, a group of ratios are to be considered.
12. Ratios depend on the correctness of accounting.
13. Classification of an item in Balance Sheet depends as nature and tenor of the
transaction. Any wrong classification may mislead evaluation.
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srn/11.02.2013
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Priority Sector Credit


Classification ,Targets & Guidelines
Priority Sector lending classification
Marginal Farmers: Farmers with landholding of up to 1 hectare.
Small Farmers: Farmers with a landholding of more than 1 hectare but less
than 2 hectares.

For the purpose of priority sector loans small and marginal farmers
include landless agricultural labourers, tenant farmers, oral lessees and
share-croppers, whose share of landholding is within above limits
prescribed for Small and Marginal Farmer.

Categories under priority sector

Agriculture

Micro and Small Enterprises

Education

Housing

Export Credit

Others

Targets:
Categories
Total Priority
Sector

Total
agriculture

Enterprises
(MSE) Micro &
Small

Domestic commercial banks / Foreign banks with less


Foreign banks with 20 and above than 20 branches
branches
40 percent of Adjusted Net Bank Credit 32 percent of ANBC or
[ANBC defined in sub paragraph (iii) credit equivalent amount of
below] or credit equivalent amount of Off-Balance
Sheet
Off-Balance Sheet Exposure, whichever Exposure,
whichever
is
is higher.
higher.
18 percent of ANBC or credit equivalent No specific target. Forms
amount of Off-Balance Sheet Exposure, part of total priority sector
target.
whichever is higher.
Of this, indirect lending in excess of 4.5% of ANBC or credit equivalent
amount of Off-Balance Sheet Exposure, whichever is higher, will not
be reckoned for computing achievement under 18 percent target.
However, all agricultural loans under the categories 'direct' and
'indirect' will be reckoned in computing achievement under the overall
priority sector target of 40 percent of ANBC or credit equivalent
amount of Off-Balance Sheet Exposure, whichever is higher.
i. Advances to micro and small
enterprises sector will be reckoned
in computing achievement under
the overall priority sector target of
40 percent of ANBC or credit

No specific target. Forms


part of total priority sector
target.

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equivalent amount of Off-Balance


Sheet
Exposure,
whichever
is
higher.
ii. 40 percent of total advances to
micro and small enterprises sector
should go to Micro (manufacturing)
enterprises having investment in
plant and machinery up to 10 lakh
and micro (service) enterprises
having investment in equipment up
to 4 lakh;
iii. 20 percent of total advances to
micro and small enterprises sector
should go to Micro (manufacturing)
enterprises with investment in plant
and machinery above 10 lakh and
up to 25 lakh, and micro (service)
enterprises with investment in
equipment above 4 lakh and up to
10 lakh
Export Credit
Export credit is not a separate
category. Export credit to eligible
activities under agriculture and MSE
will be reckoned for priority sector
lending under respective categories.
Advances
to 10 percent of ANBC or credit
Weaker
equivalent amount of Off-Balance
Sections
Sheet Exposure, whichever is higher.

No specific target. Forms


part of total priority sector
target.
No specific target in the
total priority sector target.

For the purpose of priority sector lending, ANBC denotes

The outstanding Bank Credit in India minus bills rediscounted with RBI
and other approved Financial Institutions plus
permitted non-SLR
bonds/debentures in Held to Maturity (HTM) category plus investments in
other categories, which are eligible to be treated as part of priority sector
lending (eg. investments in securitised assets).

For foreign banks with 20 and above branches, priority sector targets and
sub-targets have to be achieved within a maximum period of five years
starting from April 1, 2013 and ending on March 31, 2018

The targets for Micro Enterprises within the Micro and Small Enterprises
segment (MSE) will be computed with reference to the outstanding credit
to MSE as on preceding March 31st.

Description of the Categories under priority sector


Agriculture (Both Direct and Indirect)
Direct Agriculture

Loans to individual farmers [including Self Help Groups (SHGs) or Joint


Liability Groups (JLGs), i.e. groups of individual farmers, provided banks

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maintain disaggregated data on such loans] engaged in Agriculture and


Allied Activities, viz., dairy, fishery, animal husbandry, poultry, beekeeping and sericulture (up to cocoon stage).
1. Short-term loans to farmers for raising crops, i.e. for crop loans.

This
will
include
traditional/non-traditional
horticulture and allied activities.

plantations,

2. Medium & long-term loans to farmers for agriculture and allied


activities (e.g. purchase of agricultural implements and machinery,
loans for irrigation and other developmental activities undertaken in
the farm, and development loans for allied activities).
3. Loans to farmers for pre-harvest and post-harvest activities, viz.,
spraying, weeding, harvesting, sorting, grading and transporting of
their own farm produce.
4. Loans to farmers up to 50 lakh against pledge/hypothecation of
agricultural produce (including warehouse receipts) for a period not
exceeding 12 months, irrespective of whether the farmers were given
crop loans for raising the produce or not.
5. Loans to small and marginal farmers for purchase of land for
agricultural purposes.
6. Loans to distressed farmers indebted to non-institutional lenders.
7. Bank loans to Primary Agricultural Credit Societies (PACS), Farmers
Service Societies (FSS) and Large-sized Adivasi Multi Purpose
Societies (LAMPS) ceded to or managed/ controlled by such banks for
on lending to farmers for agricultural and allied activities.
8. Loans to farmers under Kisan Credit Card Scheme.
9. Export credit to farmers for exporting their own farm produce.

Loans to corporates including farmers' producer companies of individual


farmers, partnership firms and co-operatives of farmers directly engaged
in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry,
poultry, bee-keeping and sericulture (up to cocoon stage) up to an
aggregate limit of 2 crore per borrower for the following purposes.
a. Short-term loans for raising crops, i.e. for crop loans.
This
will
include
traditional/non-traditional
horticulture and allied activities.

plantations,

b. Medium & long-term loans for agriculture and allied activities (e.g.
purchase of agricultural implements and machinery, loans for
irrigation and other developmental activities undertaken in the farm,
and development loans for allied activities).

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c. Loans for pre-harvest and post-harvest activities, viz., spraying,


weeding, harvesting, grading and sorting.

d. Export credit for exporting their own farm produce.


Indirect agriculture

Loans to corporates: If the aggregate loan limit per borrower (loans to


corporates) is more than 2 crore the entire loan should be treated as
indirect finance to agriculture.

partnership firms and institutions engaged in Agriculture and Allied


Activities [dairy, fishery, animal husbandry, poultry, bee-keeping and
sericulture (up to cocoon stage)]
i.

Medium & long-term loans for agriculture and allied activities

ii.

Loans for pre-harvest and post-harvest activities such as spraying,


weeding, harvesting, grading and sorting.

iii.

Loans up to 50 lakh against pledge/hypothecation of agricultural


produce (including warehouse receipts) for a period not exceeding 12
months, irrespective of whether the farmers were given crop loans for
raising the produce or not.

iv.

Export credit to corporates, partnership firms and institutions for


exporting their own farm produce.

v.

Loans upto 5 crore to Producer Companies set up exclusively by only


small and marginal farmers under Part IXA of Companies Act, 1956
for agricultural and allied activities.

vi.

Bank loans to Primary Agricultural Credit Societies (PACS), Farmers


Service Societies (FSS) and Large-sized Adivasi Multi Purpose
Societies (LAMPS)

Other indirect agriculture loans


i.

Loans up to 5 crore per borrower to dealers /sellers of fertilizers,


pesticides, seeds, cattle feed, poultry feed, agricultural implements
and other inputs.

ii.

Loans for setting up of Agriclinics and Agribusiness Centres.

iii.

Loans up to 5 crore to cooperative societies of farmers for disposing of


the produce of members.

iv.

Loans to Custom Service Units managed by individuals, institutions


or organisations who maintain a fleet of tractors, bulldozers, wellboring equipment, threshers, combines, etc., and undertake farm
work for farmers on contract basis.

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v.

Loans for construction and running of storage facilities (warehouse,


market yards, godowns and silos), including cold storage units
designed to store agriculture produce/products, irrespective of their
location.

vi.

If the storage unit is a micro or small enterprise, such loans will be


classified under loans to Micro and Small Enterprises sector.

vii.

Loans to MFIs for on-lending to farmers for agricultural and allied


activities as per the conditions specified.

viii.

Loans sanctioned to NGOs, which are SHG Promoting Institutions, for


on-lending to members of SHGs under SHG-Bank Linkage Programme
for agricultural and allied activities. The all inclusive interest charged
by the NGO/SHG promoting entity should not exceed the Base Rate of
the lending bank plus eight percent per annum.

ix.

Loans sanctioned to RRBs for on-lending to agriculture and allied


activities.

Micro and small enterprises Direct finance

Under Manufacturing Sector : Loan /advances granted to Micro &


Small enterprises

Under service sector : Loans/advances upto Rs. 5 crore granted to


Micro and small enterprises.

Khadi and Village Industries Sector (KVI)

All loans sanctioned to units in the KVI sector, irrespective of their


size of operations, location and amount of original investment in plant
and machinery. Such loans will be eligible for classification under the
sub-target of 60 percent prescribed for micro enterprises within the
micro and small enterprises segment under priority sector.

Micro and small enterprises - Indirect Finance


i.

Loans to persons involved in assisting the decentralised sector in the


supply of inputs to and marketing of outputs of artisans, village and
cottage industries.

ii.

Loans to cooperatives of producers in the decentralised sector viz.


artisans village and cottage industries.

iii.

Loans sanctioned by banks to MFIs for on-lending to MSE sector as


per the conditions specified.

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Education

Loans to individuals for educational purposes including vocational


courses upto 10 lakh for studies in India and 20 lakh for studies
abroad.

Housing
i.

Loans to individuals up to 25 lakh in metropolitan centres with


population above ten lakh and 15 lakh in other centres for
purchase/construction of a dwelling unit per family excluding loans
sanctioned to banks own employees.

ii.

Loans for repairs to the damaged dwelling units of families up to 5


lakh in urban and metropolitan areas and up to 2 lakh in rural
and semi- urban areas.

iii.

Bank loans to any governmental agency for construction of dwelling


units or for slum clearance and rehabilitation of slum dwellers subject
to a ceiling of 10 lakh per dwelling unit.

iv.

The loans sanctioned by banks for housing projects exclusively for the
purpose of construction of houses only to economically weaker
sections and low income groups, the total cost of which do not exceed
10 lakh per dwelling unit.
For the purpose of identifying the economically weaker sections
and low income groups, the family income limit of 1,20,000 per
annum, irrespective of the location, is prescribed.
Bank loans to Housing Finance Companies (HFCs), approved by
NHB for their refinance, for on-lending for the purpose of
purchase/ construction/ reconstruction of individual dwelling
units or for slum clearance and rehabilitation of slum dwellers,
subject to an aggregate loan limit of 10 lakh per borrower,
provided the all inclusive interest rate charged to the ultimate
borrower is not exceeding lowest lending rate of the lending bank
for housing loans plus two percent per annum.
The eligibility under priority sector loans to HFCs is restricted to
5% of the individual banks total priority sector lending, on an
ongoing basis. The maturity of bank loans should be co-terminus
with average maturity of loans extended by HFCs. Banks should
maintain necessary borrower-wise details of the underlying
portfolio.

Export Credit

Export Credit extended by foreign banks with less than 20 branches will
be reckoned for priority sector target achievement.
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As regards the domestic banks and foreign banks with 20 and above
branches, export credit is not a separate category under priority sector.

Others
i.

Loans, not exceeding 50,000 per borrower provided directly by banks


to individuals and their SHG/JLG, provided the borrowers household
annual income in rural areas does not exceed 60,000/- and for nonrural areas it should not exceed 1,20,000/-.

ii.

Loans to distressed persons, not exceeding 50,000 per borrower to


prepay their debt to non-institutional lenders.

iii.

Loans outstanding under loans for general purposes under General


Credit Cards (GCC).
If the loans under GCC are sanctioned to Micro and Small
Enterprises, such loans should be classified under respective
categories of Micro and Small Enterprises.

iv.

Overdrafts, up to Rs. 50,000 (per account), granted against 'no-frills' /


basic banking / savings accounts provided the borrowers household
annual income in rural areas does not exceed Rs.60,000/- and for nonrural areas it should not exceed Rs.1,20,000/-.

v.

Loans sanctioned to State Sponsored Organisations for Scheduled


Castes/ Scheduled Tribes for the specific purpose of purchase and
supply of inputs to and/or the marketing of the outputs of the
beneficiaries of these organisations.

vi.

Loans sanctioned by banks directly to individuals for setting up off-grid


solar and other off-grid renewable energy solutions for households.

Weaker Sections
Priority sector loans to the following borrowers will be considered under
Weaker Sections category: Small and marginal farmers;
Artisans, village and cottage industries where individual credit limits
do not exceed 50,000;
Beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY), now
National Rural Livelihood Mission (NRLM);
Scheduled Castes and Scheduled Tribes;
Beneficiaries of Differential Rate of Interest (DRI) scheme;
Beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY);

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Beneficiaries under
Scavengers (SRMS);

the

Scheme

for

Rehabilitation

of

Manual

Loans to Self Help Groups;


Loans to distressed farmers indebted to non-institutional lenders;
Loans to distressed persons other than farmers not exceeding 50,000
per borrower to prepay their debt to non-institutional lenders;
Loans to individual women beneficiaries upto 50,000 per borrower.
Investments by banks in securitised assets
Investments by banks in securitised assets, representing loans to
various categories of priority sector, except 'others' category, are
eligible for classification under respective categories of priority sector
(direct or indirect) depending on the underlying assets subject to
certain conditions:
Bank loans to MFIs for on-lending

Bank credit to MFIs extended on, or after, April 1, 2011 for on-lending to
individuals and also to members of SHGs / JLGs are priority sector
advance under respective categories viz., agriculture, micro and small
enterprise, and 'others', as indirect finance, provided;
not less than 85% of total assets of MFI (other than cash, balances
with banks and financial institutions, government securities and
money market instruments) are in the nature of qualifying assets.
In addition, aggregate amount of loan, extended for income
generating activity, is not less than 75% of the total loans given by
MFIs.

A qualifying asset shall mean a loan disbursed by MFI, which satisfies


the following criteria:
i.

The loan is to be extended to a borrower whose household annual


income in rural areas does not exceed Rs.60,000/- while for nonrural areas it should not exceed Rs. 1,20,000/-.

ii.

Loan does not exceed Rs.35,000/- in the first cycle and


Rs.50,000/- in the subsequent cycles

iii.

Total indebtedness of the borrower does not exceed 50,000/-.

iv.

Tenure of loan is not less than 24 months when loan amount


exceeds 15,000/- with right to borrower of prepayment without
penalty.

v.

The loan is without collateral.

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vi.

Loan is repayable by weekly, fortnightly or monthly installments

Non-achievement of priority sector targets

Domestic scheduled commercial banks and foreign banks with branches


20 and above having shortfall in lending to overall priority sector
target/agriculture target and weaker sections target shall be allocated
amounts for contribution to the Rural Infrastructure Development Fund
(RIDF) established with NABARD or Funds with NHB/SIDBI/other
Financial Institutions, as specified by the Reserve Bank.

The foreign banks with less than 20 branches, which fail to achieve the
priority sector targets are required to contribute to funds with SIDBI or
with other Financial Institutions, for such other purpose as may be
stipulated by RBI.

Non-achievement of priority sector targets and sub-targets will be taken


into account while granting regulatory clearances/approvals for various

Common guidelines for priority sector loans


Banks should comply with the following common guidelines for all categories
of advances under the priority sector.
1. Rate of interest
The rates of interest on various categories of priority sector loans will
be as per DBOD directives issued from time to time.
2. Penal interest
No penal interest should be charged by banks for loans under priority
sector up to Rs 25,000. However, banks will be free to levy penal interest
for loans exceeding Rs 25,000, in terms of the above guidelines.
3. Service charges
No loan related and adhoc service charges/inspection charges should
be levied on priority sector loans up to 25,000.
4. Receipt, Sanction/Rejection/Disbursement Register
A register/ electronic record should be maintained by the bank,
wherein the date of receipt, sanction/rejection/disbursement with
reasons thereof, etc., should be recorded.
The register/electronic record should be made available to all
inspecting agencies.
In the case of proposals from SC/ST, rejection should be at a level
higher than that of Branch Manager.

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5. Issue of Acknowledgement of Loan Applications


Banks should provide acknowledgement for loan applications received
under priority sector loans.
Bank Boards should prescribe a time limit within which the bank
communicates its decision in writing to the applicants.
6. Insurance against fire and other risks
Banks may waive insurance of assets financed by bank credit in the
following cases:
Type of
Risk

No. Category
(a)

All categories of priority sector


advances up to and inclusive of Rs.
10,000

Fire & other


risks

Type of
Assets
Equipment
and current
assets

Advances to Small Enterprises up to


and inclusive of Rs. 25,000 by way of

(b)

Composite loans to artisans,


village and cottage industries

All term loans

Working capital where these


are against non-hazardous
goods

Fire
Fire
Fire

Equipment
and current
assets
Equipment
Current
Assets

However, insurance of vehicle or assets even for loans up to Rs


10,000/= need not be waived if such insurance is a condition under
any law or norms of any scheme.

srn/08.05.2013

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MSME advances

A Micro (manufacturing) enterprise - investment in plant and machinery


(original cost excluding land and building) does not exceed Rs.25 lacs,
irrespective of the location of the unit

A Small (manufacturing) enterprise - investment in plant and machinery


(original cost excluding land building) is more than Rs.25 lacs but does
not exceed Rs.5 crore.

A Medium (manufacturing) enterprise - whose investment in plant and


machinery (original cost excluding land and building) is more than Rs.5
crore but does not exceed Rs.10 crore

Micro Service enterprise is an enterprise rendering services, whose


investment in equipment (original cost excluding land and building and
furniture, fittings and such items not directly related to the service
rendered -does not exceed Rs.10 lacs.

Small service enterprise is an enterprise rendering services, whose


investment in equipment (original cost excluding land and building and
furniture, fittings and other items not directly related to the service
rendered is more than Rs.10 lacs but does not exceed Rs.2 crore.

A Medium service enterprise is an enterprise rendering services, whose


investment in equipment (original cost excluding land and building and
furniture, fittings and other items not directly related to the services
rendered is more than Rs.2 crore but does not exceed Rs.5 Crore

The mandated targets are;

Loans granted to micro and small enterprises under manufacturing


sector and loans upto Rs.5 crore per unit granted to micro and small
enterprises under service sector are reckoned for computing achievement
of priority sector advances.

All advances granted to units in the KVI sector, irrespective of their size
of operations, location and amount of original investment in plant and
machinery will be brought under Small enterprises segment within the
priority sector

Target:
a. 40% of total advances to small enterprises sector should go to micro
(manufacturing) enterprises having investment in plant and machinery
upto Rs. 10 lac and micro (service) enterprises having investment in
equipment upto Rs. 4 lac
b. 20% of total advances to small enterprises sector should go to micro
(Manufacturing) enterprises with investment in plant and machinery
above Rs. 10 lac and upto Rs. 25 lac and micro (service) enterprises
with investment in equipment above Rs. 4 lac and upto Rs. 10 lacs.

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c. Thus, 60% of small Enterprises advances should go to the micro


enterprises.

IOB SME Policy covers only the MSE (Micro and Small Enterprises)

Collateral free loan up to an amount of Rs.10.00 lac

The committee recommended for Cluster based approach in extending


finance to SME Sectors. : Ganguly Committee recommendations

SME policy in banks is framed in compliance of direction issued by RBI


based on recommendations of the K.C.Chakrabarty Committee.

Assessment of working capital finance


Simplified procedures will be adopted for sanction of working capital
limits on the basis of 20% of the projected annual turnover to MSME
units requiring aggregate fund based working capital limits upto Rs.
7.5 Crore
For SME units requiring working capital limits over Rs7.5 Crore and
upto Rs.10 Crore, the Maximum Permissible Bank Finance (MPBF)
method based on Credit Monitoring Arrangement (CMA) data will be
followed
For SME units requiring working capital limits over Rs.10 Crore, Cash
budget system or MPBF method, at the option of the borrower, will
continue to be followed.

Appraisal of proposal relating to Information Technology


As per RBIs guidelines while assessing working capital limits for
borrowers engaged in Information Technology , limits upto Rs 2 crore
(Rs 7.5 crore for Small Enterprises) may be assessed on the basis of
20% of projected turnover or, if the borrower wishes, the limits will be
considered as per monthly cash budget.
For above Rs 2 crore working capital facilities in respect of non Small
Enterprises and Small Enterprises with credit limits of above Rs.7.5
crore the assessment is to be made uniformly as per cash budget and
credit would be made available on the basis of deficits.
Software proposals will continue to be cleared by Screening
Committee in Central Office. After clearance such proposals will be
sanctioned by the respective sanctioning authorities
The proposals once cleared by Screening Committee, need not be
referred again at the time of renewal, if the enhancement does not
exceed 50% of the limits and if there is no change in the activity of the
borrower.
Technical evaluation of IT/software industry proposals are done by IT
dept.

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Debt Equity Ratio


Road Transport operators having National Permit

5:1

Single Vehicle Operators

5:1

MSME upto Rs.10 lakh long term loan

3:1

Internal Scoring Model to be used for credit limits upto Rs.2 crore and
Risk Assessment Model for limits of Rs.2 crore and above.

Current ratio of 1.25 is acceptable while lending under Nayak


Committee Norms

Margin: No margin for loans upto Rs.50,000/Loan above Rs.50,000/- TERM LOANS (margin)
a.

For loans above Rs.50000/- and up to Rs.5 Lac -10%

b.

For loans above Rs.5 Lac -15%

Working Capital against hypothecation of raw materials, work in Process,


finished goods etc.
a. Above Rs.50000/- and up to Rs.5 Lac -15%
b. Above Rs.5 Lac -20%
Working Capital against Book Debts/Receivables Margin to be taken as
per our Banks general loan policy document, with out any concession
25%
Minimum cash margin of 10% will be prescribed in respect of non fund
based limits such as LG and LC.

Branch Managers upto the level of scale IV can sanction secured credit
facilities to MSE units by taking collateral securities to a minimum extent
of 60% of the limits sanction.

Discretionary powers for branches managers - Secured advances with


cover under CGTMSE scheme for Micro and Small Enterprises :
Scale III 100 lacs
Scale II 50 lacs
Scale I -

25 lacs

All Branch Managers can sanction collateral free loans to MSE sector
with CGTMSE cover, upto their per borrower limits.

The interest payable up to six months after commercial production will


be included as part of the project cost for assessment of credit
requirements.

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IOB SME Advance Term Loan Sanction Scheme to fulfill the felt
needs of SME borrowers and is designed to facilitate our SME borrowers
to procure the new/additional machinery without delay or hassle. Max
amount. Rs.25 lacs

Branches may seek "Due Diligence" report for SMEs with turnover of Rs.1
core lakhs to Rs. 25 crores from CRISIL or Dun & Bradstreet
Online application facility is available in the website in MSME module
under Corporate Banking.
This application can be filled in and submitted ONLINE by a MSME
borrower to the branch of his choice and location.
As per IBA guidelines, receipt of MSME applications has to be
compulsorily ONLINE and branches have to not only acknowledge
receipt of applications online but also update the status of MSME
applications received and processed to enable the applicant to track
the status of the application.
On submission, a unique application ID number will be generated and
this number has to be noted for tracking the application status and
for all future correspondence.
The applicant should submit hard copy of the application along with
all requisite documents within 7 days from the days from the date of
uploading his application to the branch chosen in the online
application.
Credit Ratings And Interest Concession:
Our Bank extends interest rate concessions to MSME borrowers rated by
the following 5 external rating agencies only:
1.CARE

2. CRISIL

3. ICRA 4. SMERA 5. BRICKWORK

Top ratings of all the above rating agencies enjoy interest concession of
0.25% on the applicable rate
The interest concession for top three ratings of SMERA is as follows;
Under NSIC - D & B - SMERA Ratings

Rating Indicator

Interest
concession on
the applicable
rate

SE 1A

0.25 %

SE 1B, SE 2A

0.25 %

SE 2B, SE 3A

0.25 %

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SMERA Ratings:

Rating Indicator

Interest
concession on
the applicable
rate

MSME 1

0.25 %

MSME 2

0.25 %

MSME 3

0.25 %

NSIC with a view to encourage rating provides 75% subsidy in the fee
charged by top rating agencies for the first year.
Time frame for Disposal of loan application:
For limits upto Rs.2 lacs within 2 weeks
For limits above Rs.2 lacs and upto Rs.5 lacs within 4 weeks
For limits above Rs.5 lacs within a reasonable frame of time

MOU With National Small Industries Corporation Ltd., (NSIC)


NSIC is a Government of India enterprise established in 1955 for
promotion of Small Scale Industries
NSIC has entered in to a MOU with our Bank on 16.1.2013 for
extending their credit facilitation support services to MSME
borrowers through our bank branches all over India.
Our arrangement with NSIC is on the following terms and conditions:
Bank will furnish blank SME credit application forms and the
check list for submission of applications to NSIC.
NSIC outlets will forward the credit proposals to the nearest
regional office of the Bank.
Regional Office will scrutinize and forward the applications to the
nearest branch location of the applicant.
Branch shall appraise and sanction of the loan application purely
on merit after complying with KYC norms.
When a loan application is rejected, at the request of NSIC, the
reasons for rejection shall be informed to NSIC only and not to the
customer.
Seven rating agencies viz., CRISIL, MSMERA-D&B, ICRA, CARE,
ICRA, India Ratings, BRICKWORK have been empanelled by NSIC
under the scheme for rating of the Small Enterprises. Our

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branches, under their sole discretion, may refer our customers to


any one of the seven rating agencies as desired by the applicant.
Within 30 days from the date of sanction, branch shall remit 50%
of the processing fee collected from applicants referred by NSIC.
It may be noted that NSICs role will cease once they forward the
loan applications to us and avail their share of processing fee on
sanction of the loan.
After sanction, all necessary follow up actions in respect of
documentation, disbursement, monitoring, recovery, etc., lies with
the branches
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Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE)
In terms of the recommendations made by the High Level Committee on Credit to
SSI(1998) headed by Shri.S.L.Kapoor, Government of India and SIDBI had jointly
set up a new Guarantee Corporation- " Credit Guarantee Fund Trust for small
Industries (CGTSI) with effect from 1.8.2000 to cover advances to SSI units.
Subsequent to the enactment of MSMED Act 2006 the Trust has been renamed as
the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and
the Scheme is known as the Credit Guarantee Fund Scheme for Micro and Small
Enterprises
The credit guarantee Scheme offers a better alternative to collateral based lending
as major portion of credit risk is shared by CGTMSE. Further CGTMSE guaranteed
portion of the advance carries Zero risk weight and attracts no provision in case the
advances become NPAs
1.

Credit policy of our Bank on collateral free loans


No Collateral security and third party guarantee are to be taken for loans
granted to Micro & Small enterprises for an amount up to Rs.10 lacs. Such
loans will be covered under CGTMSE.
All MSE credit upto Rs. 1 crore may also be granted without any collateral
security where CGTMSE guarantee is available. Collateral security can be
taken only if CGTMSE cover is not available for the unit like Retail trade or
where the borrower prefers to offer collateral security.

2.

Eligible borrowal accounts


Credit facilities extended to single borrower for credit upto Rs.100 lacs by
way of Term Loan and/or working capital to a New or Existing Micro &
Small enterprises including IT and Software industries.
Advances extended without obtaining any Collateral Security and or third
party guarantees.
Loan granted to SHGs are not eligible
With effect from 1.9.2003 there is no minimum threshold limit fixed for
guarantee cover by CGTMSE.

3.

Responsibilities of the bank under the scheme


Limit would have been sanctioned by using prudent banking judgment.
Bank shall closely monitor the borrower's account
Bank shall safe guard the primary securities in good and enforceable
condition.
Bank shall lodge the claim, if any in the prescribed form in time.
Bank shall obtain prior permission of Trust before entering into any
compromise or arrangement which may have the effect of discharge or
waiver of personal guarantee or security.

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For loans of Rs.50 lacs and above, the account should be internally rated
and should be of investment grade.
4.

5.

Guarantee Fee

A onetime guarantee fee at specified rate (currently 1.00% in the case of


credit facility upto Rs. 5 Lakh and 1.5% in the case of credit facility above
Rs. 5 Lakh) of the credit facility sanctioned (comprising term loan and /
or working capital facility) shall be paid upfront to the Trust by the
institution availing of the guarantee within 30 days from the date of first
disbursement of credit facility.

In respect of SSI borrowers who are enjoying credit limits upto Rs.10 lakhs
and covered under the CGTMSE, the onetime guarantee fee (Presently
1.5%) should be initially borne by the borrower. On good conduct of the
account the one time guarantee fee remitted by the borrower will be
reimbursed to them after a period of five years from the date of remittance
or at the closure of loan/ facility whichever is earlier. In case if the original
limits are less than Rs.10 lakhs and subsequently due to enhancements if
the limits are above Rs.10 lakhs then the reimbursement is restricted only
for limits upto Rs.10 lakhs .

Annual Service Fee structure


The annual service fee at specified rate (currently 0.50% in the case of
credit facility upto Rs. 5 Lakh and 0.75% in the case of credit facility above
Rs. 5 Lakh) of the credit facility sanctioned (comprising term loan and /
or working capital facility) shall be paid by the lending institution within 60
days ie. on or before May 31, of every year.

6.

In respect of credit facilities sanctioned by member Lending Institutions


(MLIs)on or after January 01.2013, the following guidelines apply;

Instead of Guarantee Fee and Annual Service Fee, a composite. all-in


Guarantee Fee is to be paid on the amount sanctioned, as under :Annual Guarantee GF
Credit Facility

Women, Micro
Enterprises and units
in North East Region
(incl. Sikkim)

Others

Upto Rs.5 lacs

0.75%

1.00%

Above 5 lacs and


upto 100 lacs

0.85%

1.00%

Annual Guarantee fee (AGF) is to be paid upfront by the Member lending


institution (MLI) to the Trust, within the period specified by the Trust.
Guarantee will not be available in the case the MLI failed to pay AGF as
above.

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If the Trust agrees to continue the guarantee, the MLI has to pay penal
interest on the fee due and unpaid, with effect from the due date, at 4%
over Bank Rate, per annum, or at such rates specified by the Trust from
time to time, for the period of delay.

7.

Annual Guarantee Fee of all new borrowal accounts under MSE sector
upto a credit limit of Rs 1 crore is borne by our Bank w.e.f 25.02.2013.

Payment of Fees

Annual Service Fee


For the guarantees issued up to March 31,2013 against the credit
facilities sanctioned / approved / renewed by MLIs up to December
31,2012, ASF needs to be paid.
ASF for FY 2013-14 and subsequent years, would be demanded and
collected in advance from the MLIs.
Demand for ASF would be made in April itself, i.e at the beginning of the
year and is to be paid by the MLIs.

Annual Guarantee Fee (AGF)


Annual Guarantee fee (AGF) is to be paid upfront by the Member
lending institution(MLI) to the Trust in respect of credit facilities
sanctioned on or after January 01.2013.
The demand on MLIs for AGF in respect of fresh guarantees would be
raised upon approval of guarantee cover.
The guarantee start date is termed as material date by CGS.
Material date would be the date on which proceeds of AGF are credited
to Trust`s Bank account.
The AGF/guarantee cover would be valid for 1 year from the material
date
In the subsequent financial year, demand for AGF( i.e., for 2nd AGF)
would be raised in the month of April for the guarantees approved in
the previous financial year (till March 31st) for which the AGF has been
received till March 31.
The AGF demands for subsequent years would be on Full Financial
Year basis excepting for the terminal year of guarantee where AGF
demand would be till validity of guarantee cover.

Extent of the guarantee


For General category of borrower : The maximum cover available
per eligible borrower, which shall not exceed 75 per cent for first
Rs.50 lacs and 50% for the rest amount in default in respect of credit
facility extended by the lending institution, subject to maximum of Rs.
62.50 lakh.

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For women entrepreneurs with credit facility above Rs.5 lacs :


The maximum cover available per eligible borrower, which shall not
exceed 80 per cent for first Rs.50 lacs and 50% for the rest amount in
default in respect of credit facility extended by the lending institution,
subject to maximum of Rs. 65 lakh.
For credit facility upto Rs.5 lacs : 85% of the amount in default
subject to a maximum of Rs.4.25 lacs.
8.

Updation of NPA details


NPA details are to be updated in the system by the end of the subsequent
quarter for all accounts that may be classified as NPA using the option
Member login area -> Guarantee maintenance -> Periodic Information
-> NPA details.

9.

CLAIMS
Invocation of guarantee
The Banks may invoke the guarantee in respect of eligible credit facility if the
following conditions are satisfied.
a.

The guarantee is in force.

b.

The lock in period of 18 months from either the date of last disbursement
of the loan to the borrowers or the date of payment of guarantee fee
whichever is later.

c.

The amount due and payable to the bank in respect of the credit facility
has not been paid and the dues have been classified by the lending
institution as NPA

d.

The loan facility has been recalled and the usual recovery proceedings
have been initiated.

e.

In respect of loans sanctioned on or after 01.01.2013,initiation of legal


proceedings as a pre-condition for invoking of guarantees shall be waived
for credit facilities upto Rs.50,000 /- subject to the bank taking a
decision for not initiating legal action and filing claim under the Scheme.

f.

As per modified CGS If the account has become NPA after lock- in period,
claim should be made within one year (2 years in case of loans sanctioned
on or after 01.01.2013) from the date of NPA. If the account has become
NPA within the lock-in period, the claim should be made within one year
(2 years in case of loans sanctioned on or after 01.01.2013) from the date
of expiry of lock-in period

g.

"Amount in Default" means the principal and interest amount


outstanding in the account(s) of the borrower in respect of term loan and
amount of outstanding working capital facilities (including interest) as on
the date of the account becoming NPA or the date of lodgment of
claim application whichever is lower or such of the date as may be
specified by CGTMSE for preferring any claim against the guarantee cover
subject to a maximum of amount Guaranteed.

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h. The trust shall pay 75% of the guaranteed amount within 30 days. The
trust will pay interest on the eligible claim amount at the prevailing Bank
rate for the period of delay beyond 30 days. The Balance 25%of the
guaranteed amount will be paid on conclusion of recovery proceedings by
the Bank, i.e.as soon as the decree in respect of the civil suit is awarded.
i.

In case of loans sanctioned on or after 01.01.2013, the balance 25 % of


the guaranteed amount will be paid on conclusion of recovery proceedings
by the MLI or after 3 years of obtention of decree of recovery, whichever is
earlier?

j.

MLIs, however, should undertake to refund any amount received from the
unit after payment of full guaranteed amount by CGTMSE.

10. Recovery & OTS


The lending institution shall, in respect of any guaranteed account,
exercise the same diligence in recovering the dues, and safeguarding the
interest of the Trust in all the ways open to it as it might have exercised in
the normal course as if no Guarantee had been furnished by the Trust. The
lending institution should intimate the Trust before entering into any
compromise or arrangement, which may have the effect of discharge or
waiver of personal guarantee(s) or security.
Subsequent to receiving claim amount from CGTMSE , if the bank recovers
money through recovery proceedings initiated by it, the same shall be
deposited with the Trust, after adjusting towards the cost incurred by the
bank for recovery of the amount.
11. Closure of account
The date of closure of guaranteed accounts should be informed then and there
by Banks to CGTMSE. Once the request is approved by CGTMSE, Closure
DAN (Demand Advice Notice) can be generated and the DAN amount is to be
passed on to CGTMSE. On receipt of DAN amount, the account will be marked
as CLOSED in the records of CGTMSE. Otherwise, ASF even after closure will
be claimed.
12.

Risk Sharing Facility II:

RSF II facility will provide guarantee cover to MSE borrowers with a credit
limit of above Rs. 100 lacs and upto Rs.200 lacs through select MLIs. Our
bank has agreed to be a partner in the RSF II scheme and we have signed
a MOU with CGTMSE

The extent of coverage will be 50% of the amount in default or guaranteed


amount whichever is lower and for special groups (NER, WOMEN, Minority,
SC/ST, etc) the cover will be 60%.
Credit rating to be obtained under Investment Grade as per internal rating
and/or external rating through Reserve Bank of India accredited Rating
Agencies.
The guarantee fee will be 1 % and for special category borrowers, the fee is
at 0.75 % of the credit facility.

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Total claim payable for overall credit limit of Rs.200 lacs will range from
Rs.100 lacs to Rs.120 lacs (amount in default)

All other terms are as applicable under the existing credit guarantee
scheme of CGTMSE
The scheme will be in operation upto 30th June ,2013 and shall be
extended as may be decided by CGTMSE.
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Letter of Guarantee
General
Guarantees shall be issued by the Bank on behalf of customers only.
No bank guarantee will normally have duration of more than 10 years
Bank Guarantees can be classified as under:
1. Specific guarantees: Bank Guarantees may be issued to cover a single
transaction only.
2. Continuing guarantees: A Guarantee which extends to a series of transactions
is called a Continuing Guarantee.

Bank Guarantees can also be classified as a. Shipping and Railway Guarantees;


b. Financial Guarantees;
c. Performance Guarantees; and
d. Deferred Payment Guarantees.

Of the above, financial guarantee, Performance guarantees and Deferred


Payment Guarantee are very common.
a. Financial guarantees
These are Guarantees which are given in lieu of purely monetary obligations.
Advance payment Guarantees, Guarantees issued in lieu of Earnest Money
Deposit, Security deposits etc., take the form of Financial Guarantees.
b. Performance guarantees
These are Guarantees issued in respect of performance of a contract or
obligation. In such Guarantees, in the event of non-performance of any of
the obligations, the Bank will be called upon to make good the monetary loss
arising out of the non-fulfillment of the guarantee obligation. Although these
Guarantees are for performance, the quantum of the pecuniary obligation is
reduced to money terms and a Guarantee is called for.
c. Deferred payment guarantees
a. These Guarantees normally arise in the case of purchase of machinery or
such other capital equipment by industries from suppliers in India or
abroad.
b. Issue of Deferred Payment Guarantees in favour of foreign manufacturers
or suppliers of goods for payments against imports into India under
import licenses issued on deferred payment basis require prior approval
of the Reserve Bank of India and are subject to the Exchange Control
Regulations in force from time to time.

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Margin:
Minimum cash margin for Performance Guarantee is : 10%
Minimum cash margin for financial guarantee

: 25%

Discretionary Power:
Letter of Guarantee with 100% margin by way of Cash/Deposit as per terms of
sanction may be issued provided there is no onerous clause in the L.G;

By Branch Managers, if the validity period including claim period is upto


and inclusive of 5 years.
By RLCC, if the validity period including claim period is above 5 years.

Letters of Guarantee with less than 100% margin by way of deposits or cash
and /or any other immovable properties of any value or personal guarantee as
per terms of sanction may be issued provided there is no onerous clause in the
LG.

By Branch Manager if the validity period including claim period is upto and
inclusive of 3 years

By RLCC if the validity period including claim period is upto and inclusive of
5 years.

By HLCC (GM) if the validity period including claim period is more than 5
years.

In respect of Export Advances / Export Oriented Units, when term loans are
sanctioned for import of machinery under EPGC Scheme and LC limits are
sanctioned favouring DGFT, sanctioning authority will have the power to
sanction / issue LG with a validity period to cover the period within which the
export obligations is to be completed even though the same is more than the
period indicated above.
srn/11.05.2013

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Rehabilitation of sick Micro & Small Enterprises

In order to identify the sick viable units at an early stage and to implement
rehabilitation package to such viable units ,RBI vide their notification
01.11.2012 has advised fresh guidelines for rehabilitation of sick MSE units for
implementation by banks.

The MSE units which could not be revived after intervention by branch at the
`handholding stage` need to be classified as sick subject to complying with any
one of the two conditions as given below and based on a viability study the
viable/potentially viable units be provided rehabilitation package.

Definition of Sickness:
A Micro or Small Enterprise (as defined in the MSMED Act 2006) may be said to
have become Sick, if:
Any of the borrowal account of the enterprise remains NPA for 3
months or more
OR
There is erosion in the net worth due to accumulated losses to the extent
of 50% of its net worth during the previous accounting year.

The decision on viability of the unit should be taken at the earliest but not
later than 3 months of becoming sick under any circumstances.

Units becoming sick on account of willful mismanagement, willful default,


unauthorised diversion of funds, disputes among partners / promoters, etc.,
should not be classified as sick units.

In case such a unit is declared unviable, an opportunity should be given to the


unit to present the case before the next higher authority.

The declaration of the unit as unviable, as evidenced by the viability study,


should have the approval of the next higher authority/present sanctioning
authority for both Micro and Small units.

Enterprises, having investment in plant and machinery upto Rs. 5 lacs and
Micro (Service) Enterprises having investment in equipment upto Rs. 2 lacs,
the Branch Manager may take a decision on viability and record the same,
along with the justification

The rehabilitation package should be fully implemented within 6 months from


the date the unit is declared as `potentially viable` /viable`.

While identifying and implementing the rehabilitation package, branch is


advised to do `holding operation` for a period of 6 months.

An account may be treated to have reached the `handholding stage`, if any of


the following events are triggered:
There is delay in commencement of commercial production by more than 6
months for reasons beyond the control of the promoters;
The company incurs losses for 2 years or cash loss for one year, beyond
the accepted timeframe;

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The capacity utilisation is less than 50% of the projected level in terms of
quantity or the sales are less than 50% of the projected level in terms of
value during a year.

Some or all of the following need-based concessions shall be given to sick


MSE units under Nursing and Rehabilitation.

Micro and Small Enterprises

1
2

Interest on fresh and


existing (renewed)
working capital

Interest shall be reduced by 3% for Micro Sector


and 2 % for other units subject to floor Base Rate

Interest on existing
Term Loan

Reduction of Interest on Term Loan to be


reduced by 3% in case of Micro and 2% in the
Case of other SMEs subject to floor rate.

Financing for
purchase of Gensets
on soft terms, specialty
in power deficit states.
3

Nature of concession as existing

Reduced margin of say 15% may be stipulated for


purchased at Gensets by MSE units. Longer
repayment periods from 3 to 5 years may be
considered depending on their cash flow for
purchase of Gensets by MSE units.

Interest on fresh
Rehabilitation Term Loan
(RTL). (For Small
manufacturing units f o r
start up expenses and
margin for working capital).

1% over base rate or 1% below applicable rate or as


prescribed by SIDBI / NABARD where refinance
is obtained, whichever is the least subject to
minimum of base rate.

Interest on Contingency
Loan Assistance to meet
escalations in capital
expenditure under the
rehabilitation scheme.

At the concessional rate allowed for working capital


assistance.

Relaxation in Margin Norms Margin requirements on inventory/ stock/ receivables


may be reduced up to 10% from the stipulated level
FUND BASED LIMITS
on case-to- case basis wherever warranted. The
NON FUND BASED LIMITS reduced margin should not be less than 15% for
stock and 20% for receivables.
Reduction in margin by 5% to 10% from the
stipulated level in respect of Non Fund Based
Limits such as LC/LG may be considered in
deserving cases.
Reduction in margin will not give relief to units
where stocks/receivables are accumulated due to
stretched sales cycle. In such cases, adhoc limits
may be sanctioned up to 30% of existing fund based
Increasing the Working
limits based on merits and subject to availability of
Capital limits due to
drawing power.
stretched w o r k i n g capital
The adhoc loan will be repayable within in a maximum
cycle and reduced sales.
period of 2 years with a moratorium of 6
months during which only interest will have to
be Serviced.

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Interest on Working
Capital Term Loan
(WCTL).

1% over base rate or 1% below applicable rate


whichever is lower subject to a minimum of Base
Rate.

Interest on Funded
Interest Term Loan
(FITL).

NIL for a period of 3 years at the discretion of the


bank.

10 Repayment period for


Funded Interest Term
Loan.

To be repaid within 7 years from the date of


commencement of implementation of rehabilitation
Programme.

11

Should not normally exceed 7 years from the


date of restructuring and 15 years from the date of
first disbursement of original loan. For Micro
Enterprises, the re pay me n t pe rio d s h ou ld n o t
exceed 10 years from the date of restructuring.
Staggered or ballooning repayment may also be
permitted so that the installments are
aligned to the cash flows.

Repayment period for


Funded Term Loan
(FTL).

12 Repayment Period for


Working Capital Term
Loan (WCTL).
13

14

Waiver of Penal
Interest

Rephasement of
existing Term Loan

15 Approval
from
ECGC/CGTMSE
wherever applicable

- do Waiver of Penal Interest from the date of


account becoming NPA or started incurring
cash losses whichever is earlier.
10 years.
In deserving cases, RO can
repayment period up to 15 years

extend

the

ECGC/CGTMSE should approve the package for


such units covered under the scheme

srn/17.03.2013
Back to index

_____________________________________
_____________________________________
_____________________________________

Career Guide for IOBians


_____________________________________

242
_____________________________________

_____________________________________

Different Credit Schemes under SME


Name

IOB SME Advance Term loan Sanction


scheme

Target Group

Existing SME borrowers with good track


record

Purpose

A standby credit facility exclusively for SME


borrowers. The borrower is required to make
an advance estimate of the term loan
requirement for purchase of machinery
during next one year period.

Quantum

Rate of Interest

10% of original cost of existing plant and


machinery or cost of machinery to be
purchased less stipulated margin or Rs.25
lacs whichever is the least.
Up to Rs 2 lakhs BR + 0.75%
Rs 2 lakhs to Rs 25 lakhs - BR + 1.75%

IOB MSE PLUS


Micro and Small enterprises engaged in
manufacturing/service activities which are
eligible for classification under MSE sector as
per MSMED Act 2006, and which are eligible for
CGTMSE Cover.
1. Construction/ purchase of work
sheds/factory premises
2. Acquisition of plant and
machinery/equipment
3. Working Capital needs.

MAXIMUM LOAN
Rs.100 Lacs
As applicable to working capital facility for MSE
from time to time.
Prime: Assets created out of loan
Collateral : NIL

IOB MICRO ONE (Modified)


MICRO ENTERPRISES (only new connections
under Micro Sector and the scheme is not
applicable to existing borrower clients)

ONLY NEW UNITS seeking credit facilities


with investment norms satisfying micro &
small units
Maximum Rs.50.00 lacs (Cash Credit + Term
Loan with a ceiling of Rs.22.50 lacs for Term
Loan)

Both for Working Capital and Term Loan


Base Rate + 1.75%
Prime: Assets created out of loan
Collateral : NIL
15% for Working Capital and
25% for Book debts & Term Loan
84 EMIs for Term Loan (for combined
facility as well)
Cash Credit to be renewed annually

Security

As applicable to SME advances

Margin

As applicable to other SME advances

Repayment

As applicable to SME term loan

5 to 10 years (including holiday period)


depending on the project.

Holiday period

As applicable to SME term loan

Moratorium of 6 to 18 months depending on


the project

Priority status

Yes

Yes

Yes

Discretion

Overall limits sanctioned including


advance term loan should be within the
discretionary powers of the sanctioning
authority.

Per borrower limit or maximum specified in the


scheme whichever is lower.

Per borrower limit or maximum specified


in the scheme whichever is lower.

Remarks

CGTMSE cover may be sought for


eligible accounts

For shed: 30%


For plant & machineries : 15%

_____________________________________

We may accept average DSCR of 1.75


with minimum DSCR of 1.5 in any year.
Loan should be compulsorily covered
under CGTMSE Guarantee Scheme.
Single documentation for entire amount
ADV/ 521/ 2010-11 Dt: 11.02.2011

_____________________________________

As applicable to SME term loan

To be covered under CGTMSE Scheme


and the fee to be borne by the borrower
Processing charge: Upto Rs. 10.00 lacs ....
Rs. 1000/-; Above Rs.10.00 lacs and upto
Rs.50.00 lacs ... Rs. 5000/-; (for both CC&TL)
Ref.ADV/ 89/2011-12 Dt: 10 .11.2011.

_____________________________________

Career Guide for IOBians


_____________________________________

Name

Sanjeevini

Target Group

Qualified/registered individual medical


practitioners from reputed universities or by a
group of such persons practicing in India for a
mini. of three years/corporates promoted by
such persons-IT assessees

Purpose

To set up new hospital/nursing home or


for acquiringequipments for an existing
hospital/ nursing homes/ working capital
requirement for purchase of equipments/
ambulances,vans/cars etc

Quantum

Rs.2 crores for Nursing homes/hospitals


in metro/urban areas Rs. 50 lacs in Semiurban area-Rs. 10 lacs in rural area(
working capital not more than 20% of
Project cost

Rate of Interest

BR + 3.00%

Security
Margin

Repayment
Holiday period
Priority status
Discretion

Remarks

Hyp. of equipments
Upto 2 lacs nil : > 2 lacs Immovable
property/NSC/LIC to cover 100% of
advance
Equipments-15-25%
Construction-25-30%

Individual Transport operators 3 wheeler

To finance purchase of Bajaj


autorickshaws/commercial three wheelers

85% of on-road price as per proforma


invoice
Up to Rs 2 lakhs
Rs 2 lakhs to- < Rs 25 lacs -

BR + 0.75%
BR + 1.75%

15% of the on-road price as the proforma invoice

IOB ENGINEER

Civil Engineers
(Individuals upto 65 yrs of age)
Proprietorship Concern.
Partnership Firm.
Partnership with Limited Liability.
To construct office premises
To purchase furniture & fixtures, fittings
and office equipments such as computers,
printers, plotters, books & Other accessories
etc.
To Purchase Centering sheets, Spans, props,
Column box etc.,
To purchase Constructional Machineries like
J.C.P Rollers, Vibrators, Mixer Machines,
drillers, earth Rammers, Other equipments,
etc.,

Maximum eligible amount depending up on the


category ,requirement
on case to case basis.
As applicable to SME advances.
A reduction of 0.50 % on the applicable rate
if collateral overage is 100% or above.
As applicable to SME finance.
As applicable to SME finance

6 months for bajaj/3 months

Maximum of 7 years(should not exceed the age


limit of 72 yrs of the borrower) in equal Monthly
Instalments including moratorium period of 3
months. For construction upto 10 yrs with
initial moratorium upto 12 to 18 months only.
3 months/12 to 18 months

Yes

Yes. Up to 1 crore per unit

Per borrower limit or maximum specified in the


scheme whichever is lower.
No processing charge.
To be covered under CGTMSE
MOU covers all authorized dealers of Bajaj
Auto Ltd/TVS and all branches of our bank.
MOU is valid upto 08.04.2014/02.06.2013

Per borrower limit or maximum specified in the


scheme whichever is lower.
Members of Civil Engineers Association
Affiliated to the federation of All Civil Engineers
Associations of the respective State. Should
not be RBI Defaulters List.
CIBIL report should be satisfactory.
Processing Charges: 0.25 % of loan amount
subject to a minimum of Rs.5,000/-

Between 3-5 years

Based on income generation


Upto 15 lacs in Rural/semi-urban reas, upto
10 lacs in other areas with sub limit for
working capital 3 lacs and 2 lacs
Scale I -5 lacs,II-10 lacs,III 40 lacs,IV
100, AGM Br/SRM/CRM/RGM-full

ADV/96/1.4.2002

Financing Bajaj /TVS autorickshaws and


commercial three wheelers

Prime: Hypothecation of the vehicle


Collateral: NIL

TL-5-7 years-maxi.10 years

_____________________________________

243
_____________________________________

_____________________________________

_____________________________________

_____________________________________

Career Guide for IOBians


_____________________________________

Name
Target Group

Purpose

Quantum
Rate of Interest

Security
Margin

Repayment
Holiday period
Priority status
Discretion

Remarks

_____________________________________

IOB SAGARLAKSHMI

IOB SME INSTA FUND


existing Micro/small enterprises customers

IOBs ARTISAN CREDIT CARD SCHEME


All existing artisans borrowers enjoying credit
limit upto Rs. 2 lacs and having satisfactory
dealings/artisans involved in
production/manufacturing process- artisans
who have joined to form SHGs-Beneficiaries of
Govt. sponsored loans are not eligible

To meet working capital requirement of an


Micro/Small Enterprises unit enjoying credit
facilities with the Bank to execute additional
/bulk orders over and above the regular
orders (for both manufacturing & Service
units )

To provide adequate and timely assistance to


meet the investments and working capital
requirement in a flexible & cost effective manner
in Rural and urban areas.

Based on Credit rating & Period of


Satisfactory Banking Relationship.
50%/30%of the existing working capital with
the cap of Rs 5.00 Cr

Based on Nayak committee recommendation i.e


20% of the anticipated turn over for Working
capital requirement & term loan component
subject to a maximum of Rs. 2 lacs.

As applicable to SME finance

Up to Rs 2 lakhs BR+ 0.75%

Women who are engaged in processing


of fish into dry fish, fish feed and other
fish based products.
Indi./Proprietary/Partnership firm.
Sorting, grading, drying, processing and
selling / dry fish / dried and
packed fish-Fish and fishery product
processing: shell craft production
Fish fast food counters, Breeding and
selling of decorative fish for aquarium.
Contract cleaning of fish markets.
Maximum Rs.10,00,000
By way of working Capital / Term Loan
for equipments.
Based on classification viz. agri/SME
/trade and nature of limit viz. TL/WC
Prime: Assets created by using the loan
and margin amount.
COLLATERAL: Nil To be covered under
CGTMSE Guarantee Scheme wherever
eligible
Up to Rs.1,00,000 : Nil
More than Rs.1,00, 000 : 15 25%
Within 5 years in monthly installments
including initial holiday period not
exceeding 3 months.
Not exceeding 3 months.
Yes
Per borrower limit or maximum specified
in the scheme whichever is lower.
PROCESSING CHARGES
Up to Rs. 1.00 lac - Nil
Above Rs. 1.00 lac to Rs 10 lacs 1 %
upfront for TL and Rs 200 per lac
for working capital.
Circular No. ADV / 41 / 2011-12
Dt.18.07.2011.

_____________________________________

244
_____________________________________

The current assets created out of the loan


should be hypothecated /charged to us.
Existing collateral should be charged as
security for the insta fund.

Applicable system margin as applicable to


respective limits
Maximum Six months with the option to
extend it for another six months on merits or
till the current credit facilities are due for
review/renewal.
NA
Yes
Per borrower limit or maximum specified in
the scheme whichever is lower.
Kindly refer circular No. ADV/ 64 / 2011-12
Dt. 12.09.2011 for quantum of finance ,
discretionary powers etc.

_____________________________________

Hypothecation of assets financed-No need to


submit stock statement and other financial
statements-Group insurance for beneficiaries
who are registered with Development
Commissioner @ 60: 40 premium paid by Govt &
Beneficiary
Upto Rs. 25000/- No margin ;Above Rs. 25000as per RBI guidelines/Banks policy
Revolving CC-term loan component attracts
repayment schedule
Priority
As applicable to Priority Sector advances

Card validity three years-require renewal


No fee for renewal/fresh

_____________________________________

Career Guide for IOBians


_____________________________________

Name

Target Group

245
_____________________________________

_____________________________________

Financing TATA Motor


commercial Transport vehicles

Financing Ashok Leyland


Commercial Transport vehicles

Individual Transport operators

Individual Transport operators,


Partnership firms, LLP, Limited
Companies, Trusts and Societies.

Purpose

To finance purchase of TATA Motor


commercial
Transport vehicles

Quantum

85% of on-road price as per


proforma invoice

To finance purchase of Commercial


Transport vehicles
85% of on-road price as per
proforma invoice

Rate of
Interest

Up to Rs 2 lakhs
BR + 0.75%
Rs 2 lakh to below Rs 25 lakhs
BR+ 1.75%
Above RS 25 Lakhs - below Rs 1 Cr BR+ 2.25%
Rs 1 Cr - below Rs 2 Cr
BR +2.75%

Security

Prime: Hypothecation of the vehicle


Collateral: NIL upto Rs.100 lacs

Prime: Hypothecation of the vehicle


Collateral: NIL upto Rs. 100 lacs

Margin

15% of the on-road price as the


proforma invoice

15% of the on-road price as the


proforma invoice & DOST 10%

Repayment
Holiday
period
Priority status
Discretion
Remarks

Up to Rs 2 lakhs
BR + 0.75%
Rs 2 lakh to below Rs 25 lakhs
BR+ 1.75%
Above RS 25 Lakhs - below Rs 1 Cr BR+ 2.25%
Rs 1 Cr - below Rs 2 Cr
BR +2.75%

Between 3-7 years

Between 3-5/3-7 years

3 months

3 months

Yes
Per borrower limit or maximum
specified in the scheme whichever is
lower.
No processing charge.
To be covered under CGTMSE

Our bank has entered into a MOU

with TATA Motors Ltd. MOU covers


all authorized dealers of TML and all
branches of our bank. MOU is valid
upto 21.03..2013

_____________________________________

Yes
Per borrower limit or maximum
specified in the scheme whichever is
lower.
Processing charge - applicable.
To be covered under CGTMSE

MOU

with
13.05.2014

ALL

is

valid

upto

Post dated cheques to be obtained.

_____________________________________

IOB - CA
Chartered Accountants & Practicing Cost and
works accountants individually / jointly or
Proprietorship concern or a Partnership
Firm/Partnership
with Limited
Liability
registered with ICAI, engaged in the profession
of Accounting/Audit etc.,
Purchase Car, construction of office premises,
acquire ready built office premises, cover cost
of land and construction, purchase furniture
& fixture, fittings and office equipments,
computers, Books and other accessories, etc.,
towards working capital and financing
receivables
Varies from Rs.10 Lacs to Rs 125 Lacs
depending on the category.
Up to Rs 2 lakhs
BR + 0.75%
Rs 2 lacs to below Rs 25 lakhs
BR+ 1.75%
Above RS 25 Lacs - below Rs 1Cr BR+ 2.25%
Rs 1 Cr - below Rs 2 Cr
BR +2.75%
No collateral security up to Rs.10 Lacs.
Collateral security may be taken for loans
above Rs.10 Lacs, if not covered under
CGTMSE guarantee scheme.

Term Loan - 20%, Working Capital 25%;


Maximum of 10 years by EMI ( Including
Moratorium period),
Initial Moratorium 18-24 months
Yes. Utp to 1 crore per unit
Per borrower limit or maximum specified
in the scheme whichever is lower.
Processing charge: 0.25% of loan
amount subject to a minimum of
Rs.5000/ To be covered under CGTMSE upto 10
lacs.
Above 10 lacs CGTMSE subject to nonavailability of security.
No prepayment charges

_____________________________________

Career Guide for IOBians


_____________________________________

Name
Target
Group
Purpose
Quantum
Rate of
Interest
Security
Margin
Repayment
Holiday
period
Priority
status
Discretion

Remarks

_____________________________________

Financing Mahindra & Mahindra


LCVs

Financing PIAGGIO vehicles


(APE)

Individual Transport operators

Individual Transport operators,


proprietorships, partnerships

To finance purchase of Mahindra


& Mahindra LCVs
90% of on-road price as per
proforma invoice

To finance purchase of Auto


rickshaws & LCVs of PIAGGIO
85% of on-road price as per
proforma invoice

<= 5yrs
> 5 yrs
Up to Rs 2 lakhs :
BR + 0.75% BR +1.00%
Rs 2 lacs to < Rs 25 lacs BR+ 1.75% BR+2.00%

Up to Rs 2 lakhs :
BR + 0.75%
Rs 2 lakhs to below Rs 25 lakhs BR+ 1.75%

246
_____________________________________

Financing ATUL vehicles


Individuals, Proprietorships,
Partnerships, limited Liability
Partnerships, limited Companies,
Trusts and Societies
To finance purchase of Auto
rickshaws & LCVs of ATUL Auto Ltd
85% of on-road price as per
proforma invoice
Up to Rs 2 lakhs : BR + 0.75%
Rs 2 lakhs to below Rs 25 lakhs BR+ 1.75%

Prime: Hypothecation of the vehicle


Collateral: NIL But with
CGTMSE cover
10% of the on-road price (cost +
insurance + registration + genuine
OEM accessories)
Between 5-7 years

Prime: Hypothecation of the vehicle


Collateral: NIL But with
CGTMSE cover
15% on road cost (including taxes,
body building, insurance,
registration, accessories et.)
Between 3-5 years

Prime: Hypothecation of the vehicle


Collateral: NIL But with GTMSE
cover

3 months

3 months

3 months

Yes

Yes

Yes

As applicable to SME financing with


CGTMSE cover
50% processing charge waived.
To be covered under CGTMSE
Our bank has entered into a MOU
with Mahindra & Mahindra Ltd.
MOU is valid upto 23.12.2013
Ref: ADV / 118 / 2011-12 dt 24
/12/2011

_____________________________________

15% on road cost


Between 3-5 years

As applicable to SME financing


As applicable to SME financing with
with CGTMSE cover
CGTMSE cover
No Processing charges
To be covered under CGTMSE
Processing charge waived.
Our bank has entered into a
To be covered under CGTMSE
MOU with PIAGGIO Vehicles Pvt
Our bank has entered into a MOU
Ltd.
MOU is valid upto
with ATUL Auto Ltd. MOU is valid
15.05.2014
upto 30.07.2014
Permit to operate the vehicle
issued by competitive authority

_____________________________________

_____________________________________

Career Guide for IOBians


_____________________________________

Name

Target Group

Purpose

Quantum

Rate of Interest

Security

IOB GENERAL CREDIT CARD


(IOB GCC)

IOB SME RICE MILLS PLUS

IOB SME MAHILA PLUS

Banks customers of Rural & Semi-Urban


areas to purchase goods & Services on
credit and to make cash withdrawals.3
years, member of well functioning SHG
financed by us already for productive
purpose. or JLG

Proprietary, Partnership, Company, Individual


(running rice mills on own or lease basis)

Qualified women(minimum graduate ) n the age


group of 21 to 50
Proprietorship Concern or a partnership with
women in the lead
Vt. Ltd companies with woman as the MD/or a
Director in a key position
Existing units fully managed by a woman
entrepreneur

To provide hassle-free credit to our banks


customers in rural & Semi-urban areas
without insisting for security, purpose or enduse verification purely based on assessment
of cash flow.
Maximum of Rs. 25,000/-

Holiday period
Priority status
Discretion
Remarks

To meet financial requirements of rice mills,


Poha Mills and Dal Mills.
To set up new rice mills and to acquire
existing rice mills. Purcahse of new & second
hand machineries etc.

Base Rate + 1.50 % i.e., 12% at present. RAM


rating is compulsory but not linked to interest
rates upto Rs 5 Crores.
Prime: Assets acquired out of loan amount &
Collateral Security to cover 50% of the Banks
exposure wherever CGTMSE cover not available
For stock: 25%, Book debts: 35% & TL: 25%

No Security
Nil

The Term Loan repayable in 84 monthly


instalments excluding holiday period

To be operated as Cash Credit


with regular operations
Nil
Yes - under Indirect SME Advances if the
borrower engaged in SME activity
Per borrower limit or maximum specified in
the scheme whichever is lower.
GL-CODE 4156 to be introduced. proper
assessment of cash flow while fixing the limit
to avoid problems in recovery later

_____________________________________

up to Rs. 5 Crores

BR + 1.75%

Margin
Repayment

247
_____________________________________

_____________________________________

Max.12 months for term loan


Yes under MSME
Per borrower limit or maximum specified in the
scheme whichever is lower.

Processing charges: Rs.100 per lac with a


maximum of Rs.25000/-.

RTGS free of charges upto Rs. 5 lacs.

Ref: Cir. ADV/ 249/ 2012-13 Dt : 08.10.2012

_____________________________________

To set up mfg/service units


To upgrade units
Fresh and additional working capital

Composite loan upto Rs 2 crores for a


Manufacturing enterprise
Composite loan upto Rs 1 crore for a
Service enterprise
BR +1.25 % for working capital
BR + 1.50 % for TL for construction of factory
/business premises
BR + 1.75 % for purchase of Machineries /
Equipments

As per other MSME finance


As per extant guidelines for lending to MSE
sector.
CC:To be renewed annually
TL:10 years for construction
7 years in Equal Monthly Instalments
New unit: 12 months; others 3 months
Yes under MSME
Similar to MSME
Rs 200 per lac both for WC and TL with a
maximum of Rs 20000
Ref: ADV/ 271 /2012-13 dt 23.11.2012

_____________________________________

Career Guide for IOBians


_____________________________________

Name

Target Group

Purpose
Quantum

Rate of Interest

Security

_____________________________________

Financing AMW vehicles


Individuals, Proprietary, Partnership &
Limited Companies.
All units engaged in transportation under
HCV segment
purchase of Trucks / Tippers

Cost of the vehicles less margin amount


As applicable to SME advances

Collateral: upto 25 lac NIL9Only


CGTMSE coverage)
Above25lacs: security required

IOB SME Equi-P scheme


(Margin Money Assistance Scheme)
All MSME units, new and existing facing shortfall
in promoters contribution (margin money) for
capital investments. (Proprietorship, Partnership
and Limited Companies)
To meet the shortfall in promoters contribution
for starting a new unit or for expansion of the
existing unit
Is restricted to 10 % of the project/capital cost or
Rs 50 lacs whichever is lower
BR+1.25 %

PRIME: The SME Equi-P term loan will be


secured by extending our charge on the fixed
assets acquired out of regular term loan
CGTMSE : as applicable to other Micro and
Small Enterprises

Priority status

Yes

Being a soft loan, the eligible amount will be


funded 100 % by the bank.
Spread over 10 years for new units and 9 years
for existing units including the holiday period.
Holiday period of 2 years for new units and not
more than 12 months for existing units.
Yes. depends on investment

Discretion

As per SME finance

As per SME finance

Margin
Repayment
Holiday period

Remarks

15% on road
3 to 5years
Upto 3months

MOU is valid upto 26.12.2013

1 % of the loan amount or Rs 10000 whichever


is lower
SME/ADV/331/2013-14 dt.19.04.2013

248
_____________________________________

IOB Bounty
ATMs/Cash Dispenser Vendors/
Manufacturers/ Suppliers who are in operation
for more than 3 years in the field of installation
& maintenance of ATMS/Cash Dispensers
Term Loan for ATMs/Cash Dispensers
(installed & maintained by Vendors) under
transaction cost model
75% on the total cost of machine including
cost of preparation and erection of the site
subject to a maximum of Rs 4.50 Lacs per
machine
Base Rate + 3.00%.
The Loan will be secured by hypothecation of
ATM/Cash Dispenser
The receivables of the Vendor to be charged to the
Bank. In case, the amount is not directly
received from the Sponsor Bank through Escrow
Account, Collateral equivalent to the loan
amount to be obtained by the Branch in the
form of liquid/immovable properties.
Personal Guarantee of the Directors in their
individual capacity must be obtained.
25% on the total cost of machine including cost
of preparation and erection of the site
60 months
6 moths
Yes
Sanction of Loan can be considered only at the
Regional Office Level
Processing charge as applicable to fund based
advances
Loan amount upto Rs. 1crore can be covered
under CGTMSE

Processing charges : Non-rural branches: Amount Rs. 25,000 to Rs.2 lacs Rs.168/- & Rural branches Rs.134/Above Rs.2,00,000 - Rs.204/lac
&
Rs.153/lac

Present Base rate of our Bank is 10.25 % w.e.f 18.02.2013;


srn/19.05.2013

_____________________________________

Back to index

_____________________________________

_____________________________________

Career Guide for IOBians


249
_____________________________________
_____________________________________
_____________________________________

Financial Inclusion - Initiative of IOB


(ICT based financial inclusion)

1. Financial Inclusion : connecting people (particularly the under privileged] to


the Banking system.

2.

RBI has issued directions to the bank on financial inclusion and is made
mandatory.

The DCC of the district is directed by RBI to form a Financial Inclusion


Sub-Committee to identify all unbanked villages with population above
2000 to provide them such banking facilities.

Indian Overseas Bank views this as an emerging business opportunity

This is a new business model which will provide low cost banking
services to a vast population

Indian Overseas Bank implements


Information and communication (ICT).

Information and Communication Technology (ICT) based financial


inclusion is the mechanism of allowing people to transact basic banking
business without coming to the Bank, through intermediaries like
Business Correspondents (BCs) and Business Facilitators (BFs) .

financial

inclusion

through

Steps to ensure Financial Inclusion

Opening small/Basic savings Bank accounts

Issuing General Purpose Credit Cards

Granting Overdraft facilities in SB accounts

Providing banking services at the door step of villagers through Smart


Cards

3. TOD in basic Small Savings SB accounts: In order to meet financial


commitments of such SB account holders, branch Managers are vested with
discretionary powers to grant overdraft of not more than Rs.1000/- (Rupees
One Thousand only) which should be adjusted within a maximum period of
Sixty Days.
4. Business Correspondent :The following organisations / individuals can be
enlisted as BCs:
a.

Individuals like retired bank employees, retired teachers, retired


government employees and ex-servicemen, individual owners of kirana/
medical /Fair Price shops, individual Public Call Office (PCO) operators,
agents of Small Savings schemes of Government of India/Insurance
Companies, individuals who own Petrol Pumps, authorized functionaries
of well run Self Help Groups (SHGs) which are linked to banks, any other
individual including those operating Common Service Centres (CSCs).

_____________________________________
_____________________________________
_____________________________________

Career Guide for IOBians


250
_____________________________________
_____________________________________
_____________________________________

b.

NGOs/ MFIs set up under Societies/ Trust Acts and Section 25


Companies

c.

Cooperative Societies registered under Mutually Aided Cooperative


Societies Acts/ Cooperative Societies Acts of States/Multi State
Cooperative Societies Act

d.

Post Offices

e.

Companies registered under the Indian Companies Act, 1956 with large
and widespread retail outlets, excluding Non Banking Financial
Companies (NBFCs).

5. Scope of activities of Business Correspondents


Functions / Services: In addition to the activities listed under Business
Facilitators model the scope of activities of Business Correspondent will
include the following;
a.

Disbursal of small value credit.

b.

Recovery of principal / collection of interest.

c.

Collection of small value deposits.

d.

Sale of micro insurance / mutual fund products / pension products /


other third party products, subject to the regulations by the concerned
authorities (like Securities Exchange Board of India, Insurance
Regulatory Development Authority, Association of Mutual Funds of India
etc) and Reserve Bank of India.

e.

Receipt and delivery of small value remittances / other payment


instruments.

The activities to be undertaken by the BCs would be within the normal


course of the bank's banking business, but conducted through the
Business Correspondents at places other than the bank premises/ATMs.

6. Security Deposit and Letter of Agreement for BC

Fixed Deposit of Rs.25000 in the name of BC should be held under lien


to our Bank. Regional Manager can reduce the amount / waive security
deposit depending on merits

To execute a letter of agreement on stamp paper

The tenure of agreement is for a period of one year initially and can be
renewed by the Regional Office concerned.

7. Other Terms and Conditions:


a. Business Correspondents will be attached to a designated base Branch.
b. Distance from his place of business to the base Branch should not
exceed 30 Kms in rural, semi-urban and urban areas. In respect of
Metropolitan centers the distance could be up to 5 Kms.

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c. In case a need is felt to relax the distance criterion, the matter can be
referred to the District Consultative Committee (DCC) of the district
concerned for approval. Where such relaxations cover adjoining districts,
the matter may be referred to the State Level Bankers' Committee (SLBC),
which shall also be the competent forum for metropolitan areas.
d. BC should function at a specific address, which can be shifted with the
prior consent of the Bank.
e. A Board should be displayed at the place of the Business Correspondent
with details of name of the Bank, Branch and the Business
Correspondent concerned.
f. A separate Cash Credit account under CC Smart scheme (under GL
Code 3007) will be opened by the branch in the name of approved BC for
routing all smart card based operations of customers.
g. This is only a transit account and no interest is charged.
h. No cheque book is issued under CC Smart Scheme.
i.

Cash-on-hand limit with the Business Correspondent is now fixed at


Rs.25000/-.

j.

Before commencement of Smart Card Banking at the terminal, the BC


may be given a sum (say up to Rs.25,000/-) to the debit of the transit
account of the branch to enable withdrawals.

k. BC should remit cash into his Transit account at the branch at the end
of every day or whenever the cash on hand exceeds the prescribed limit
l.

BC should not charge any fee to the customers for the services rendered
by them on behalf of the Bank.

m. Bank will remain responsible to the customer for the acts of omission
and commission of the BC/BF.
8.

Business Facilitator The services of the following individuals / organisations


may be utilized as BF for undertaking the activities mentioned below.
a. Non Governmental Organisations
b. Farmers Clubs
c. Co-operatives
d. Community based Organisations
e. IT enabled Rural Outlets of Corporate Entities
f. Post-Offices
g. Insurance Agents
h. Well functioning Panchayats
i.

Village knowledge Centres

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j.

Agri Clinics / Agri Business Centres

k. Krishi Vigyan Kendras


l.

Units of Khadi & Village Industries Commission / Khadi & Village


Industries Board

9. Scope of activities of Business Facilitators :


a. Identification of borrowers and selection of activities (suitable economic
activity for income generation).
b. Collection of preliminary processing of loan applications including
verification of primary information / data.
c. Creating awareness about savings and other products and education and
advice on managing money and debt counseling.
d. Processing and submission of applications to banks.
e. Promotion and nurturing Self- Help Groups / Joint Liability Groups.
f. Post-sanction monitoring.
g. Monitoring and handholding of Self -Help Groups / Joint Liability Groups
/ Credit Groups / Others.
h. Follow-up for recovery.
Note: Business Facilitators are not permitted to undertake any cash
transactions.
10. Security Deposit and Agreement (BF)
No security deposit will be insisted upon.
Have to execute a Letter of Agreement on stamped paper.
11. Fees and commission for business intermediaries
Opening of SB and other deposit accounts: Rs.10/- per account.
Fixed remuneration : Rs.1000 to Rs.3000 per month based on scale of
performance. Rs.2000 for card base upto 300 and Rs.3000 for card
base above 300.
Transaction based : Rs.1/- (Rs.One only) per transacted account per
day irrespective of any number of transactions in the account on the
same day
Collection and preliminary processing of loan applications including
verification of information /data : 1.00% of the loan amount
Recovery of loans : 1.00% of the amount recovered and payable in 2
installments

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12. Transactions through Smart Cards

This is done through biometric Smart Cards and the POS machines
which get linked to the central server through mobile connectivity

Our Bank had launched a system of enabling the account holders to


operate their accounts at their own place without visiting the branches.

M/s Tata Consultancy Services (TCS) Ltd is the service provider of our
Bank.

Account holders are issued Smart cards and BCs are issued master
smart card and POS by the service provider.

Transactions are done by swiping through Hand Held Devices (small


POS machines) with the assistance of a Business Correspondent who
receives or gives cash under a prior arrangement with the Bank.

The maximum transaction per account per card per day is pegged at
Rs.2000 with a minimum of Rs.50 at present.

There is no limit on the number of centres at which such services can


be provided. Every centre will function like an extension counter run by
an intermediary without involving any bank staff.

The Business Correspondent can provide door step service by moving


around or operate from his own house/shop or sit in a common place
like Panchayat Office etc.

He can receive or pay cash anytime during day or night as per mutual
convenience of himself and the account holder

No licence from RBI or any other authority is required

13. Ultra Small Branches (USBs)

Ministry of Finance (MOF), Government of India has directed that Ultra


Small Branches be set up by Banks where opening of a Brick and
Mortar Branch is presently not viable, with the following objectives.

For furthering the Financial Inclusion efforts of Banks.

To minimize the cost of Financial Inclusion Initiative.

To see that the cost has a relationship to the growth in business and,
hence, the profitability of the Bank.

For close supervision and mentoring of the Business Correspondent


Agents by the respective Branch.

To ensure that a range of banking services are available to the residents


of FI villages.

BC or Business Correspondent Agent (BCA) shall operate from the Ultra


Small Branch

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The Branch covering a village under Financial Inclusion should depute


a specific officer to visit such village on a pre- notified fixed day and
time every week.

Branch official visiting the village should be equipped with a laptop with
Virtual Private Network (VPN) connectivity to the CBS.

Laptops should mandatorily deploy atleast Windows 7 operating


system or higher versions.

The connectivity between the laptop at Ultra small branch and banks
networks should be established through GPRS/2000 1X.

The Business Correspondents (BC) / BCA would be responsible for the


cash transactions and the visiting officer will be providing the other
services viz., clearing applications for opening of new accounts, loans,
recovery follow up, field inspections, business development etc.

14. IOB Sampoorna

IOB has launched a unique programme in the year 2008 to facilitate


Total Village Development viz., IOB-Sampoorna. It aims at total inclusive
growth for Integrated Rural Development covering all aspects of social
and economical life of people.

Under this scheme, an identified branch gives credit facilities and noncredit inputs in the village.

The project comprises loans to individuals, SHG linkage, farmers club,


rural tourism, social forestry, healthcare, extension of banking services,
skill training etc.

IOB Sampoorna provides solution for a rural branch with limited


infrastructure to effectively serve in a number of villages by leveraging the
core competency of various institutions who have necessary expertise in
their particular field and also have corporate social responsibility.

15. Rural Self Employment Training Institutes (RSETI).

To promote self employment for the unemployed rural youth, particularly


those below the poverty line, and for periodically upgrading their skill,
RSETIs are set up.

It is also with the objective that on getting training, youth will launch
profitable micro-enterprises and enhance their own standards of living
and thereby contribute to the overall national economy.

The State Government will in consultation with the banks in SLBC,


assign districts, preferably, to the respective Lead Banks in the States to
set up RSETIs.

Each RSETI should offer 30 to 40 Skill Development Programmes in a


financial year in various avenues. All the programmes should be of short
duration ranging preferably from 1 to 6 weeks.

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16. Financial Literacy and Credit Counselling Centres (FLCCs)

The broad objective of the FLCCs is


literacy/education and credit counselling.

Some of the specific objectives of the FLCCs would be;

To provide financial counselling services through;

to

provide

free

financial

Face-to-face interaction and also through other available media like email, fax, mobile, etc. as per convenience of the interested persons;
To educate the people in rural and urban areas with regard to various
financial products and services available from the formal financial
sector;
To make the people aware of the advantages of being connected with
the formal financial sector ;
To formulate debt restructuring plans for borrowers in distress and
recommend the same to formal financial institutions, etc.

Banks have set up FLCCs, particularly in those districts where they have
lead bank responsibility.
*********************

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NBFC-Micro Financial Institutions (MFIs)

A Micro Finance Institution is ANY INTERMEDIARY who is engaged in On


lending to individuals, Self Help Groups, Joint Liability Groups etc. It
includes any person, group of persons, trust, society, section 25 Company,
Non banking finance company, etc.

When NBFC is functioning as MFI, it is known as a NBFC-MFI

Y. H. Malegam committee constituted to study issues and concerns in the


MFI sector, inter alia, had recommended to continue with the categorisation
of bank loans to MFIs under the priority sector provided they comply with
the certain stipulated criteria in this regard.

All new companies desiring NBFC-MFI registration will need a minimum


NOF of Rs.5 crore except those in the North Eastern Region of the country
which will require NOF of Rs.2 crore.

NBFC-MFIs are required to maintain not less than 85 % of their net assets
as Qualifying Assets.

NBFC-MFIs were also required to ensure that the aggregate amount of loans
given for income generation is not less than 70 % of the total loans
extended. 30% of the total loan can be for other purposes such as housing
repairs, education, medical and other emergencies.

MFI has to be a member of at least one Credit Information Company (CIC)

The maximum variance permitted for individual loans between the minimum
and maximum interest rate cannot exceed 4 %.
NBFC - MFIs are to ensure that;
85% of the total assets are in the nature of Qualifying Assets i.e,.
a. Loans are extended to borrowers whose household annual income does
not exceed Rs.60, 000/- in rural areas and Rs.1,20,000/- in non
rural areas.
b. Loan does not exceed Rs.35000/- in the first cycle and Rs.50000/in the subsequent cycles.
c. Total indebtedness of the borrower does not exceed Rs.50000/-.
d. When loan amount exceeds Rs.15000/-, tenure of loan is not less than
24 months with right of prepayment without penalty.
e. The loan is without collateral.
f. Loan is repayable by weekly, fortnightly or monthly installments at the
choice of the borrower.

srn/15.03.2013

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JOINT LIABILITY GROUPS (JLGs)

1. Objectives

To augment flow of credit to tenant farmers cultivating land either as oral


lessees or sharecroppers and small farmers who do not have proper title of their
land holding through formation and financing of JLGs.

2. Definition of JLG

A Joint Liability Group (JLG) is an informal group comprising preferably of 4 to


10 individuals coming together for the purpose of availing bank loan either
singly or through the group mechanism against mutual guarantee.

3. Selection Criteria for JLG

Members should be of similar socio economic status and background carrying


out farming activities and who agree to function as a Joint Liability Group.

The groups must be organised by the likeminded farmers and not imposed by
the bank or others.

The members should be residing in the same village / area and should know
and trust each other well enough to take up joint liability for Group / Individual
loans.

The members should be engaged in agricultural activity for a continuous period


of not less than 1 year within the area of operation of the Branch.

The group member should not be a defaulter to any other formal financial
institution.

JLG should not be formed with members of the same family and more than one
person from the same family should not be included in the JLG.

There is a need for a very active member of the group to ensure leadership role
and ensure the activities of the JLG. The selection of a good / able / active
leader for the JLG is an essential need which will ultimately benefit all the JLG
members.

4. Savings by JLGs

The JLG is intended primarily to be a credit group.

Therefore savings by the JLG members is voluntary.

All the JLG members may be encouraged to open an individual "Basic savings
Bank" account.

However, if the JLG chooses to undertake savings as well as credit operations


through the group mechanism, such groups should open a savings account in
the name of JLG with atleast 2 members authorised to operate the account on
behalf of the group.

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5. Credit Linkage
Branches can finance JLGs by adopting any of the following models:Model A: Financing Individuals in the Group:

The group would be eligible for accessing separate individual loans from the
financing Branch.

The JLG would prepare a credit plan for its individual members and an
aggregate of that is submitted to the Branch.

The individual members of JLG would be eligible for loan after the Branch
verifies the individual members credentials.

All members would jointly execute one inter-se document (making each one
jointly and severally liable for repayment of all loans taken by all individuals
in the group).

Branch could assess the credit requirement, depending on the crops to be


cultivated, available cultivable land and credit absorption capacity of the
individual.

However, there has to be mutual agreement and consensus among all


members about the amount of individual debt liability that will be created.

Model B: Financing the Group:

The JLG would consist preferably of 4 to 10 individuals and function as one


borrowing unit.

The group would be eligible for accessing one loan, which could be combined
credit requirement of all its members.

JLG is mainly a credit product.

But if the members want to save through the group, Branches can open savings
account in the name of the JLG to be operated by two members of the group as
decided through a resolution by the JLG.

JLGs that undertake savings apart from credit are required to maintain books
of accounts.

The quantum of credit need not be linked to groups savings as in the case of
SHGs.

The credit assessment of the group could be based on the available


cultivable area by each member of the JLG.

All members would jointly execute the document and own the debt liability
jointly and severally.

6. Purposes of loan
JLG members may be financed for crop production, consumption, marketing and
other agricultural productive purposes.

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7. Type of Loan
Branches may consider cash credit, short-term loan or term loan depending upon
the activity and Quantum of Loan.
8. Maximum amount of loan is restricted to Rs.50,000/- per individual, under both
the above models A & B.
9. Security
No collateral may be insisted upon. It may be ensured that the mutual guarantee
offered by the JLG members is obtained.
10. Personal Accident Insurance
All the farmers are to be covered under Personal Accident Insurance Scheme.
(PAIS).
NON -FARM SECTOR JOINT LIABILITY GROUPS (JLGs)

The JLG members are expected to engage in similar type of economic activities
like weaving, handicrafts making etc.

The management of the JLG should be simple with little or no financial


administration within the group.

The members should be residing in the same village /area and should know
and trust each other well enough to take up joint liability for Group/Individual
loans

JLGs/ JLG Members can also be financed under Central /State Government
sponsored schemes with subsidy

Credit linkage, Type of loan, maximum amount of loan etc as like that of JLG
for agriculture purpose.

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Self Help Group [SHG]

SHG is a homogenous group of rural poor, voluntarily formed to save small


amounts out of their earnings, which is convenient to all the members and agreed
upon by all to form a common fund/ corpus of the group to be lent to the members
for meeting their productive and emergent credit needs.
Reserve Bank of India has recognised the concept of Self- Help Groups for rural
lending as a part of routine activity of banks and declared lending to Self Help
Groups as a component of Priority Sector Advances under loans to weaker sections.
NABARD provides 100% refinance for advances under Bank-SHG linkages.
1. Promotion of SHGs
SHG may be organised in a village or cluster of villages either by reputed
Voluntary Agencies (VAs), Non-Governmental Organisations (NGOs) or at the
initiative of Banks. Normally, the promoting VAs / NGOs provide training,
extension and support facilities to the group and its members.
2. Thrift and Credit Concept

SHGs create their own fund/corpus with the thrift received from members.

SHGs meet the smaller consumption and emergent needs of members from
the common fund generated from the savings of members.

SHG members with greater savings potential may be allowed to park their
surplus fund within the group in the form of voluntary savings over and
above the compulsory savings mandated in the group and a suitable
accounting system may be started in the SHG for this purpose. (ARID/ADV /
245 / 2012-13 dt.04.10.2012)

Voluntary savings can be reckoned in two ways;


a. not forming a part of the group corpus
b. As a part of group corpus and utilized for intra group lending.

In case of (a), it will also be reckoned for assessing the quantum of loan to
the group from bank. However, it is desirable that the additional savings by
group members does not entitle the concerned members to seek
proportionately higher dosage of credit for themselves.

The SHGs should have freedom to decide as to whether the voluntary


savings by members of the group are eligible for proportionate share in the
interest income or dividend from the group

3. Characteristics of SHG
The membership of the group should preferably be between 10-20 and
should not exceed 20 at any time.
The members should preferably have a homogenous background and
interest.

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The group should function in a democratic manner allowing free exchange of


views and participation by members.
The groups should maintain simple records, viz. Minutes Book, Membership
Register, Savings registers and Credit Registers.
The group should devise a code of conduct for themselves, viz. periodicity
and the amount to be saved by every member, purpose for which loan can be
given, rate of interest to be paid/charged on savings/credit to members, etc.
4. Grading of SHGs / Linking of SHGs
Besides looking into the characteristics of SHGs there is a need for a
system to grade the SHGs for the purpose of establishing credit linkage
with the bank.
The SHGs scoring more than 90 points can be selected without any
reservation.
SHGs scoring 60-89 points have to be selected with caution. SHGs scoring
less than 60 points are not suitable for linkage.
5. Separate category: Loan granted to SHGs are reported under the head
Advances to SHGs
6. Our Bank Lending Norms
a. Credit dispensation
Financing can be done directly to the SHG or through the sponsoring
NGO/VA.
The group should have an active existence of atleast 6 months and must
have successfully undertaken savings and credit operations for credit
linkage. It is not necessary that the Savings Bank Accounts should have
been opened 6 months prior to credit linkage
While grading, the SHG should score more than 60 points.
The banker should be convinced of the genuineness of the group formation
and its objectives.
b. Quantum of Loan : sanction of limits to SHGs under Direct linkage only by
way of Cash Credit facility, other than those exempted, as per the following
eligibility norms:Type of
loan
1

Cash credit
facility

I year

II year

III year

IV year

2
4 times of
savings/
corpus
subject
to a
maximum
of
Rs.2,25,000/-

10 times of
savings/
corpus
subject to a
maximum of
Rs.4,00,000/-

10 times of
savings/
corpus
subject to a
maximum of
Rs.5,00,000/-

5
10 times of
savings/
corpus
subject
to a
maximum
of
Rs.7,50,000/-

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Cash Credit limit shall be sanctioned in the ratio of 1:10 subject to a


maximum of Rs.7.50 lacs after savings of 5 years and drawals will be
allowed as per column (2) to (4).

The members inter-se will get a term loan from the group

c. Margin: There is no margin for loans granted to SHGs


d. Security: The SHGs may not be in a position to offer any collateral security.
However, the assets created out of our finance should be hypothecated.
Term loans:
Term loans can be sanctioned only for the following purposes
a. In those Govt schemes which have back ended subsidy and release of
subsidy is contingent on repayment of term loans, the SHGs can be
granted term loans.
b. Term loans can also be given to SHGs in cases where the SHGs undertake
group activity and the Bank loans are taken to undertake that activity.
7. Discretionary powers:
i.

Loans to SHGs for economic activity can be sanctioned at branch level


subject to scheme norms and activity wise delegations under Agriculture &
Priority Sector

ii.

Direct lending to SHGs (not linked to economic activities) subject to


compliance of loan to savings ratio, as given below.

Type of group

DGM

AGM

SM IV

MM III

MM II

JM I

where the number


of members in the
SHG is
[a] upto 15

[b] More than 15

Loans to NGOs for


on-lending to SHGs

25

25

10

Nil

Nil

Nil

6. JBY Janashree Bima Yojana is a low cost insurance available both for
beneficiaries and their spouse which shall take care of repayment in case of
unforeseen eventualities to the beneficiaries.
7. All women SHG members financed by our Bank shall be necessarily covered
under Janashree Bima Yojana (JBY).
8. IOB-SHG Family Insurance" - Life Insurance Cover to Members of Self Help
Groups (SHG) and Spouse

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This is a socially relevant scheme, which will enhance goodwill for the Bank
a. Type of cover: Group Term Insurance Cover
b. Eligibility:
Persons in the age group of 18 to 59 years are covered who are engaged
in specified occupation like milk produces, construction workers, farm
labourers etc.
They should be members of a Self Help Group and the SHG should have
account relationship with us. The SHG may or may not have availed loan
facility from us.
A member can take only one cover under the policy. Multiple covers
through different SHG is not allowed.
c. Documents required: The insured i.e., the SHG member has to sign a
simple proposal form which contains a self declaration of good health. No
other document is required from the insured.
d. Premium payable: Annual premium is Rs.200/- of which Rs.100 will be
paid by the individual member and the remaining Rs.100 will be subsidised
from the Social Security Fund of Government of India. The husband of SHG
member can also be covered for death benefit of Rs.10,000/- for additional
premium of Rs.40/e. Period of Cover: For a period of 1 year from the date of receipt of premium
by the branch.
f. Issue of Policy: Individual policies will not be issued but a Master Policy in
the name of the Bank will be issued.
g. Benefits to the Insured: The insured under the scheme will get the
following benefits:
Natural death of insured, the nominee will get Rs.30,000
Death due to accident, the nominee will get Rs.75,000
Total Permanent disability due to accident, the amount payable is
Rs.75,000
Partial permanent disability due to accident, the amount payable is
Rs.37,500
Members' children studying between 9th and 12th standard are eligible for
scholarship of Rs.300/- per quarter, provided the student passes the
final examination. This facility of Shiksha Sahayog Yojana is available for
a maximum of two children per family.
On death of husband of the member an amount of Rs.10,000/- is
payable for an additional premium of Rs.40/-.
h. Scholarship Claims: Apart from life cover the scheme also provides for
scholarship for children of the insured SHG member studying between class
9th and 12th provided the student passes the annual examination.

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The number of scholarships is restricted to 15 % of the total number of


members and will be given to the poorest of the poor as certified by the
Branch Manager of the Bank.
9. Debt swap scheme for SHGs
As a measure of inclusive growth, banks have been advised by RBI/NABARD to
implement Debt Swap Scheme to provide Institutional Credit to the indebted
farmers and SHG members to repay loans taken from private money lenders.
Lending to SHG members (who are not engaged in agricultural activities)
to prepay loan to non institutional lenders against appropriate collateral or
group security will be classified as Micro Credit under Priority Sector.
The Debt Swap scheme should be implemented in service area villages only.
a. Objective:
The objective of the scheme is to facilitate the members of SHGs to
liquidate their outstanding debts with non-institutional lenders (money
lenders) through bank linkage and replacement of high cost loans
with bank finance.
Eligibility
All the eligible SHGs may be financed & this scheme may be taken up in
one service area village of each branch.
Existing members of Self Help Groups (SHGs), who are linked to
banks, accessed bank loans and promptly repaying & also those SHGs,
who are linked to Banks and yet to take loans from banks.
New SHGs, which have completed atleast 6 months of the existence with
regular savings and internal lending.
In case the SHG member is having dealings with other Bank, loans under
Debt Swap scheme should not be extended to such borrowers who have
multiple bank borrowings
b. Assessment of outside debt & loan amount
i. Existing SHGs
Regular loan limit: Eligibility as per the corpus and (or) Micro Credit PlanMCP
(Note: Micro Credit Plan includes the following components.)
1. Investment credit needs for economic activities.
2. Social needs like Health, Education, marriage, house repair etc., which is
subject to maximum of 10%of investment credit needs as calculated
above.
Debt swap scheme: 50% of the eligible loan amount as calculated above
(or) to the extent of debt which ever is lower, as additional term loan.

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Total limits of both the regular loan and additional loan as detailed above
are subject to maximum of Rs.5 lakh per SHG.
ii. New SHGS
Debt swap:50% of the eligible loan amount or to
whichever is lower, as additional term loan.

the extent of

debt

Total limits of both the regular loan and additional term loan as
detailed above are subject to maximum of Rs.2.5 lakh per SHG.
The loan is given to SHGs only (Not to the individual members directly ).
c. Mode of payment/disbursement
SHGs should prepare a micro credit plan and submit the same along with
application & statement of debts obtained by individual members.
Based
on the MCP, and debt statement Branch Manager may take decision
regarding the quantum of loan.
Resolution from the Group declaring outside debts.
The sanctioned amount towards the debt should be directly paid to
the money lender.
Every member should be informed of the sanction particulars.
Branch Manager has to satisfy about the existence of outside debt.
After availing the loan, the group has to ensure that the repayment
of outside debts taken by its members is liquidated and further a declaration
to that effect to be furnished to the Branch. Wherever possible, the
documentary evidence for payment of outside debt to be handed over
to the Branch and payment will be made to the creditors.
e. Margin: No margin.
f. Security: Hypothecation of Book debts/assets created out of loan.
No collateral security upto Rs.5.00 lakhs per group. However if the SHG
member(s) have already given collateral security to the moneylender,
such underlying security will be taken while taking over of such
debts under the scheme.
Above Rs.5.00 lakhs as per usual norms.
Repayment:
Repayable in three to five years in monthly instalments with gestation period
of 6 months (Depending on the activity of the SHGs). Longer repayment
period for SHGs is proposed after considering the income generation of
SHGs.
h. Insurance coverage:
Individual Self Help Group members may be covered with Janashree Bima
Policies, which covers their life OR Individual Self Help Group members may
be covered with Swasthya Bima Policies, which covers their health.

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i. Other terms
KYC norms must be strictly adhered to.
SHGS to be evaluated periodically.
Applicable processing charge to be collected
10.

Other loan schemes for SHGs

a. Loans under SGSY Scheme


Loans to SHGs are considered under SGSY scheme, provided the members
of the group are eligible SGSY scheme beneficiaries
b. Loan under SJSRY Scheme
c. Loan under PMEGP
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SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)


1. General

The SGSY Scheme is operative from 1st April, 1999 in rural areas of the
country.

The scheme will be funded by the Centre and the States in the ratio of 75:25.

Implemented by Commercial Banks, Regional Rural Banks and Co-operative


Banks.

The objective of SGSY is to bring the assisted poor families (Swarozgaris) above
the poverty line by ensuring appreciable sustained income over a period of time.

Swarozgaris can be either individuals or groups and would be selected from BPL
families by a 3 member team consisting of Block Development Officer (BDO),
Banker and Sarpanch.

The list of Below Poverty Line (BPL) households identified through BPL census
duly approved by Gram Sabha will form the basis for identification of families
for assistance under SGSY.

SC/ST will account for at least 50 %, Women 40 %, and the disabled 3 % of


those assisted.

Once the person or group of persons has been identified for assistance, their
training need also is to be ascertained with reference to Minimum Skill
Requirement (MSR).

Farm activities to be assisted would include minor irrigation such as open dug
well/bore/tube well/lift irrigation/check dam etc. Non-farm activities will
include those activities that result in the production of goods/services that have
ready market.

The unit cost as fixed by the Regional Committees of NABARD should be


taken into consideration as indicative cost while fixing the unit cost for the
farm sector.

In regard to loans falling under Industry, Service and Business (ISB) Sector,
the responsibility of fixing the unit cost and other techno-economic parameters
rests with the District SGSY Committee.

BPL Family under the guidelines would be treated as a unit for the purpose of
giving income generating assets.

A household having two kitchens and two ration cards should not be treated as
a family and the existence of two kitchens or two ration cards in the same
house is an indication of two families.

2. Revolving Fund

Self Help Groups go through various stages of evolution viz. Group formation,
Group Stabilization, Micro Credit stage and Micro Enterprise Development
stage.

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SHGs that are in existence for about six months and have demonstrated the
potential of a viable group, enters the third stage, receives the Revolving Fund
from DRDA and banks as cash credit facility.

The DRDAs may release subsidy, which is equal to the group corpus with a
minimum of Rs. 5000/- and a maximum of Rs. 10000/- linked with bank
credit.

The group corpus would be defined as the total amount available with the
group inclusive of cash with the group, amount in Savings Bank account of the
group, loans outstanding against members of the group and interest earned on
the loans as well as deposits.

Subsequently, if it is found that the group has not been able to reach the micro
enterprise stage and requires further financial support to continue in the micro
finance stage for some more time, performance of such groups may be got
evaluated.

In the evaluation if it is observed that the group has been successfully utilising
the revolving fund, they could be considered for sanction of further doses of
subsidy fund up to a maximum of Rs. 20000/- inclusive of previous doses
linked with bank credit.

The subsidy of Rs. 20000/- released by DRDA will be adjusted against the
loan at the end of the cash credit period on the request of the group.

3. Lending Norms

The size of loan under the scheme would depend on the nature of project.

The loans under the scheme would be composite loan comprising of Term Loan
and working capital.

The loan component and the admissible subsidy together would be equal to
total project cost.

Swarozgaris will be given the full amount of loan and subsidy and they will have
the freedom to procure the assets themselves.

Disbursements up to Rs.10,000/- under Industry, Service and Business


(ISB) sector may be made in cash where a number of items are to be bought.
But bills/vouchers are to be collected subsequently.

4. Group loans

The group is entitled to subsidy of 50% of the project cost subject to per capita
subsidy of Rs. 10000/- or Rs. 1.25 lakh, whichever is less.

5. Time limit for disposal of applications

All loans granted under the scheme are to be treated as advances under priority
sector.

Loan applications under the scheme should be disposed of within the


prescribed time limit of 15 days and at any rate not later one month.

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6. Insurance Cover

Insurance cover is available for assets/live stock bought out of the loan.

Swarozgaris are covered under the Group Insurance Scheme as per SGSY
guidelines.

The General Insurance Corporation has agreed to provide this cover on the
terms and conditions as reflected in the specimen Master Policy and Long Term
Master Policy Agreement signed between the GIC and the State Government.

The expenditure on the premium is to be shared among the Government, bank


and the beneficiary.

Sum Insured: The cost of the asset shall be treated as the sum insured for the
settlement of claims.

For permanent total disablement (PTD) claims 75% of the sum insured shall be
payable.

7. Group Life Insurance Scheme

For availing the group insurance coverage by the SGSY Swarozgaris, the
maximum age of Swarozgaris at the time of sanction has to be kept at 60 years
of age.

The insurance coverage, however, would be for five years or till the loan is
repaid, whichever is earlier, irrespective of the age of Swarozgaris at the time of
sanction of loan.

This Scheme is operative from the date on which the asset is disbursed to the
Swarozgari.

Under the insurance, An amount of Rs.6000 will be given by LIC to the


nominee of the swarozgari, in case of natural death.

In the event of death due to accident a sum of Rs.12,000/- shall become


payable by LIC.

8. Security norms

For individual loans upto Rs. One lakh and group loans upto Rs. 10 lakhs,
the assets created out of bank loan would be hypothecated to the bank as
primary security.

In case where movable assets are not created, as in land-based activities


such as dug well, minor irrigation etc., mortgage of land may be obtained.

Where mortgage of land is not possible, third party guarantee may be


obtained at the discretion of the bank.

For all individual loans exceeding Rs. 1,00,000/- and group loans exceeding Rs.
10 lakhs, in addition to primary security such as hypothecation/mortgage of
land or other assets, suitable margin money/ other collateral security in the
form of insurance policy; marketable security/ deeds of other property etc. may

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be obtained at the discretion of the bank.

While deciding the limit for collateral security, the total project cost (bank
loan plus Government subsidy) should be taken into consideration by
banks.

9. Subsidy

Subsidy under SGSY will be uniform at 30 % of the project cost, subject to a


maximum of Rs. 7,500/-.

In respect of SC/STs it will be 50 % of the project cost subject to a maximum of


Rs. 10,000/-.

The group is entitled to subsidy of 50% of the project cost subject to per capita
subsidy of Rs. 10000/- or Rs. 1.25 lakhs, whichever is less.

There will be no monetary limit on subsidy for irrigation projects.


a) The subsidy admissible to the Swarozgaris under SGSY should be kept in
the Subsidy Reserve Fund Account Swarozgari-wise. Banks should apply no
interest on the Subsidy Reserve Fund Account.
b) In the case of Working Capital advances also, subsidy may be kept in the
Reserve Fund Account as stated above without any interest being offered.
However, the amount standing to the credit of the account should be
withdrawn and credited to a Cash Credit Account of the SGSY Swarozgaris
after a period of 5 years.
c) Subsidy under SGSY will be back ended.
d) The balance lying to the credit of Subsidy Reserve Fund Account will not
form part of DTL for the purpose of SLR/CRR.

10. Repayment of Loan

All SGSY loans are to be treated as medium term loans with minimum
repayment period of five years.

Instalments for repayment of loan will be fixed as per the unit cost approved by
the NABARD/Dist. SGSY Committee.

There will be a moratorium on repayment of loans during the gestation period.

Repayment of instalments should not be more than 50 % of the incremental net


income expected from the project.

Swarozgaris will not be entitled for any benefit of subsidy if the loan is fully
repaid before the prescribed lock-in period.

The repayment period for various activities under SGSY can broadly be
categorized into 5, 7 and 9 years depending on the project.

The corresponding lock-in period would be 3, 4 and 5 years respectively. If the


loan is fully repaid before the currency period, the Swarozgaris will be entitled
only to pro-rata subsidy.

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The banks may engage the services of NGOs or individuals (other than
government servants) as monitor-cum-recovery facilitators, on a commission
basis.

A processing-cum-monitoring fee of 0.5 % of the loan amount may be charged


to the Swarozgaris to meet this expenditure.

Prompt repayment at the Swarozgaris level, will entitle him/her to waiver of the
0.5 % processing-cum-monitoring fee.

Banks are eligible for refinance from NABARD for the loans disbursed under
SGSY as per their guidelines.

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Swarna Jayanti Shahari Rozgar Yojana (SJSRY)

The main objective of the scheme is addressing urban poverty alleviation


through gainful employment to the urban unemployed or underemployed poor
by encouraging them to set up self employment ventures (individual or group),
with support for their ustainability; or undertake wage employment.

The target population under SJSRY is the urban poor - those living below the
poverty line, as defined by the Planning Commission from time to time.

Major components of SJSRY are;


a. Urban Self Employment Programme (USEP)
b. Urban Women Self-help Programme (UWSP)
c. Skill Training for Employment Promotion amongst Urban Poor (STEP-UP)
d. Urban Wage Employment Programme (UWEP)
e. Urban Community Development Network (UCDN)

To accord special focus on the issues of urban poverty amongst Scheduled


Castes (SCs) and Scheduled Tribes (STs), a special component programme of
SJSRY, called the Urban Programme for Poverty reduction amongst SCs &
STs (UPPS), will be carved out of USEP and STEP-UP.

Funding under SJSRY will be shared between the Central Government and the
State Governments in the ratio of 75:25.
Urban Self Employment Programme (USEP)

Assistance to individual urban poor beneficiaries for setting up gainful self


employment ventures [Loan & Subsidy] is a sub-component of USEP.

Urban Self Employment Programme (Loan & Subsidy): This programme will
be applicable to all cities and towns on a whole town basis.
Not less than 30% for women beneficiaries are to be assisted under the
scheme.
SCs and STs must be benefited at least to the extent of the proportion of
their strength in the city / town population below poverty line (BPL).

A special provision of 3% reservation in the total number of beneficiaries


should be made for the differently-abled .

15% of the physical and financial targets under USEP at the national level
shall be earmarked for the minority communities.

No minimum or maximum educational qualification is prescribed for


selection of beneficiaries under USEP.

Where the identified activity for microenterprise development requires skill


training of an appropriate level, the same will be provided to the beneficiaries
before extending financial support.

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Identifiably, clusters should be taken for support under SJSRY and efforts
should be to ensure that all adults in the cluster are provided with benefits of
skill development, self-employment or wage employment so that no urban poor
household is left with an adult without means of earning income.

Eligibility:
Urban poor living below the poverty line, in any city/town.
Should be of minimum 18 years at the time of applying for Bank Loan.
Residing in the town for at least three years
Should not be a defaulter
institution/cooperative bank.

to

any

nationalized

bank/financial

Financing pattern under USEP are:


Maximum allowable unit project cost - Rs.200,000/-. If two or more eligible
persons join together in a partnership, the project with higher costs would
also be considered provided share of each person in the project cost is
Rs.200,000 or less.
Loan amount (including subsidy) : 95% of the project cost would be made
available by Banks
Interest rate: as applicable to such priority sector lending fixed by the
Reserve Bank of India, from time to time. The interest will be charged only
on the loan amount.
Maximum allowable subsidy - 25% of the Project Cost subject to a
maximum of Rs.50,000/-. In case more than one beneficiary join together
and set a project under partnership, subsidy would be calculated for each
partner separately.
Beneficiary contribution - 5% of the project cost as margin money
Collateral - No Collateral required
Repayment : Repayment schedule ranges from 3 to 7 years after initial
moratorium of 6 to 18 months as decided by Bank.

Self-Employment (Group) Through Setting Up Of Micro-Enterprises Under


UWSP.

Eligibility:
Membership of the Group : Minimum number of women in a group is 5.
Should not be a defaulter
institution/cooperative bank.

to

any

nationalized

bank/financial

Project Cost : No maximum limit


Subsidy: Rs.300,000/- or 35% of the cost of project or Rs.60,000/- per
Member of the Group, whichever is less.
Margin: 5% of the project cost as margin money in cash.

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Interest rate: as applicable to such priority sector lending fixed by the


Reserve Bank of India, from time to time. The interest will be charged only
on the loan amount.
Collateral - No Collateral required
Repayment : Repayment schedule ranges from 3 to 7 years after initial
moratorium of 6 to 18 months as decided by Bank
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PRIME MINISTERS EMPLOYMENT GENERATION PROGRAMME


(PMEGP)

This scheme is developed by merging the two schemes that were in operation till
31.03.2008 namely Prime Ministers Rojgar Yojana (PMRY) and Rural
Employment Generation Programme (REGP).

The scheme is implemented in Rural as well as urban areas.

PMEGP will be a central sector scheme administered by the Ministry of Micro,


Small and Medium Enterprises.

Cost Project
a. The maximum cost of the project / unit admissible under manufacturing
sector is Rs. 25 lakh
b. The maximum cost of the project / unit admissible under business /
service sector is Rs. 10 lakh

Subsidy
The quantum of subsidy from the Government of India is based on the
categories of beneficiaries and the area of location of the project viz. rural or
urban. It ranges from 15% to 35% accordingly.
Categories of beneficiaries
under PMEGP
Area
(location
unit/project)

of

Beneficiarys
contribution
(of project cost)

the

General Categories
Special (including SC / ST /
OBC / Minorities / Women, Exservicemen, Physically
handicapped, NER, Hill and
Border areas etc.

Subsidy amount
(of project cost)
urban

Rural

10%

15%

25%

5%

25%

35%

Eligibility Conditions of Beneficiaries

There will be no income ceiling for assistance for setting up projects under
PMEGP.

For setting up of project costing above Rs.10 lakh in the manufacturing sector
and above Rs. 5 lakh in the business / service sector, the beneficiaries should
possess at least VIII standard pass educational qualification.

Retail outlets backed by manufacturing (Including Processing)/ Service facilities


may also be permitted to avail loan under the scheme.

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The retail outlets backed by bonafide manufacturing /service facilities may


be certified to be so by the district level task force committee which
recommends the case.
The maximum cost of the project for business/ trading activities may be Rs.
10 lakh ( at par with the maximum project cost for service sector).
Maximum 10 % of the Margin Money allocation in a year in a state may be
used for business /trading activities as above
For manufacturing with retail outlet the project cost should not exceed
Rs.25.00 Lacs. For service projects with sales out lets the maximum project
cost should not exceed Rs.10 lakhs.

Self Help Groups (including those belonging to BPL provided that they have not
availed benefits under any other Scheme) are also eligible for assistance under
PMEGP.

Institutions registered under Societies Registration Act,1860

Production Co-operative Societies

Charitable Trusts

Units that have already availed Government subsidy under any scheme of Govt.
of India or State Government are not eligible.

Registered and Khadi Institutions who have availed government grant under
MDA, ISEC or any other scheme is not eligible.

Implementing Agencies

Khadi and Village Industries Commission (KVIC), Mumbai, which will be the
single nodal agency at the national level.

At the State level, the scheme will be implemented through State Directorates of
KVIC, State Khadi and Village Industries Boards (KVIBs) and District Industries
Centres in rural areas.

In urban areas, the Scheme will be implemented by DICs.

Identification of beneficiaries

Will be done at the district level by a Task Force consisting of representatives


from KVIC / State KVIB and State DICs and Banks.

The Task force would be headed by the


Commissioner / Collector concerned.

District Magistrate

/Deputy

Working capital

Working Capital component should be utilized in such a way that at one point
of stage it touches 100% limit of Cash Credit within three years of lock in period
of Margin Money and not less than 75% utilization of the sanctioned limit.

If it does not touch aforesaid limit, proportionate amount of the Margin Money
(subsidy) is to be recovered by the Bank / Financial Institution and refunded to
the KVIC at the end of the third year.

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EDP training

Sanctioning authority need not wait for the completion of EDP training for
disbursement of the loan to the beneficiaries under PMEGP scheme, claiming as
well as settlement of subsidy by the Nodal branches.

However, if the bank authorities feel that EDP is necessary before disbursement
in some specific project, the same can be insisted upon.

Final adjustment of subsidy kept in Term deposit after physical verification of


the project should not be made till EDP is completed.

Branches should make it mandatory to complete the EDP training before


releasing the second stage of loan.

The training should be invariably completed within 12 months of release of first


installment.

The period of training for the projects upto Rs.2 lacs for service activities is only
3 days.

Margin Money (Subsidy)

The financing branch must forward the Margin Money (subsidy) claims in the
prescribed format to the nodal branch within 15 days from the date of first
disbursement of loan.

The designated nodal branch has to clear and remit the amount of subsidy to
the financing branch within 15 days of receipt of the claim.

Once the Margin Money (subsidy) is released in favour of the loanee, it should
be kept in a Term Deposit of 3 years at branch level in the name of the
beneficiary / Institution.

No interest will be paid on the TD and no interest will be charged on loan to the
corresponding amount of TD.

Since Margin Money (subsidy) is to be provided in the form of subsidy (Grant),


it will be credited to the Borrowers loan account after 3 years from the date of
first disbursement to the borrower / institution.

But final adjustment of subsidy, kept in term deposit, should not be made till
EDP training is completed.

In case the Banks advance goes bad before the three year period due to
reasons beyond the control of the beneficiary, the Margin Money (subsidy) will
be adjusted by the Bank to liquidate the loan liability of the borrower either in
part or full.

In case any recovery is effected subsequently by the Bank from any source
whatsoever, such recovery will be utilized by the Bank for liquidating their
outstanding dues first. Any surplus will be remitted to KVIC.

Margin Money (subsidy) will be one time assistance, from Government. For any
enhancement of credit limit or for expansion / modernization of the project,
margin money (subsidy) assistance is not available.

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Margin Money (subsidy) assistance is available only for new projects sanctioned
specifically under the PMEGP. Existing units are not eligible under the Scheme

Computation
of
admissible
margin
capital/sanctioned cash credit limit

money

subsidy

on

working

If the working capital availment touches 100% of the sanctioned cash credit
limit at least once, and the average working capital availment is at least 75%,
then the margin money subsidy would be calculated on 100% of the sanctioned
cash credit limit.

If the working capital availment does not touch 100% of the sanctioned cash
credit limit atleast once, or if the average working capital availment is below
75%, proportionate amount of margin money subsidy should be recovered by
the Bank and refunded to KVIC at the end of three years from the date of
disbursement of the loan (that is, term loan) or date of ending of lock-in period,
whatever is earlier.

The margin money subsidy has to be computed as the admissible percentage of


the average daily working capital availment.

The average working capital availment should be calculated on the basis of


daily average of the actually availed cash credit limit.

The refund of the margin money subsidy (on working capital) on the difference
between subsidy on the sanctioned cash credit limit and the subsidy on the
admissible limit, should be undertaken at the end of the three year period from
the date of first disbursal of the loan or date of ending of lock-in period,
whichever is earlier

Adjustment of margin money subsidy on term loan, that is, refund of the
margin money subsidy on the difference between the sanctioned term loan
and the actually availed term loan (where the latter is less than the former)
should be undertaken immediately after the disbursement of the last
instalment of the loan.

Interest on margin money subsidy

Banks can charge interest only on that part of loan which exceeds the margin
money subsidy/TDR amount. The first instalment released by bankers should
be at least equal to or more than the margin money subsidy/ TDR amount.

If the first instalment is less than the margin money subsidy/TDR amount,
Banks have to pay interest to KVIC on the difference (till such time the loan
amount becomes equal to or exceeds the margin money subsidy/TDR amount).

The rate of interest should be the same at which the loans have been sanctioned
to the beneficiaries.

Bank has to obtain an undertaking from the beneficiary before the release of bank
finance that, in the event of objection (recorded and communicated in writing) by
KVIC / KVIB / State DIC, the beneficiary will refund the Margin Money (subsidy)
kept in the TDR or released to him after three years period.
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Government Sponsored Schemes


Name

PMEGP

Implementing Agency

KVIC as single agency at central level &


KVIC, DIC & KVIB at state level

Objective of the
scheme

For employment generation through


establishment of micro enterprises

Target Group

Purpose

Quantum

Amount of subsidy

Rate of Interest
Security
Margin
Repayment
Holiday period

Individuals, SHG, Institutions registered


under Societies Registration Act,1860,
Production Co-operative Societies,
Charitable Trusts etc.

For setting up of Micro Enterprises


Project cost for manufacturing : Rs.25 lacs
and for service Rs.10 lacs
Category
Urban
General
15%
Special (including SC /
ST / OBC / Minorities/
Women, Ex-servicemen
25%
Physically andicapped,
NER, Hill and Border
areas etc.
As applicable to SME

Rural
25%
35%

No collateral security upto Rs.10 lacs. Above


rs.10 lacs collateral security or CGTMSE
cover. Prime security for both
General category : 10% & special : 5%
may range between 3 to 7 years after an
initial moratorium
As decide by the bank

Priority status
Discretion

Priority sector
As per SME finance

Remarks

it is mandatory to complete the EDP


training before releasing the second stage of
loan

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SGSY
District Rural Development Agencies (DRDAs),
Non-Government Organisations (NGOs),
Technical Institutions in the district
to bring the assisted poor families (Swarozgaris)
above the poverty line by ensuring appreciable
sustained income over period of time
Individual & SHGs (The list of (BPL) households
identified through BPL census duly approved by
Gram Sabha will form the basis for identification
of families for assistance under SGSY.)
On farm activities to be assisted would include
minor irrigation such as open dug
well/bore/tube well/lift irrigation/check dam,
etc. Non-farm activities will include those
activities that result in the production of
goods/services that have ready market
The size of loan under the Scheme would depend
on the nature of project. There is no investment
ceiling other than the unit cost
30 percent of the project cost, subject to a
maximum of Rs. 7,500/-. In respect of
SC/STs it will be 50 percent of the project
cost subject to a maximum of Rs. 10,000/-.
The group is entitled to subsidy of 50% of the
project cost subject to per capita subsidy of
Rs. 10000/- or Rs. 1.25 lakhs, whichever is
less
As applicable to small loans
For individual loans upto Rs.1 lakh and group
loans up to Rs. 10 lakh, the assets created out of
bank loan would be hypothecated to the bank as
primary collateral. Loan exceeding the above
addl. Collateral security
nil
to be treated as medium term loans with
minimum repayment period of five years
Moratorium on repayment of loans during the
gestation period as decide by bank
Priority Sector
Branch discretion subject to scheme norms &
activity wise discretion under Agri & Pri.credit
BDOs, Bankers and line departments will act
as resource persons for imparting the
training. The training expenditure will be met
by DRDAs from out of the SGSY Fund

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SJSRY
Urban local bodies.
Funding is shared between the Centre and the
States in the ratio of 75:25.
To provide gainful employment to the urban
unemployed or underemployed through the
setting up of self-employment ventures or
provision of wage employment.
Individuals & SHGs.
The urban poor - those living below the poverty
line. No minimum or maximum educational
qualification beneficiaries under USEP
To set up small enterprises relating to
manufacturing, servicing and petty business
for which there is a lot of potential in urban
areas
Maximum allowable unit project cost :
Rs.200000
25% of the Project Cost subject to a
maximum of Rs.50,000/ For setting up group enterprises, the UWSP
group shall be entitled to a subsidy of
Rs.300,000/- or 35% of the cost of project or
Rs.60,000/- per Member of the Group,
whichever is less
As applicable to small loans
No Collateral required
5% of the project cost as margin money
As per the decision of the financial institution
As decision of the financial institution
Priority Sector
Branch discretion subject to scheme norms &
activity wise discretion under Agri & Pri.credit
Urban Self Employment Program (USEP) &
Urban Women Self-help Program (UWSP) are
components of SJSRY

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Name
Implementing
Agency
Objective of the
scheme

Target Group

_____________________________________

Interest Subsidy Scheme for Housing poor


NHB & HUDCO
Affordable House to all

People belonging to Economically weaker section (EWS) and Low


Income Group (LIG)

Purpose

To provide affordable housing loans with Central Government


subsidy to EWS/LIG persons for (a) acquisition of house &
(b)construction of house

Quantum

EWS : Rs.1,00,000 LIG: 1,60,000

Amount of subsidy

Rate of Interest

Security
Margin
Repayment

Holiday period
Priority status
Discretion
Remarks

Poultry Venture Capital Fund ( Subsidy)


NABARD
to encourage poultry farming activity especially in non-traditional
States and provide
employment opportunities in backward areas.
Farmers, individual entrepreneurs, NGOs, companies, cooperatives,
groups of
Un-organised and organized sector which include Self Help Groups
(SHGs), Joint Liability
Groups (JLGs) etc.
For setting up layer units, broiler units etc.
Varies depending on the species, purpose etc.
Ref.NABARD circular No. Circular No. 124 / ICD - 27 / 2011
dt.30.06.2011 address banks

Subsidy is 5% p.a on interest charged for EWS and LIG,


admissible for a maximum loan amount of Rs.one lakh over the
full period of the loan
9% fixed for five years. After 5 years till the date of liquidation of
the loan the rate of interest would be normal rate prevailing at
that time, as applicable to Subhagraha
Prime: Mortgage of the dwelling units Collateral: No collateral
security/third party guarantee for loans upto and inclusive of Rs.
1 lakh

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Capital subsidy - 25% of outlay


(33.33 % for SC and ST entrepreneurs and North Eastern areas
including Sikkim)
Cash credit : BR + 1.25%
Term Loan : BR + 1.50%
Prime security : Hypothecation of assets created out of loan amount
Collateral : as decided by the bank/RBI guidelines.

10%

For loans upto Rs one lakh, banks may not


insist on margin as per RBI guidelines. For loans above Rs 1.00
lakh : 10% (minimum)

Minimum period :15 years Maximum period : 20years


(Construction to be completed in one year)

Repayment Period will depend on the nature of activity and cash


flow and will vary between 5- 9 years.

.
Yes
Branch Managers irrespective of their grade can sanction loans
under this scheme
EWS: Household income per annum: Rs.1,00,000 LIG:
Household income per annum : Rs.1,00,000 to Rs.2,00,000
Subsidy will be available for loan amount upto Rs.1.00 lac.
Additional loans, if needed would be at ubsubsidized rates. The
scheme will close in March 2013

may range from 6 months to 1 year


Yes
As per other agri finances (Per borrower limit)

NABARD would provide refinance assistance to commercial


banks.
The capital subsidy will be back ended with minimum lock-in
period of 3 years.

Present Base rate of our Bank is 10.25% w.e.f 18.02.2013. Interest rates are subject to change in Base Rate
srn/23.05.2013

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Interest Subsidy Scheme for Housing the Urban Poor


Purpose
a) Acquisition of house
b) Construction of house
Eligibility
The scheme is meant only for people belonging to Economically weaker
section (EWS) and Low Income Group (LIG)

For the purpose of identifying the economically weaker sections and low
income groups, the family income limit of Rs.1,20,000 per annum,
irrespective of the location, is prescribed.

Beneficiaries having no house in his/her name or in the name of his/her


spouse or any dependent child will be eligible.

Beneficiaries who own land in urban area but do not have any pucca house
in own name or in the name of spouse or any dependent child will also be
covered.

EWS: Households having an average monthly income upto Rs.5000/Maximum Loan Amount
Rs.1,00,000/Construction Area (Minimum House area) 25 Sq.mts
LIG: Low Income Group
Households having an average monthly income :Rs.5001 to 10000/Maximum Loan Amount
Rs.1,60,000/Construction Area (Minimum House area) 40 Sq.mts
Loan repayment:
Minimum Period: 15 years
Maximum Period: 20 years
(Construction to be completed in one year)
Margin: 10%
Rate of Interest:
i.

9% fixed for first 5 years. After 5 years till the date of liquidation of the loan
the rate of interest would be normal rate prevailing at that time, as
applicable to Subha Gruha scheme

ii. Reset clause: 5 years


iii. Penal Interest for Delayed payment of instalment: 2%
Processing Charges : Nil
Prepayment charges:

Nil

Insurance Cover: Free insurance cover to borrowers.

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Security:
Prime Security:
Mortgage of the dwelling units
Collateral Security: No collateral security /third party guarantee for loans
up to and inclusive of Rs.1 lakh.

Subsidy will be 5% p.a. on interest charged for EWS and LIG, admissible for
a maximum loan amount of Rupees one lakh over the full period of the
loan.

The subsidy will be passed on as follows:


The Net Present Value (NPV) of this subsidy will be arrived at on the basis of
notional discount rate of 9% p.a., (equivalent to Government Security rate)
for the period of the loan and on the interest chargeable at the time when the
loan is contracted

Nodal Agency for implementing the scheme in our Bank and for releasing the
interest subsidy amount is HUDCO

Beneficiaries have to be identified and certified by the State Level Nodal


Agency.

Interest subsidy at 5% for a maximum loan amount of Rs. 1.00 lac is


calculated over the full period of the loan at NPV.

Subsidy is passed on by Nodal Agency on upfront basis every quarter for


loans granted during the previous quarter.

Immediately on receipt of the subsidy at branch level; branch will credit the
same to the borrowers loan account.

Interest on the loan amount will be calculated on the reduced outstanding


after credit of subsidy.

Bank will submit utilisation certificate to HUDCO every half year.

The generation of application under the scheme is unsatisfactory. Hence it


was decided that MFIs/ NGOs/ SHGs /CBOs can be associated as business
correspondent /facilitator and a fee of Rs.100/ per approved application
would be provided to such person under the Scheme.

srn/12.04.2013

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Subhagraha Housing Loan scheme


Purpose:

Term loan for acquisition / construction of new flat or a house and for purchase of
old house/ flat.

Loans under the scheme may also be sanctioned for additional rooms/ first floor/
Second floor on the already owned houses.

Second/ additional loans may also be sanctioned to the existing borrowers under
the scheme for construction of additional rooms/ floors on the already built
houses.

Second loan for purchase / construction of second house also can be given under
the Scheme.

Loans shall be considered for purchase of plot also subject to the loan quantum for
such purpose does not go beyond 30% of the total loan amount sanctioned and
the house to be constructed within 2 years from the date of purchase of plot.

Eligibility:

Individuals/group of Individuals and individual members of Cooperative society.


Individuals who have regular and independent Source of Income from Agriculture/
Profession/ Trade business etc. and through employment.

In case of applicants belonging to salaried class he should be in the line of


employment at least for 2 years and in case of persons in business it may be
reduced/ waived depending on the income of the individual.

The maximum age of the applicant at the time of availing loan may be considered
up to 60 years.

In case of applicants having crossed the age of 55 years, his/ her spouse or other
legal heir should be included as co-obligant. However the entire loan should be
liquidated before the first applicant attains the age of 70 years.

Borrower, who wants to let out the house he purchases, on rental basis on account
of his posting outside the headquarters or because he has been provided
accommodation by his employer, is also eligible to avail the loan under the
Scheme.

Quantum of finance:

Loans can be sanctioned up to 80% of the cost of house/flat whether new or


already built.

However where the loan amount falls under Priority Sector Credit, loans can be
sanctioned up to 90% of the cost of the house / flat.

There is no upper ceiling.

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50% norms is followed for arriving the eligible amount. Regional Managers are
empowered to sanction housing loan under 40% norms.

In case of Husband and wife, if both are employed, 40% norms should be seen only
in case of the Prime borrower and net income of the spouse shall be added to arrive
at the repayment capacity and to fix quantum of loan. However this norm cannot
be applied for any other relations.

Stamp duty, registration and other documentation charges should not be included
in the cost of the house property.

Repayment:

Loan should be repaid within a maximum period of 30 years including the


maximum holiday period.

Repayment period shall be permitted up to the age of 70 Years. However incase of


employed persons it may be ensured that adequate documentary evidence is
produced in support of additional income/ pension /income from other sources to
meet the Instalment commitments.

Loan is repayable in equated Monthly installments and interest Charged during


holiday period at monthly rest has to be serviced.

However in order to facilitate the borrowers who are close to their retirement years
and are currently earning good income, the branches may fix a higher EMI till their
retirement period and shall refix the EMI at the time of their retirement in such a
way that the 40% norms shall be maintained in the post retirement income also.

Similarly, in case of any lump sum payment made by the borrowers towards part
payment of the loan, the EMI shall be refixed on the outstanding of that date at the
request of the borrower. Form 378 to be obtained afresh at such times.

Holiday period:

A maximum of 18 months from the date of disbursement of first instalment of loan


or completion of construction whichever is earlier.

For purchase of old house/old flat, holiday period of 3 months may be allowed.

Margin :

Uniform margin of 20% to be maintained for purchase of new and old house
(margin as a % of estimated cost inclusive of cost of land).

In case of loans falling under Priority Sector Credit , it is enough if the margin is
maintained at 10%.

The stamp duty, registration and other documentations charges are to be borne by
the borrower and cannot be included under Margin.

In case of loans for construction of house on already owned plot, cost of such plot
shall be reckoned as margin .The value of such plot to be reckoned as given in

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the Sale Deed of the land purchased or the ruling guideline value whichever is
less.

However value of properties/plots obtained through Gift Deed / Partition Deed /


Settlement Deed or by any such means shall not be considered as Margin.

Rate of Interest:
Repayment period
Over 1 year to 5 years
Over 5 yrs upto 10 yrs
More than 10 years

Amount upto
30 lacs
Base Rate (BR)
Base Rate (BR)
Base Rate (BR)

Amount above
30 lacs 75 lacs
BR + 0.25%
BR + 0.25%
BR + 0.25%

Amount above
Rs.75 lacs
BR + 0.50%
BR + 0.75%
BR + 1.00%

50 bps concession in interest rate is allowed for loans above Rs.75 lacs where the
margin offered is 25% and more.

The above concession is also made available for loans above Rs.30 lacs upto Rs.75
lacs w.e.f 19.04.2013.

effective from today (the date of this circular).


Penal interest

2% over the prescribed rate should invariably be charged for the amount of default
/ delay in payment of installments for the overdue period.

Processing Charges:

A flat rate of 0.58% of the loan amount with a maximum of Rs 10190/-.

Security:

Immovable property to be financed must be mortgaged only with our Bank. The
land should be in the name of the applicant or jointly with his/ her spouse / close
relatives (Co-obligant).

Loans can also be considered even if the land is in the name of any close relatives.
However the loans should be granted jointly, where the earning member will be
the Prime borrower and the land owner will be the co borrower.

The mortgage details should be registered under CERSAI also as per the extant
guidelines.

Valuation of property:

In case of new house/flat allotted by DDA/ Housing Boards and other central/
State Government Agencies (original purchase/ first buyer), separate third party
valuation need not be insisted upon.

In other cases like Second hand house or flat / flats purchased from Private
builders/ construction on owners plot etc., estimate report at the time of sanction

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of loan and valuation report at the time completion / possession, from our
approved valuer should be obtained at borrowers cost.

Age of the house / flat should not generally exceed 25 years. Regional Managers
are given discretion in cases where the age of the building exceeds 25 years
provided our approved valuer has certified about the quality and soundness of
construction. The certificate should also indicate the probable left over life span of
the building, sufficiently covering the proposed repayment period.

Insurance:

The Property should be insured for the full value of its superstructure for the risk
of fire and other hazards including earthquake with bank clause during the
currency of loan and the original policy should be held with the bank.

Prepayment Charges:

No Prepayment charges to be collected on any loans closed prematurely. However


for the loans granted under fixed rate option prior to 1.7.2011, 1% Pre payment
charges should be collected on the amount outstanding as of date if they are closed
prematurely.

Takeover of loans:

Branches are permitted to take over housing loans accounts from other banks as
well as reputed housing Finance institutions such as HUDCO, LIC housing
Finance Ltd and other reputed intermediaries in the housing finance market in the
public/ private sector, provided it satisfies the following
The accounts to be taken over are regular and are in the standard category and
performing assets
The repayment period to be fixed by us should not exceed the original
repayment period stipulated by the institution, which has sanctioned the
original loan.
The proposal for takeover of housing loan accounts should be sanctioned from
the level of Regional Managers and above within the discretionary powers
available to various layers of authority.
Proposals involving taking over of housing loan accounts from cooperative
housing societies will have to be referred to General Managers for prior

Housing Loans eligible for Priority Credit:

Housing Loans upto a limit of Rs. 20 lacs sanctioned prior to 01.04.2011 will
continue to be classified under priority sector till maturity / renewal of such loans.

Housing Loans sanctioned up to a limit of Rs. 25 lacs between 1.4.2011 and


1.7.2012 will be classified as Priority Sector irrespective of the Area of
Classification.

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The revised guidelines for Housing Loans Limits to be eligible under Priority Sector
Advances with effect from 02.07.2012 are as given below:
Loans to individuals up to Rs. 25 lakh in metropolitan centres with population
above 10 lacs and Rs. 15 lakh in other centres for purchase/construction of a
dwelling unit per family excluding loans sanctioned to banks own employees.
Loans for repairs to the damaged dwelling units of families (Home Improvement
Scheme) up to Rs. 2 lakh in rural and semi- urban areas and up to Rs. 5 lakh
in urban and metropolitan areas.
Bank loans to any governmental agency for construction of dwelling units or for
slum clearance and rehabilitation of slum dwellers subject to a ceiling of Rs. 5
lakh per dwelling unit.
The loans sanctioned by banks for housing projects exclusively for the purpose
of construction of houses only to economically weaker sections and low income
groups, the total cost of which do not exceed Rs. 5 lakh per dwelling unit. For
the purpose of identifying the economically weaker sections and low income
groups, the family income limit of Rs. 1,20,000 per annum, irrespective of the
location, is prescribed.

Other conditions

Loans must be granted either by the branch nearer to the permanent residence of
the borrower or nearer to the location of the property proposed to be financed.

In case the borrower fails to construct a house within the stipulated time on the
plot purchased using the bank loan, the loan amount disbursed up to date must
be recovered at commercial rate of interest from the date/s of disbursements.
An Undertaking letter from the borrower accepting to repay the loan with
commercial rate of interest in case of failure to construct the house to be obtained
before disbursement of loan

The borrowers must be advised to bring in proportionate margin before release of


each stage of loan. The proceeds are to be paid to the Contractor/builder/ supplier
of materials by way of Demand Draft or in any other electronic mode of payment as
far as possible against their acknowledgement/ receipts/ bills.

In cases where the applicant owns a plot/land and approaches the bank for a
credit facility to construct a house, a copy of the sanctioned Plan approved by the
competent authority in the name of the person applying for such credit facility
must be obtained by the bank.

An affidavit cum undertaking letter must be obtained from the person applying
for such credit facility that;
He shall not violate the sanctioned plan and construction shall be done strictly
as per the sanctioned plan.
It will be the sole responsibility of the executants to obtain completion
certificate within 3 months of completion of construction failing which the bank

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shall have the power and the authority to recall the entire loan with interest
costs and other usual charges.

An architect appointed by the bank must also certify at various stages of


construction of building that;
the construction of building is strictly as per the sanctioned plan and

Also certify at a particular point of time that the completion certificate of the
building issued by the competent authority has been obtained.

When loan is granted for purchase of built up house/ flat it is mandatory for the
borrower/s to declare by way of an affidavit cum undertaking that the built up
property has been constructed as per the sanctioned plan and or building bye laws
and as far as possible has a completion certificate also.

An architect appointed by the bank must also certify before disbursement of loan
that the built up property is strictly as per the sanctioned plan and/ or building
bye laws.

No loan should be granted in respect of those properties which fall in the category
of unauthorized colonies unless and until they have been regularized and
development charges are paid.

Further no loan should be sanctioned in respect of properties meant for residential


use but which the applicant intends to use for commercial purposes and declare so
while applying for loan.

In case of loans availed jointly by resident and non-resident Indians, it has to be


treated as loan under Subhagruha Scheme only.

If loan is granted in the names of more than one borrower, the asset creation must
be in the names of all the borrowers.

Loan to Staff members

All the terms and conditions mentioned in the Scheme will be applicable to Staff
members also who avail the loan under the Subhagruha Scheme, provided their
Pension and other fixed income (like rent, income/pension of spouse, etc.,)are
sufficient to make good the loan instalment for which documentary evidences are
to be produced by them.

The loans granted to the staff members should be recovered in proportionate EMI
from their monthly salary. However the monthly installment under this loan need
not be reckoned for arriving members 40% net income for availing other staff loans
by them from the Bank.

Besides authorization letter for deduction of proportionate loan installments from


their monthly salary, the applicants should also submit a letter of undertaking for
recovery of the entire outstanding in the loan account from their terminal benefits
in the event of death/ pre-mature retirement / termination etc during the currency
of the loan.

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Loans under Subha Gruha scheme to the staff members, whether as prime
borrower or as co borrower, are to be sanctioned by RLCC only, even if the loan
amount falls within the discretionary powers of the branch.

However applications need not be routed through the Rapid Retail Centres and can
be sent to the ROs directly for sanction.

Loans under the Scheme are to be availed at the Salary Drawn branch only.

Branches/Regional Offices need not insist for prior clearance from Industrial
Relations department, Central Office for loan availment by staff members under
Subha gruha Housing loan scheme.

However the sanctioning authorities shall mark a copy of their sanction


endorsement of the loan granted to our staff members under the above scheme,
marking to Industrial Relations Department, central office and Personnel
Administration Department clerical/ Supervisory section, as the case may be for
placing the same in the respective members personal files.
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srn/19.05.2013
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VIDYA JYOTHI EDUCATIONAL LOAN SCHEME


A. Eligibility of Student:
Should be an Indian National
Should have secured admission to higher education course in recognized
institutions in India through Entrance Test/ Merit Based Selection process
after completion of HSC (10 plus2 or equivalent).
In the states where there is no common entrance test (CET) the applicant
must secure 60% (in case of SC/ST students 55%) marks in the qualifying
examination as Cutoff marks.
Wherever common entrance test (CET) is absent for securing admission to
post graduate courses/research programmes, employment and reputation of
institution concerned should be the criteria.
Eligibility of such PG courses may be ascertained from the Webomatrics
Website by the Branches, which give indicative list of reputed universities
and loans may be granted accordingly. Branches may also visit For courses
in India: :www.ugc.ac.in, www.education.nic.in, www.aicte.org.in
In case of admission to any Deemed university, documentary evidence with
regard to conduct of any Common Entrance Test and selection through Merit
based Process must be obtained by the Branches.
In a selection process, if everybody who appeared for examination is advised
as selected then it is not a merit based selection (single window). Hence
single window concept, like in Tamil Nadu, cannot be considered as merit
based selection.
The students who have secured more than 60% (in case of SC/ST students
55%) marks and joining colleges other than college allotted to him/her by
counseling to be considered as management quota.
It would be in order for banks to consider a meritorious student (who
qualifies for a seat under merit quota) eligible for loan under this scheme
even if the student chooses to pursue a course under Management Quota.
B. Eligible courses of Study:
I. Studies in India: (Indicative list)
Approved courses leading to graduate/post graduate degrees and PG
diplomas conducted by recognized colleges/ universities recognized by UGC/
Govt. / AICTE/AIBMS/ICMR etc.
Courses like ICWA, CA, CFA etc.
Courses conducted by IIMs, IITs, IISc, XLRI, NIFT, NID etc.
Regular Degree/Diploma courses like Aeronautical, pilot training, shipping,
degree/diploma in nursing or any other discipline approved by Director

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General of Civil Aviation/Shipping/Indian Nursing Council or any other


regulatory body as the case may be, if the course is pursued in India
Approved courses offered in India by reputed foreign universities.
Other job oriented courses leading to technical/ professional degrees, post
graduate degrees/P.G diplomas offered by recognized institutions.
Nursing courses pursued under Management Quota. (However, the funding
is restricted to fee structure as approved by the State Government or
regulatory body).

Sanction of loans to applicants who got admission under Management Quota


is to be considered outside the purview of IBA educational loan scheme.

Vocational/skill development study courses, off-campus courses and onsite/partnership programmes are not eligible for loan under the IBA scheme.
II. Studies abroad:
Graduation: For job oriented professional/ technical courses from reputed
universities.
Courses offered by reputed universities.
Post graduation: MCA, MBA, MS, etc.
Courses conducted by CIMA- London, CPA in USA etc.
Degree/Post graduate diploma courses like aeronautical, pilot training,
shipping etc provided these are recognized by competent regulatory bodies in
India/abroad for the purpose of employment in India/abroad.
PG diploma from reputed universities also eligible.

C. Expenses considered for loan


i.

Fee payable to college/ school/ hostel

ii.

iii.

For courses under Management quota seats, considered under the


scheme, fees as approved by the State Government/Government approved
regulatory body for payment seats will be taken, subject to viability of
repayment.
Examination/ Library/ Laboratory fee

iv.

Travel expenses/ passage money for studies abroad

v.

Insurance premium for student borrower, if applicable

vi.

Caution deposit, Building fund/refundable deposit supported by Institution


bills / receipts (subject to a max. of 10% of entire tuition fee).

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vii.

Purchase of books/ equipments/ instruments/ uniforms (subject to a max.


of 20% of tuition fee)

viii.

Purchase of computer at reasonable cost, if required for completion of the


course (subject to a max. of 20% of tuition fee)

ix.

Any other expense required to complete the course - like study tours, project
work, thesis, etc. (subject to a max. of 20% of tuition fee)

D. Quantum of finance:
Need based finance is to be worked out as per expenses eligible above with
applicable margin and within the following ceilings.
Category
Studies in India
Studies abroad

Priority sector
Rs.10.00 Lakhs
Rs.20.00 Lakhs

Non-Priority Sector
Rs.30.00 Lakhs
Rs.40.00 Lakhs

However higher quantum of loan can be considered on case-to-case basis


(eg., IIMs, ISB, etc.) at CO level by appropriate authority.

Loans in excess of Rs.10 lakhs qualify for interest subsidy under Central
Sector Interest Subsidy Scheme for amount up to 10 lakhs only.

E. Margin:
Upto Rs 4.00 lacs
Above Rs. 4.00 lacs

: Nil
: Studies in India - 5%
Studies Abroad - 15%

Scholarship/ assistantship to be included in margin.


Margin may be brought-in on year-to-year basis as and when disbursements
are made on a pro-rata basis.
F. Security:
Category
Upto Rs 4 lacs
Above Rs.4 lacs
and upto Rs7.50
lakhs
Above Rs.7.50
lakhs

Security
Co-obligation of parents or Guardian. No security
Co-obligation of parents / Guardian together with
collateral security in the form of suitable third
party guarantee.
Co-obligation of parents together with tangible
collateral security of suitable value, along with
the assignment of future income of the student
for payment of installments

Wherever the land/ building is already mortgaged, the unencumbered portion


can be taken as security on second charge basis provided it covers the required
loan amount.

Security offered for loans above ` 7.5 lakhs need not necessarily be belonging to
the joint borrower (co-obligator).

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In case the loan is given for purchase of computer, the computer has to be
hypothecated to the Bank.

G. Rate of Interest:
Category
Upto Rs4 lacs
Rs. 4 lacs to Rs. 7.5. lacs
Above Rs. 7.5 lacs
For wards of staff members
irrespective of the amount

Rate of Interest
Base Rate + 2.00%
Base Rate + 3.25%
Base Rate + 3.00%
Base Rate + 1.75%

Simple interest to be charged during the Repayment holiday/Moratorium


period.
Penal interest @ 2% to be charged for above Rs.4 lacs for the overdue amount
and overdue period.

1% concession if interest is serviced during the study period and subsequent


moratorium period prior to commencement of repayment will continue.

The Interest concession of 0.5 % given to the Girl students at the time of
disbursement of loan to continue.

Concession 0.50% to Children of War widows and Handicapped Soldiers Subject


to rate not falling below Base Rate and pension accounts are routed through us.

Servicing of interest during study period and the moratorium period i.e. till
commencement of repayment is optional for students.
Accrued interest to be added to the principal amount borrowed while fixing EMI
for repayment.

H. APPRAISAL/ SANCTION/ DISBURSEMENT:

Applications shall be received either directly at our branches or through on-line


mode.

Upon receipt of application, standard acknowledgement giving a reference


number is to be issued. The acknowledgement will contain contact details of the
Branch Manager / designated official who, could be contacted in case of delay
in disposal of application.

Normally, sanction/rejection will be communicated within 15 days of receipt


duly completed application with supporting documents.

Normally, loan application will be accepted by the branch nearest to the


residence of parents. For the parents with transferable jobs, the branches
nearer to the permanent address shall consider the loan.

No Loan applications to be rejected without being referred to the next higher


Authority / Controlling Office.

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In the absence of any permanent address, loans to be considered by obtaining a


Declaration letter from the Borrower parent to intimate the Bank about change
of address, if any without fail.

In the normal course, while appraising the loan the future income prospects of
the student will be looked into. However, where required, the means of parent /
guardian could also be taken into account to evaluate re-payment capability.

I. Repayment
Holiday/
Moratorium period
Repayment of the
loan

Course period + 1year or 6 months after getting


job, whichever is earlier.
in equated monthly instalments for periods as
under:
For loans upto Rs. 7.5 lakhs - upto 10 years
For loans above Rs. 7.5 lakhs - upto 15 years

If the student is not able to complete the course within the scheduled time,
extension of time for completion of course may be permitted for a maximum
period of 2 years.

If the student is not able to complete the course for reasons beyond his control,
sanctioning authority may at his discretion consider such extensions as may be
deemed necessary to complete the course.

In case the student discontinues the course midway, appropriate repayment


schedule will be worked out by the bank in consultation with the
student/parent

The accrued interest during the repayment holiday period to be added to the
principal and repayment in Equated Monthly Instalments (EMI) fixed.

Repayment of the education loan is based on the future earning potential of the
student.

In case the student takes up higher studies immediately upon completion of the
course, the commencement of repayment would get shifted to 6 months from
employment or one year from completion of the course (higher studies)
whichever is earlier without treating the change as restructuring. This would be
so irrespective of whether the student had taken fresh/top up loan for higher
studies or not.

J. INSURANCE

Branches are advised to cover the lives of the students and the parents up to 50
years of age while granting Educational Loan by covering the loan under our
Vidya Jyothi Educational Scheme with Suraksha with their consent

The loan to be disbursed could include the insurance premium amount and the
insurance policy should be assigned in favour of the bank.

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295
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K. FOLLOW UP/TRACKING

Branches are advised to contact college / university authorities to send the


progress report to the bank at regular intervals in respect of students who have
availed loans.

In respect of studies abroad, the branches are advised to insist on the student
borrower to provide the Unique Identification Number (UIN)/ Identity card and
note the same in the office records to enable the bank to track the students
studying abroad. The UID number issued by UIDIA is to be captured in Banks
system as and when available.

L. PROCESSING CHARGES

No processing / upfront charges can be collected on Educational Loan for


studies in India.

For Study abroad 0.57 % processing charges may be collected while considering
the loan. The fee would however, be refunded upon the student taking up the
course.

M. CAPABILITY CERTIFICATE

Branches are advised to issue the capability certificate for students going
abroad for higher studies.

For issuing the certificate, financial and other supporting documents may be
obtained from the applicant.

N. OTHER TERMS:

Going by the spirit of the scheme, limit of Rs 4.0 lakh (Rupees Four Lakhs)
collateral free loan is student specific and not family specific. There is no
restriction on giving a second or third collateral free loan to other siblings when
one of the siblings has already taken a collateral free loan.

O. Minimum Age

There is no specific restriction with regard to the age of the student to be eligible
for education loan.

P. Top up loans

Banks may consider top up loans to students pursuing further studies within
the overall eligibility limit, if such further studies are commenced during the
moratorium period of the first loan.

The repayment of the loan will commence after the completion of the second
course and further moratorium period, as provided under the scheme.

Q. No Due Certificate
Branches may obtain a declaration/ an affidavit confirming that no loans are
availed from other banks.

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296
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_____________________________________

R. Disposal of loan application


Loan applications have to be disposed of in the normal course within a period of
15 days to 1 month, but not exceeding the time norms stipulated for disposing
of loan applications under priority sector lending.
No application for educational loan received should be rejected without the
concurrence of next higher authority.
S. Co- Obligator

The Co-obligator should be Parent(s)/ guardian of the student borrower.

In case of Married person, the co-obligor can be Spouse or the Parent /Parents
in law.

However, if the joint borrower has a loan account with the bank and the loan is
treated as non-performing asset the bank may, as a prudent measure insist on
a joint borrower acceptable to the bank, in case of adverse credit history of the
parent/guardian of the student.

T. Additional Points to note:

Teacher Training/Nursing/B.Ed. courses will be eligible for education loan


provided the training institutions are approved either by the Central
Government or by State Government and such courses should lead to Degree or
Diploma course and not to Certification course.

The revised Model Educational Loan Scheme (2011) covers only merit channel
seats for these courses.

It is not uncommon for students to take up part-time jobs as permitted by the


institutions where they are studying to part fund their education. So they will
not be taking loan for meeting entire cost of studies. Branch / RO may sanction
loan for meeting part cost as requested by students in such cases.

Requests received from NRIs can be considered if student is Indian passport


holder and they meet other eligibility requirements. However, it would be
necessary to accept as security any collateral which is enforceable in India.

The student loan will not be affected by any change in asset classification of any
separate bank borrowing of the joint borrower.

U. Interest Subsidy
Central Scheme to provide Interest Subsidy Scheme on Education Loan for
Economically Weaker Section.
The benefits of the Scheme would be applicable to those students belonging
to Economically Weaker Sections (EWS), with an annual gross
parental/family income with an upper limit of Rs. 4.50 lacs per year
(from all sources).

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297
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_____________________________________

To cater-to the needs of students belonging to economically weaker sections


with prescribed upper parental gross income limit of the family from all
sources, which is based on economic index and not on social
background.
Interest subsidy is available during the period of moratorium i.e., Course
Period plus one year or six months after getting job, whichever is earlier.
The interest subsidy is

admissible upto a loan amount of Rs 10 lakhs.

The subsidy is admissible even in respect of courses where the fee structure
is more than Rs 10.00 lakhs. However, for calculation of interest subsidy,
the same should be calculated for loans upto Rs 10 lakhs.
For pursuing any of the approved courses of studies in technical and
professional streams, from recognized institutions in India.
The interest subsidy under the Scheme shall be available to the eligible
students only once, either for the first undergraduate degree course or the
post graduate degrees/diplomas in India. Interest Subsidy shall, however, be
admissible for integrated courses (graduate + post graduate).
Only member banks of IBA are eligible for Interest Subsidy for Education
Loan.
********************************
srn/15.05.2013

Back to index

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Career Guide for IOBians


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298
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Retail Credit Schemes


Name
Target Group

Purpose

Quantum

Rate of
Interest

Clean loans
Employees of Govt.Corp, PSUs, Central/State Govt
and reputed PVt.sector undertakings which are
highly rated and are in existence for mini.10 yrsLIC agent 3 yrs average yearly commission
Rs.84000/- age not to exceed 55 yrs,mini.
experience 5 yrs,IT assessee
To meet out financial needs
Clean Loan to LIC Agents be extended for
professional purpose.
upto 10 times of salary or Rs. 15.00 lac whichever
is lower subject to undertaking from the employer
to deduct the instalment or to route the salary
through
the
branch
till
the
loan
adjusted.(repayment upto 60 months).
For LIC agents, 10 times of average commission
receipt per month with a maximum of Rs 10.00
lakhs.

Pensioners Loan Scheme


All pensioners excluding Malaysian Government
pensioners receiving pension through our bank
branch
The loan can be granted for meeting any personal
expenses and the end use need not be verified.

The loan amount is restricted to 10 months


pension with a ceiling of Rs.2.00 lakhs for those
not over 65 years of age and Rs.1 lakh for those
who are over 65 years of age.

BR+ 5.0%

BR + 4.00%
1% interest concession for ex-staff of our Bank

Personal Guarantee of two guarantors


acceptable to the sanctioning authority.

Undertaking letter from legal heir/third party.


For Ex-IOB ian no such letter

Repayment

Nil
Loans on 10 month salary -60 monthly
instalments & for others 36 months

Nil
Not more than 65 yrs-60 EMI,
More than 65 yrs EMI 30 months

Holiday period

Nil

Nil

Priority status

No

No
Maximum eligible amount as per Scheme

Discretion

Scale I-20000,II-50000,III-1.00 lac,IV-3 lac,


LIC-AGM Br-5ac/SRM-5 lacs/CRM-5.00 lacs
Others- AGM 10 lac; DGM : 10 lac

Security
Margin

Remarks

Obtention of undertaking letter from employer to


recover the dues from the terminal benefits in case
of retirement/death/termination preferably for the
loans repayable within two years. Loan to LIC
agents, if extended for professional purpose, Loans
will be classified under MSE Loans.

_____________________________________

Adv/002/2011-12 dt 05.04.2011

_____________________________________

Sahayika
Confirmed salaried persons with
40% take home pay (including other
income), professional, self employed
and businessmen with 3 years
standing in the field and IT
assessee.
To meet any social and
financial commitments

Max : Rs. 10.00 lacs.

BR + 3.75%
0.5% reduction for
prompt payment
EM on Immovable property,
additionally NSC,UTI,IVP etc .
NSC/KVP/Units : 25%
Life policies : 10%; Properties 50%
Max: 60 EMI
Nil
NO
JMI-1 lac ; II-2 lac ; III - Rs.5.00
lacs ;
SM IV & above : Full

On selective basis. Property


valuation should be doubly ensured

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Career Guide for IOBians


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Name

Target Group

_____________________________________

IOB Gold

All existing business customers, irrespective of


enjoying credit limits or not are eligible for the loan
under IOB GOLD, subject to following:
1. Must have a CA or CC account with the branch.
2. In case of non borrowers, the CA should be at least
one year old with satisfactory operations

Purpose

To meet any urgent business/personal


requirements. A declaration from the borrower in
this regard is sufficient.

Quantum

Minimum Amount Rs. 1,00,000/Maximum Amount Rs.25,00,000/-

Rate of
Interest

Base rate + 4%.

Security

Pledge of gold ornaments of 20 to 22 carat fineness


and gold coins of 24 carat fineness, sold by Banks

IOB-Akshay
Personal borrowers in their
individual capacity
Corporates/business concerns not
eligible.
Advance against LIC policies

90% of the surrender value

Base rate + 3.75%


Endowment policy with profit/money
back policy of LIC/PLI/ policies of
Pvt insurers approved by IRDA

Repayment

20% - Rate is fixed on daily basis linked to


previous days rate of ornamental gold available
in IOB online.
A period of 12 months either in monthly
instalments or through one bullet repayment.

Holiday period

Nil

Nil

Priority status

No

No

Discretion

Per Borrower Limit or Maximum specified in the


scheme whichever is lower

Scale I-I lac,II-2 lacs,III-3 lacs,IV-4


lacs,AGM Br/SRM/CRM/RGM full

Margin

Remarks

Appraisal charges- Rs. 1 lac to Rs. 5 lacs .... Rs.


500/-; Rs. 5 lacs to Rs. 25 lacs .... Rs. 1000/Processing charges : 0.58% of the loan amount.
Cir. No. ADV/ 35 / 2011-12 Dt : 07.07.2011

_____________________________________

10% of surrender value


Maxi.48 EMI

ADV/113/dt 21.5.2002

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299
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Subhagruha
Individuals/group of individuals/members of coop society having regular and independent
income-employed persons 2 years in the line of
employment. Age not to exceed 60 years.
Acquisition/construction of a new flat or a
house. Purchase of old house/flat age not
exceeding 25 years (deviation can be allowed by
RM). Additional floor/rooms construction also.
For purchase of plot 30% of loan amount.
Upto 90% of the cost of construction/purchase
value of the house for loans fall under priority
sector sector & 80% for others. Maxi,No
ceiling.50% norms (RMS can follow 40%
norms).Stamp duty, regn exp. Etc not to be
included.

Upto Rs. 30 lsc Rs.30 l< Rs.75L<


Repay per. Upto 5 yrs - 10.25% 10.50% 10.75%
5yrs<upto 10 yrs
- 10.25% 10.50% 11.00%
10yrs <
- 10.25% 10.50% 11.25%
subject to change in base rate): 50bps concession is
allowed for loans > Rs.75 lac with margin more than 25%

First mortgage of property to be financed/land


in the name of applicant(s).
10% for loans under priority sector & 20% for
others inclusive of cost of land. Already owned
land, cost of land can be margin.
Maxi 30 years including holiday period. A/c
should be closed before the applicant attains 70
years of age.
Maxi.18 months or completion of construction
whichever is earlier for construction.3 months
for purchase of old house/flat.
Upto Rs.25 lacs in metropolitan & 15 lacs in
other areas (w.e.f 02.07.2012)
Scale-1 5;Scale (II) Rs.10 lac;-Scale(III) Rs.30
lacs; Scale IV Rs.100 lacs ; V-200 ;VI-300 lac
No pre-payment penalty if paid from own
sources & 1% if availed under fixed rate option
prior to 01.07.2011.

Loans to staff members under subhagrahadiscretion only with RLCC.

Processing charge @0.58% of the loan with


a maximum of Rs.10190/-

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Career Guide for IOBians


_____________________________________

Name

Target Group

Purpose

Quantum
Rate of Interest

Security

Margin

_____________________________________

Home Improvement Scheme


Individuals(Salaried,
business
people,
professionals) owning a flat/house in his
/her name-confirmed service, take home
pay more than 50%,balance of service equal
to or more than the repayment period, proof
for other source of income- P&SE
-IT
assessee,mini.3 yrs standing
For repair & renovation/up gradation of
existing houses/flats
Mini.Rs.25000 Maxi.Rs.15 lacs 50% of value
of security or estimated cost of repairs
whichever is less.
As per Subhagraha scheme
(subject to change in Base rate)

EM of the house/flat which is under


repair/renovation and the land or any other
immovable property in the name of borrower
and unencumbered with a market value
twice that of the loan amount

Home Dcor scheme


Individuals who own a house/flat in their name
or in the name of their spouse - confirmed
service, three years standing for P.SE if house
in close relatives name joint borrowers-age not
more than 55 years
To furnish the house-TV,VCR, Washing machine
computer not allowed
5 times gross monthly income or Rs.2.00 lacs
which ever is less if 3rd party guarantee is offered
10 times the gross monthly income or Rs.10.00
lacs whichever is less of collateral equal to the
loan amount is offered
BR + 2.75 %
1) Loan upto 2.00 lac
1) >2 lacs upto 10 lacs
Hypo of items purchased
,,
2) Suitable TPG (salaried person) 2) Mortgage of
houseuse/flat
3) If house/flat is mortgaged to 3)
,,
another Bank/Institution no lien
letter from the bank/Insti to the items
hypothecated to our BK/ renovations undertaken

Immovable property 50% of market value

25% on cost kept as term deposit till the loan is


closed.

Maxi.144 EMI subject to max. age of 60 yrs


for salaried persons entire loan should be
recovered before retirement-36 post dated
cheques should be obtained towards EMI

72 EMI- subject to max. age of 60 yrs & not to


exceed 60% of gross pay including EMI for any
housing loan-36 post dated cheques must be
obtained towards EMI

Holiday period

Three months holiday period

Nil

Priority status

Loan Upto Rs.2,lac/in R/SU upto Rs.5 lacs


in other areas

No

Discretion

JMI 2 lacs, MMII 3 lacs MMIII 5 lacs ; SMIV 10 lac ; AGM & DGM 15 lac

Repayment

Remarks

36 posted dated cheques should be obtained

_____________________________________

Scale I-50,000,II-1.00 lac; III- 3 lac;IV-5 lac


AGM&DGM _ 10 lac
36 post dated cheques should be obtained
Full cost of furnishing as loan

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300
_____________________________________

Home Loan to NRI


Existing NRI/Persons of Indian Origin holding
Indian Passport or pass port of any other
country except Pakistan and Bangladesh, PIOs
with fresh account relationship with minimum
monthly salary equal to Rs. 10000/For purchase or construction of residential
flat/house and for repair/renovation of
existing house or flat.
with a maximum of 80% of cost for
construction /purchase.
As per Subhagruha loan

Equitable mortgage of property purchased or


proposed to be acquired-Guarantee waivedProcessing charge @0.58% of the loan with a
maximum of Rs.10190/20% of the cost of construction, purchase
( including cost of land) or repair to be brought
in by way of foreign inward remittance or by
debit to NRE/NRO/FCNR accounts
Construction/purchase-180 EMI-Repair
/renovation 60 EMI- fresh inward remittance
or to the debit NRE/FCNR/NRO account or by
close relatives of the NRI Borrower in India.
Branches should ensure that the payment
made by the relative is through his/her bank
account and credited directly to the borrowers
loan account. Should not accept cash towards
repayment of Home Loan account of NRI.
6months-acquisition-12months
for
construction from the date of first disbursal
3 months for repair & renovationAs applicable to Subhagraha
For construction/purchase/acquisition/
repair/rno: JMI 5 lac, MMII 10 lac, MM III-30
lac ; Scale IV Rs. 100 lac ; AGM-200 lac ;DGM300lac
Co obligant(resident) may also be POA of NRI.

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Career Guide for IOBians


_____________________________________

_____________________________________

Name

IOB CAREER DREAM

Target Group

Students preparing for Professional Courses


entrance examinations , Civil Services examinations
and various Career & Skill development courses

Purpose
Quantum
Rate of
Interest

Security

Margin
Repayment

Pushpaka

for financing Coaching/Tuition fee of reputed


Institutions in India to prepare for Professional
Courses entrance exam. , Civil Services exam. and
various Career & Skill development courses
Minimum of Rs. 25,000/- and Maximum Of
Rs.2,00,000/B R + 3.75 % under Floating Rate (Loan secured by
NSC, LIC, KVP etc) and for others B R + 4.00 %
under Floating Rate (Loan without security /against
immovable property)
If salary is routed through our Bank, no security is
required.But TPG is mandatory.
In case salary/pension is not routed through the
Bank, the loan is to be fully secured by collateral
in the form of NSC, LIC Policies, Deposits, KVP etc.
Third party guarantee is not required.
Immovable property also accepted as security
5% of the tuition fee as per the fee structure
25 % for immovable property; 10 % for Movable

Within 3 years

Holiday
period

Nil

Priority
status

No

Discretion

JM I : Rs. 1 lac and other Rs. 2 lac

Remarks

Under Career & Skill development courses, Branch


should get the approval from Regional Head for
financing institutes other than NIIT & APTECH.
0.50% of loan amount sanctioned subject to the
minimum of Rs.500

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301
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Pushpaka to staff members


1. Members who are not eligible for loan
under SVL scheme or who want to buy
Individuals in employment, business, self
vehicle of higher cost
employed professionals. Firms, Companies
2. In confirmed service with net take
& NRIs are also eligible
home pay not less that 40% of Gross
salary
To purchase new/old car (not older than 5
years. New 2 wheelers.
New car : 90% of the cost; Old : 75%
2 wheelers : 90% of the cost
Base Rate + 0.50%

To purchase new/old car (not older than


5 years. New 2 wheelers.
New car : 90% of the cost; Old : 75%
2 wheelers : 90% of the cost
Base Rate + 0.50%

Hypothecation of vehicles
For NRIs, a suitable guarantee from
Resident Indian, acceptable to the
Bank

1. Hypothecation of vehicles
2. Lien on terminal benefits if the
loan terms extends after retirement
3. Recovery from salary monthly
instalments

New car : 10% : Old car : 25%


Two wheeler : 10%
Max. 84 emi for new car & old car
maxi. 84 months age of car should
not go beyond 8 yrs at the time of
closure (last instalment).
Motor cycle : 72 months

New car : 10% : Old car : 25%


Two wheeler : 10%
Max. 84 emi for new car & old car
maxi. 84 months age of car should
not go beyond 8 yrs at the time of
closure (last instalment). Motor
cycle : 72 months ; Total term does
not go beyond 65 yrs
Nil

Nil

Advances granted to medical


practitioners for an amount up to Rs.10
No
lacs. Others : No
Car : JM I 7.50 lac; II-10 lac; III 15 lac,
SMIV & above : full
Sanctioned only by RLCC
2 wheeler : JMI -0.75 lac; II -1 lac
MMIII & above - full
Net salary income of spouse, rental
2 valuation and road worthiness certifi for
income, agri income of applicant/
used card. Reputed automobile
spouse may also be reckoned.
dealers/engineers/ survivors of GIC.
1. No clearance from IRD required.
While giving to firms, this should not be
2. No processing charge
linked with other borrowings.

_____________________________________

_____________________________________

Career Guide for IOBians


_____________________________________

Name

Target Group

Vidyajothi with suraksha


Students who have secured admission to higher
education course in recognized institutions in
India through merit channel Selection process
after completion of HSC .
In the states where there is no common
entrance test (CET) the applicant must secure
60% in the qualifying examination as Cutoff
marks
Merit channel seat holders in admission

IOB -Scholar
Students who got admission in approved
colleges and secured minimum of 65% marks
in the Plus 2 or equivalent exam.
Students who want to pursue Vocational
Training and skill development courses that
are kept outside the Model Scheme (VJEL).
Any other course pursued by students which
are having employability on completion.

Purpose

Expenses towards persecution of higher studies

Expenses towards persecution of higher studies +


living expenses (like Hostel fees, Bus fare, etc.,)

Quantum

Studies in India : Rs.30 lac


Studies abroad : Rs.40 lac

Loan for Inland studies up to Rs. 30 lacs


Loans for studies abroad Up to Rs. 40 lacs

Rate of Interest

Security
Margin
Repayment
Holiday period
Priority status
Discretion

Remarks

Up to Rs.4 lacs
: BR + 2.00%
Rs. 4 lacs to Rs.7.5 lacs : BR + 3.25%
Above Rs. 7.5 lacs
:BR + 3.00%
For wards of staff
:BR + 1.75%
Up to Rs.4 lacs : No security
Above Rs.4 lacs to Rs.7.50 lacs: guarantee
Above Rs.7.50 lacs : tangible security
Upto Rs.4.00 lacs : NIL
Above Rs. 4 lacs : studies in India : 5%
Studies abroad : 15%
For loans upto Rs. 7.5 lakhs - upto 10 years
For loans above Rs. 7.5 lakhs - upto 15 yrs
Course period + 1year or 6 months after getting
job, whichever is earlier.
Studies in India ; upto Rs.10 lacs & studies
abroad ; upto Rs.20 lacs priority sector
JM I 1 lac; MM II-3lac; MM III 4 lacs; SM-IV
(India) 10/(abroad)20 lacs; AGM & DGM (India)
15/(abroad)25 lac
CSIS eligible. Loans in excess of Rs.10 lakhs
qualify for interest subsidy under CSIS Scheme
for amount up to 10 lakhs only.
No processing charges for studies in India &
0.58% for studies abroad
Suraksha insurance for students & parents
upto 50 yrs with their consent
1% int. concession for holiday int. service
0.5% int. concession for girl students

_____________________________________

302
_____________________________________

_____________________________________

Vocational Education And Training

for pursuing higher education in India &


Abroad, to support the national initiatives for
skill development
Need based finance to meet expenses will be
considered subject to the following ceilings :
For courses duration upto 3 mths Rs. 20,000
For courses of duration 3 to 6 mths Rs. 50,000
For courses of duration 6 m to 1 yr Rs. 75,000
For courses of duration above 1 yr Rs.1,50,000

Upto Rs. 4.00 lacs : BR + 2.50%


Above Rs. 4.00 lacs : BR + 3.25%
Ward of Staff : BR + 1.75 %
Loans to be secured fully in the form of collateral
security acceptable to the bank with suitable
margin.
uniform Margin of 25% for all the loans under
the Scheme irrespective of the loan amount
For loans upto 7.5 lakhs up to 10 years
For loans above 7.5 lakhs up to 15 years
Repayment holiday/Moratorium Course period +
6 months or after getting job, whichever is earlier
Studies in India ; upto Rs.10 lacs & studies
abroad ; upto Rs.20 lacs priority sector
JM I 1 lac; MM II-3lac; MM III 4 lacs; SM-IV
(India) 10/(abroad)20 lacs; AGM & DGM Inland
20lac & abroad 30 lac
Central Scheme to provide Interest Subsidynot applicable.
Processing fee of 0.5 % with min of Rs. 500/and max of Rs. 5,000/ 1% int. concession for holiday int. service

_____________________________________

Students those who have the minimum


educational qualification.
has been developed as an extension of the
existing Model Educational Loan Scheme
for pursuing higher education in India &
Abroad, to support the national initiatives
for skill development

BR + 2%

No collateral or third party guarantee will


be taken.
parent as joint borrower
NIL

Courses upto 1 year : in 2 to 5 years


Courses above 1 year : in 3 to 7 years
For courses of duration up to 1 year : 6 m
from the date of Completion of the course
For courses of duration above 1 year : 12 m
from the date of Completion of the course
Yes
JM I 1 lac; MM II-& above full
No specific restriction with regard to the age
to be eligible for the loan.
1% int concession for holiday int service
Processing Charges NIL
top up loans to students pursuing further
studies within the overall eligibility limit
Central Scheme to provide Interest Subsidynot applicable.

_____________________________________

Career Guide for IOBians


_____________________________________

_____________________________________

Name

IOB - Royal

Target Group

High net worth individuals / Self employed


Professionals like Doctors, CAs, Engineers,
Architects and salaried employees of select
Public and Private limited Companies,
Higher Judiciary Officials, Professors of
Colleges / Universities, High end IT
employees, etc.
Min salary/disclosed income :
Rs.75000/month

Purpose

Fulfilling all financial aspirations, whether it


is for a dream holiday or any marriage
expenses or any of their social / financial
commitments.

Quantum

Maximum Loan Limit of Rs. 15.00 lakhs.


(Quantum to be assessed according to the
50% norms)

Rate of Interest

repay up to 4 years
Repay 4 years<

: BR + 4.25%
: BR + 5.00%.

Security

No security / Guarantee required

Margin

NIL

Repayment

From 12 to 84 months

Holiday period
Priority status

No holiday period

Discretion

Remarks

NO
AGM : Rs. 10.00 lakhs
DGM : Rs. 15.00 lakhs
In the form of Cash Credit with monthly
reducing DP balance and to be reviewed
once in a year or as Demand Loan with
EMI
obtaining Post dated cheques
Processing Charges of Rs. 200/- per Lakh
subject to a maximum of Rs. 1000/-.
Ref: ADV/ 187 /2012-13 dt : 06.06.2012

_____________________________________

Reverse Mortgage Loan


Applicant should be a Senior Citizen having
completed 60 years of age.
Joint loans with spouse is possible provided
the first named applicant is a Senior Citizen
and the age of the spouse is not below 55
years
Applicant must be the owner of a selfacquired, self occupied residential property
(house or flat) located in India with clear and
transferable title, free from any encumbrance.
For upgradation, repair, renovation or
extension of the house property Medical
expenses or maintenance of family.
Supplementing pension or any other income.
Meeting any other need.
depend on market value of the property, age
of the borrower and the rate of interest
prevailing
MinRs.5lac&Max: No ceiling (mly inst. <50000
Fixed Rate of Interest at Base Rate +1.00%
subject to reset every 5 years.
Registered Memorandum of deposit of title
deeds of the house (residential) property
against
which
the
loan
is
granted.
Commercial property will not be accepted as
security.
10% less than market value
75% for calculation of loan amount
Of this, only 45% is released
Loan period : Max. 15 years
The loan will become due for recovery and
payable six months after the death of the last
surviving spouse
NA
No
Scale I & II : NIL; Scale III Rs.30lacs; Scale
IV rs.50 lacs ; AGM & DGM 100 lacl
obtain Life Certificate during November every
year as is done in the case of pensioners
The borrower will have the option for
foreclosure
Bank s have the option for forced closure
Lump sum payment is restricted only for
medical expenses.
Process.0.50% of the loan amt subject to a
maximum of Rs 10000/-.

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Comm. Cash Credit against Jewellery

Individuals who own jewels, engaged in


business activities like small
business/trade/professional and selfemployed etc.

To meet the business needs for running a


commercial activity against the prime
security of jewels.

Mini. Rs.50,000/- and maxi Rs. 10 lacs.

fully secured by pledge of gold jewellery


(prime security)

NIL
Similar to cash credit limits
NA
No
JM-2lacs, MM-II 3 lacs MM-III Rs.5 lacs,
SM-IV 10 lacs & AGM/DGM : Rs.10 lacs
Process. Charges Rs. 204/- per lac or
Part thereof with a max. of Rs.2040
For limits up to Rs.3 lakhs, net weight of
the jewels or Rs.3 lakhs whichever is
lower. For limits exceeding Rs. 3 lakhs,
20% of the projected turn over whichever
is lower

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304
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Name

IOB Surya (Scheme A) loan to staff

Liquirent

Target Group

Members must be confirmed service with net take home


pay not less than 40% of gross salary including proposed
instalment.

Owners who let out their properties to reputed companies / PSUs /


MNCs / Banks /Institutions / Commercial Organisations /
individuals / Landlords of our Bank premises / officers / executives
quarters

Purpose

To purchase off grid renewable solar energy equipments


in India as under:

Solar Cookers

Solar Heaters

Home/Indoor Lighting Systems

Advance against rent receivables

Quantum

85% on the project cost which includes cost of the


system, accessories, transportation & installation.
Min.: Rs.30,000 Max. Rs.10.00 lacs

Maxi.70% of rentals (net of service tax) for the unexpired lease period
less TDS @22.67% and rent advance taken if any OR discounted value
of @12.75% whichever is less subject to maxi.120 months rent including
renewal period

Rate of Interest

Base rate Plus 1.50%

BR+5.00%

Security

Hypothecation of Solar Energy Equipments (financed


by Bank).
Extension of mortgage of house property for which
the member has availed loan under SHL/subhagraha.
Lien on terminal benefits where the member has no
housing loan with us.
Instalments salary recovery

Margin

15% of the project cost

Repayment
Holiday period

Maximum up to 5 years subject to the total loan terms


does not go beyond his age of 65 years.
No holiday period

Priority status

Yes under others

Discretion

Only with RLCC

Remarks

Upto 2 lacs-Nil
> 2 lacs EM of the same property whose rent is charged to us or other
property valued 150% of loan amount. or Bank deposit,
NSC,KVP,IVP,LIC equal to loan amount or more

30%
Maxi.120 EMI
Nil
No
NON-CRE -For landlords/others-Scale I -5 lacs II-10 lacs-III-20 lacs,IV- 50
lacs, AGM Br-300 lacs/ DGM-600 lacsl

Loans under the scheme are to be availed at the salary


drawn branch.
No prior clearance from IR dept is required
No processing charge

(Only floating rate is applicable for all fresh advances under retail credit schemes w.e.f 01.07.2011)

Present Base rate of our Bank is 10.25% w.e.f 18.02.2013


Back to index

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Liquirent

Liquirent scheme was introduced during the year 2000 with a view to
provide loans against future rent receivables

Sanctioning of loan is based on current lease agreement.

The unexpired period of the current lease, as per the agreement, should not
be less than 36 months

It is to be noted that merely because the lease agreement provides for


extension of lease beyond the current lease period, the renewal period of the
lease should not be automatically taken in to account for arriving at the loan
amount. Branch/Regional Office should make an assessment of the
investment made by the lessee in the leased premises viz. Interior
Decoration, air-conditioning and electrical installations before sanctioning
and or sending the recommendation for such proposals

The quantum of loan will be arrived at after reducing the advance rent and
TDS if any.

The repayment period will be fixed corresponding to the number of months


rent (including the renewal period) taken in to account for arriving at the
loan amount, subject to a maximum of 120 months.

Calculation of loan amount


1. The rentals (net of service tax) for unexpired lease period up to a
maximum of 120 months rent.
2. Less: TDS @ 22.67% (Effective tax rate- on rentals net of deduction of
repairs etc
3. Less: Rental advance received as per agreement
4. Net rentals {1 minus (2+3)
5. Less: margin @30% on net rentals (4)
6. Maximum loan amount based on the discounted value of net rentals
(Rent after deduction of TDS) and un expired period of lease with
applicable rate of interest (12.75% fixed at present]
7. Loan amount: Minimum of amount under 5 or 6 (For fixed interest
option)
8. When Liquirent loans are sanctioned, as per the option of the borrower,
the sanctioning authorities should calculate the EMI, assuming the
interest rate as BPLR + 3%. (this interest rate is for arriving at the
eligible loan amount and fixing the EMI only and not for charging
the borrower)

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The loan is secured fully by tangible assets.

As per the revised guidelines of RBI on the classification of advances,


Liquirent Exposure has to be classified under Commercial Real Estate and
Non Commercial Real Estate depending upon the fulfillment of certain
conditions

In the case of advances under Liquirent Scheme, subject to fulfilment of the


following conditions, the exposures need not be classified under CRE.
The lease rental agreement between the lessor and lessee has a lock in
period, which is not shorter than the tenor of the loan.
Lease deed does not contain any clause, which allows a downward
revision in the rentals during the period.

Liquirent loan should be subject to execution of tripartite agreement


(between lessor, lessee and the bank and

There should not be any deviation in the norms for liquirent CRE exposure.

Advances under Liquirent Scheme should not be considered if the land lord
and the tenant are associates/subsidiaries/relatives.

srn/10.02.2013

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Easy Trade Finance


Target group:
Individuals/proprietary/partnership/ Private Limited Company
concerns engaged in Retail Trade.
1. Purpose: To meet the working capital needs and also term loan needs viz.
buying a shop, showcase, and equipment and in general for setting up/running
a shop or office or any other contingent requirements relating to the business of
retail trade.
2. Amount of loan: The minimum finance under the scheme will be Rs.100,000/-.
Maximum loan under working capital and term loans put together should not
exceed as given below:
Location
Metro branches
Urban branches
Semi-Urban branches
Rural Branches

Fund Based
Rs. 300 lakh
Rs. 300 lakh
Rs. 150 lakh
Rs. 30 lakh

Non Fund Based


Rs.150 lac
Rs.150 lac
Rs. 50 lac
Rs.10 lac

RLCC can sanction Fund based limit upto Rs 3.00 Crore& NFB 1.50 Cr under
the above scheme irrespective of the category of branches on merits of the
case.

3. Security

The advance should be fully secured by Immovable property and / or liquid


assets such as Life policies of LIC of India and Private insurance companies
approved by IRDA, NSC/IVP/KVP/Term Deposits etc.

Rural properties in general should not be accepted as Collateral security.

However, residential property in growing sub urban areas adjoining to Metro


and Urban centres, found to be rural but highly marketable can be taken up
with Central Office on a case to case basis

4. Margin on Security
a. Liquid securities
i. Life policies - 10% of Surrender value
ii. KVP

- 20% of the face value

iii. IVP

- 20% of the advance value

iv. Term deposit- 10% of advance value


b. For immovable property
Classification of centre
Metro and Urban centres
Semi-Urban centres
Rural centres

Margin in % terms
of Forced Sale Vale
of the properties
30
40
50

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5. Assessment of finance

a.

For TL 75% of invoice amount .

b.

For WC- 25% of turnover

a and b put together should not exceed the area specific limit subject to
Forced sale value of immovable property less margin and value less margin
in the case of liquid securities.
Other features/conditions:

If a client has more than one unit and he applies for the facility under this
scheme, the total liability need not be taken into account for determining
area specific limit provided different securities / properties are offered as
collateral for each unit.
6.

Advantages to customers:
Customers can avail finance for both working capital and term loan
requirement under one scheme.
Low interest rates
They are relieved of botheration of having to submit periodical stock
statement, financial statements and the insurance of stock is also not
insisted.
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srn/08.05.2013
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a. Eligibility criteria

DRI Scheme

a. The annual income ceiling for eligibility to borrow under DRI scheme is
Rs. 24000 per family in urban and semi-urban areas and Rs. 18000 in
rural areas.
b. He/she should not own any land or the size of the land holding should
not exceed 1 acre in the case of irrigated land and 2.5 acres in the case of
un-irrigated land.
c. Members of SC/STs are eligible for the loan irrespective of their land
holdings provided they satisfy the other criteria

The maximum loan amount per beneficiary under the scheme should not
exceed Rs. 15,000/- for working capital / term loan depending on the
nature and need of the activity and

The limit of the Housing Loan is Rs.20,000/-.

Back to index
srn/30.07.2012

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KISAN CREDIT CARD (KCC) SCHEME

The Kisan Credit Card has emerged as an innovative credit delivery


mechanism to meet the production credit requirements of the farmers in a
timely and hassle-free manner

The scheme is under implementation in the entire country by the vast


institutional credit framework involving Commercial Banks, RRBs and
Cooperatives

All KCCs are Smart Card cum Debit Cards.

The scheme is implemented in association with National Payment


Corporation of India Ltd

These cards should be enabled for use at ATMs, Point of Sale(PoS) Terminals
at
Merchant
Establishments
and Micro
ATMs
with
Business
Correspondents.

ATM enabled Rupay Kisan Card are issued to all the new KCC accounts

A. Objectives/Purpose

Kisan Credit Card Scheme aims at providing adequate and timely credit
support from the banking system under a single window to the farmers for
their cultivation& other needs as indicated below:
I.

Short Term credit limit portion


a. To meet the short term credit requirements for cultivation of crops
b. Post harvest expenses
c. Produce Marketing loan
d. Consumption requirements of farmer household
e. Working capital for maintenance of farm assets and activities allied to
agriculture like dairy animals, inland fishery etc.

II.

Long Term Credit limit portion


Investment credit requirement for agriculture and allied activities like
pump sets, sprayers, dairy animals etc.

B. Eligibility
a. All Farmers Individuals / Joint borrowers who are owner cultivators
b. Tenant Farmers, Oral Lessees & Share Croppers
c. SHGs or Joint Liability Groups of Farmers including tenant farmers, share
d. croppers etc

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C. Fixation of credit limit/Loan amount


Limits are fixed separately for Farmers Other than marginal farmers &
Marginal farmers and depends on crop pattern.
I.

Farmers other than Marginal farmers:


For farmers raising single crop in a year
a. The short term limit to be arrived for the first year:
Scale of finance for the crop (as decided by District Level Technical
Committee) x Extent of area cultivated + 10% of limit towards post-harvest
/ household / consumption requirements + 20% of limit towards repairs
and maintenance expenses of farm assets + crop insurance, PAIS & asset
insurance.
b. Limit for second & subsequent year :
First year limit for crop cultivation purpose arrived at as above plus 10% of
the limit towards cost escalation /increase in scale of finance for every
successive year ( 2nd , 3rd, 4th and 5th year) and estimated Term loan
component for the tenure of Kisan Credit Card, i.e., five years.
1) For farmers raising more than one crop

Short term credit: The limit is to be fixed as above depending upon the
crops cultivated as per proposed cropping pattern for the first year and
an additional 10% of the limit towards cost escalation / increase in scale
of finance for every successive year (2nd, 3rd, 4th and 5th year). It is
assumed that the farmer adopts the same cropping pattern for the
remaining four years also. In case the cropping pattern adopted by the
farmer is changed in the subsequent year, the limit may be reworked.

Term loans for investments towards land development, minor


irrigation, purchase of farm equipments and allied agricultural activities.
The banks may fix the quantum of credit for term and working capital
limit for agricultural and allied activities, etc., based on the unit cost of
the asset/s proposed to be acquired by the farmer, the allied activities
already being undertaken on the farm, the banks judgment on
repayment capacity vis-a-vis total loan burden devolving on the farmer,
including existing loan obligations

The long term loan limit is based on the proposed investments during
the five year period and the banks perception on the repaying capacity of
the farmer

D. Maximum Permissible Limit: The short term loan limit arrived for the 5th
year plus the estimated long term loan requirement will be the Maximum
Permissible Limit (MPL) and treated as the Kisan Credit Card Limit.
Fixation of Sub-limits for other than Marginal Farmers:

Short term loans and term loans are governed by different interest rates.
Besides, at present, short term crop loans are covered under Interest
Subvention Scheme/Prompt Repayment Incentive scheme. Further,

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repayment schedule and norms are different for short term and term loans.
Hence, in order to have operational and accounting convenience, the card
limit is to be bifurcated into separate sub limits for short term cash credit
limit cum savings account and term loans.

Drawing limit for short term cash credit should be fixed based on the
cropping pattern and the amounts for crop production, repairs and
maintenance of farm assets and consumption may be allowed to be drawn as
per the convenience of the farmer.

In case the revision of scale of finance for any year by the district level
committee exceeds the notional hike of 10% contemplated while fixing the
five year limit, a revised drawable limit may be fixed and the farmer be
advised about the same.

In case such revisions require the card limit itself to be enhanced (4th or
5th year), the same may be done and the farmer be so advised.

For term loans, installments may be allowed to be withdrawn based on the


nature of investment and repayment schedule drawn as per the economic
life of the proposed investments.

It is to be ensured that at any point of time the total liability should be


within the drawing limit of the concerned year.

Wherever the card limit/liability so arrived warrants additional security, the


branches may take suitable collateral as per our bank norms

II. For Marginal Farmers:


A flexible limit of Rs.10,000 to Rs.50,000 be provided (as Flexi KCC) based
on the land holding and crops grown including post harvest warehouse
storage related credit needs and other farm expenses, consumption needs,
etc., plus small term loan investments like purchase of farm equipments,
establishing mini dairy/backyard poultry as per assessment of Branch
Manager without relating it to the value of land.
The composite KCC limit is to be fixed for a period of 5 years on this basis.
Wherever higher limit is required due to change in cropping pattern and/or
scale of finance, the limit may be arrived at as explained for other farmers.
E. Disbursement
Short term credit

The short term component of the KCC limit is in the nature of revolving cash
credit facility. There should be no restriction in number of debits and
credits.

The drawing limit for the current season/year could be allowed to be drawn
using any of the following delivery channels.
a. Operations through branch
b. Operations using Cheque facility
c. Withdrawal through ATM / Debit cards

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d. Operations through Business Correspondents and ultra thin branches


e. Operation through PoS available in Sugar Mills/ Contract farming
companies,etc., especially for tie-up advances
b. Operations through PoS available with input dealers
c. Mobile based transfer transactions at agricultural input dealers and
mandies.
Long term credit
The long term loan for investment purposes may be drawn as per installment
fixed.
F. Validity / Renewal

The Kisan Credit Card should be valid for 5 years subject to an annual
review.

The review may result in continuation of the facility, enhancement of the


limit or cancellation of the limit / withdrawal of the facility, depending upon
increase in cropping area / pattern and performance of the borrower.

When the bank has granted extension and/or re-schedulement of the period
of repayment on account of natural calamities affecting the farmer, the
period for reckoning the status of operations as satisfactory or otherwise
would get extended together with the extended amount of limit.

When the proposed extension is beyond one crop season, the aggregate of
debits for which extension is granted is to be transferred to a separate term
loan account with stipulation for repayment in installments.

The scheme provides fixation of scale of finance for the first year and
subsequent increase for every successive year. Therefore documentation will
be done only for maximum limit so that there is no need for fresh
documentation during the validity of account.

Within the sanctioned limits the withdrawal limit may be fixed each year as
per the scale of finance. The maximum limit can be upscaled on the basis of
approximate future need but not above 125% of the present need.

The DPN and related documents should be taken for such higher amount
but actual disbursement will be as per current need

Rate of Interest (ROI):


ROI will be linked to Base Rate
However, if Government supported interest subvention is provided for
any component of the limit, the rate of interest may be fixed accordingly.

G. Repayment Period:

The repayment period may be fixed by banks as per the anticipated


harvesting and marketing period for the crops for which a loan has been
granted.

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The term loan component will be normally repayable within a period of 5


years depending on the type of activity / investment as per the existing
guidelines applicable for investment credit.

H. Margin:
For crop loans, no separate margin need be insisted as the Margin is in-built
while fixing the Scales of Finance. For term loan component, our existing
margin norms will be followed.
I. Security:
Security will be applicable as under:

Hypothecation of crops up to card limit of Rs. 1.00 lakh as per the extant
RBI guidelines.

With tie-up for recovery: Branches may consider sanctioning loans on


hypothecation of crops upto card limit of Rs.3.00 lakh without insisting on
collateral security for the Sugar mill tie up loans.

Collateral security may be obtained for loan limits above Rs.1.00 lakh in
case of non tie-up and above Rs.3.00 lakh in case of Sugar mill tie-up
advances.

In States where branches have the facility of on-line creation of charge on


the land records, the same shall be ensured.

J. Other features:

Interest Subvention/Incentive for prompt repayment as advised by


Government of India and / or State Governments. Branches will make the
farmers aware of this facility.

Crop insurance is mandatory.

The KCC holder should have the option to take benefit of Assets Insurance,
Personal Accident Insurance Scheme (PAIS), and Health Insurance (wherever
product is available and have premium paid through his KCC account).
Necessary premium will have to be paid on the basis of agreed ratio between
bank and farmer to the insurance companies from KCC accounts.

One time documentation at the time of first availment and thereafter simple
declaration (about crops raised / proposed) by farmer from the second year
onwards.
No Processing fee should be charged up to a card limit of Rs.3.00 lakh.

Farmers to be provided with KCC Short Term sub-limit cum SB account so


as to allow credit balance in KCC-cum-SB accounts to fetch interest at
savings bank rate.

The extant prudential norms for income recognition, asset classification and
provisioning will continue to apply for loans granted under revised KCC
Scheme.

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Personal Accident Insurance Scheme (Pais) For Kcc Holders

MOU with M/s Universal Sompo General Insurance Company Limited


(USGIC Co.Ltd) for a Master Policy to cover all KCC holders under Personal
Accident Insurance Scheme (PAIS). The Master policy is valid up to
31.07.2015

The premium payable for a one-year policy is Rs. 12/-.

The premium burden will be shared between the KCC issuing branch and
the KCC holder in the ratio of 2:1.

This scheme will cover all the KCC holders against death due to accident or
permanent disability from accidents caused by external, violent and visible
means and occurring within the geographical jurisdiction of India.

This policy will cover the KCC holders up to the age of 70 years

Risk coverage:
a.
b.
c.
d.

Death due to accident (within 12 months of accident)


caused by outward violent and visible means
Permanent total disability
Loss of two limbs or two eyes or one limb and one eye
Loss of one limb or one eye

Rs.50000
Rs.50000
Rs.50000
Rs.25000

Saral Suraksha Bima


M/S. Universal Sompo General Insurance Company Limited has launched a
Micro Insurance Policy titled Saral Suraksha Bima. Our bank market this
product among the Kisan Credit Card borrowers of our Bank.
*********************
srn/10.03.2013
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Agriculture/Non-Agri - Different Credit Schemes


Name

IOB ROSHINI

Target
Group

Women-18-55 yrs from rural households from


well functioning SHGs, NGOs,SF/MF/Share
croppers and landless laborers/SC/ST

Purpose

To pay deposit for LPG connection and


purchase of gas stove with accessories.

Quantum

Rate of
Interest

Security
Margin
Repaymen
t
Holiday
period
Priority
status
Discretion
Remarks

BHOOMI SHAKTI
Women Farmers, comprising of the
following: (a) Women having farm
land in their own names (b) tenant
farmers, if the tenant is a woman
for all activities under Agriculture

Not fixed

Maxi. Rs.5000/-

Base rate + 1.25 %


Hypothecation of assets purchased out of
loan
Nil
Maxi 60 EMI

4% if granted under DRI


All other cases
0.5% less than applicable rate for limits up
to Rs.50, 000
0.25% less than applicable rate for limits
above Rs.50, 000
As applicable to general agri advances
As applicable to general agri advances
As applicable to general agri advances
As applicable to general agri advances

Nil

AGRI-CLINIC
Agricultural graduates/graduates in
subjects related to agriculture like
horticulture, animal husbandry, fisheries
,dairy, veterinary, poultry, pisciculture
and other allied activities
To provide gainful employment to agrl.
graduates to set up Agri-clinics, AgriBusiness centres for input supply and
services to needy farmers.
Maxi. Project cost Rs.10 lacs for
individuals and Rs. 50 lacs for Group of 5
entrepreneurs.
Cash credit
Term loan
<=5yrs
5yrs<
Upto Rs.5 lac BR + 1.75% +1.25%
+1.50%
5lac25lacs
BR + 3.25% +2.25%
+2.50%
25lac-100lacs
BR+3.25%
+2.75% +3.00%
Rs.100 <
RAM rating +3.25% +3.50%
Upto Rs.5 lacs-Nil
> 5 lacs- Collateral/guarantee
Upto Rs. 5 lacs Nil > 5 lacs 15-25%
5-10 years depending upon the activity
Nil

Branch Manager

Yes
Direct Agri advances
Per Borrower limit or maximum specified
in the scheme whichever is lower

Yes - upto Rs.25000/- Indirect


Agricultural Advances
Per Borrower limit or maximum specified
in the scheme whichever is lower

Letter to be sent to LPG dealer with a copy


to Regional Office of the Oil Company no
transfer without our NOC

Processing Charges, Upfront Fee and


Mortgage Charges are waived for all
loans granted under this Scheme

GL-CODE 4156 to be introduced. proper


assessment of cash flow while fixing the
limit to avoid problems in recovery later

Yes Non Agri

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Target
Group

Purpose

Quantum

Rate of
Interest

Security

Margin
Repayment
Holiday
period
Priority
status
Discretion

Remarks

IOB - URBAN HORTICULTURE YOJANA


Salaried persons, professionals and business men, having
steady income & institutions, retd IOBians drawing
pension from us - possess independent house having at
least 500 s.ft of open space for gardening
For raising kitchen-garden, flower garden small orchards
or roof gardens in open space inside the compound and
on the terrace

For individuals : Min. Rs.33,000 and max.Rs.2.50 lakh &


For institutions max.Rs.25 lac

Loan upto Rs.5 lacs : BR + 1.25%


Loan above Rs. 5 lacs
: BR + 2.25%

No holiday period
Priority sector

IOB- GREEN CREDIT Yojana


Any farmer owning cultivable land in his own
name will be eligible for the facility.

Purchase of two-wheelers, three-wheelers and


four wheelers to be used for agricultural
purpose only (ie. going to field, carrying
material needed for farming, movement for
sale of produce etc.).

to meet both short term and long term credit


needs of the farming community. (including
purchase of jeeps/trucks/tractors and for
construction of farm houses)

Rs.5,00,000/- or 85% of the cost


whichever is less

Hypothecation of crop &


and hypothecation of vehicle

Loan amount will be 50% of the value of


farm-land mortgaged to the Bank subject to a
minimum of Rs.1 lac and maximum of
Rs.25.00 lacs. This facility is treated as an
Agricultural Term Loan.
Loan amt. upto Rs.5 lac
> 5 lac
Repay per. Up to 5 yrs
: BR+1.25%
+2.25%
Above 5 yrs
: BR+1.50%
+2.50%

1.
2.

Mortgage of agricultural land having value


of at least twice the loan amount.
2.
Hypothecation of crop and
hypothecation of any asset created out of
loan amount

No margin is required for loans up to


Rs.1,00,000/- & 15% for others
Maximum 10 years in monthly, half yearly
or annual instalments; depending on crop
harvest time.

50% of the value of farm land subject to other


conditions
Seven years in monthly, half yearly or annual
installments depending upon the cropping
pattern

Repayment coincides with harvest

Repayment coincides with the harvest

Priority sector

Per Borrower limit or maximum specified in the scheme


whichever is lower

GL code -4114 -23

IOB AGRI-TRANSPORT YOJANA


The farmer owning economically viable land
holding or carrying out any other agricultural
or allied activities

Repay period. Up to 5 yrs : BR + 1.25%


Above yrs : BR + 1.50%

Up to 1 lakh no collateral security.


For Employees: Undertaking letter from employer or
routing of salary through the branch backed by standing
instructions
For Other Individuals: Third party guarantee of an
individual with worth not less than that of the borrower.
For Institutions: Collateral Security of at least 50 % of
loan
amount
plus
personal
guarantee
of
partners/trustees/ promoters. Prime Security in each
case will be hypothecation of produce.

No margin up to 1 lakh

Loan above 1 lakh 15%


12 to 24 EMIs for individuals
12 to 36 instalments for institutions

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Per Borrower limit or maximum specified in


the scheme whichever is lower

GL code -4114 -21

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Priority
Per Borrower limit or maximum specified in
the scheme whichever is lower
Mortgage of small patches of scattered land
should not be allowed
GL code 4114-22

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Name

Target Group

Purpose

Quantum

Rate of
Interest

Security

Margin
Repayment
Holiday
period

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BHUMILAKSHMI
Small and marginal farmers/Share croppers /
Tenant farmers/ Total land owned by the
borrowers including the land to be
purchased under the scheme should not be
more than 5 acres of un irrigated land or
2.50 acres irrigated land
to provide land to the Small and Marginal
Farmers / Share croppers / Tenant farmers to
possess and cultivate land.

To enable the distressed urban poor to


prepay their debt to non-Institutional lender
and to bring them into formal financial system

Maximum Rs.10 lacs

Rs.5000/- in Municipal areas/Rs.10,000/- in


corporation areas

Up to Rs. 500000/- : B R + 1.50% Over Rs.


500000/- : B R + 2.50%

BR + 1.25%

The land purchased out of the bank finance


and mortgaged in favour of the bank will
form the security for the loan from borrowers.
Branches may temporarily take separate
collateral security if mortgage of the
purchased land in favour of the Bank is
delayed
Up to loan amount of Rs.1 Lac : - NIL
Loan amount exceeding Rs.1 Lac : minimum 10%
Loan may be repaid within 12 years in half
yearly / yearly instalments including
moratorium period
maximum moratorium period of 24 months.

SCHEME FOR DISTRESSED URBAN POOR


BPL, Resident of urban area for atleast 3
years, member of well functioning SHG
financed by us already for productive
purpose. or JLG

JOINT LIABILITY GROUPS OF TENANT FARMERS


Informal Group of 4 to 10 (Max of 20) tenant &
Small farmers cultivating land but not possessing
proper titles to the lands, SF/MF/Share croppers
and landless laborers/SC/ST. All are of similar
economic status engaged in agricultural activity
for min period of 1 year
Model A Financing Individuals in the group
Model B Financing the Group for requirement of
all the members. Loans may be CC, Short term or
Term loans depending on the purpose.
Flexible Credit Product for requirements of crop
production, consumption, marketing and other
productive purposes. Maximum of Rs. 50,000/per member under both Models A & B.
Short term loan : BR+0.75 % (incl. int. subvention)
Cash credit
: BR+1.75%
Term loan
: BR+1.25%

Group guarantee of SHG/JLG members

Hypothecation of assets purchased out of loan

Nil

Nil

60 EMI

Maxi 60 EMI

Nil

Nil

Priority status

Yes : Direct Agriculture

Yes

Discretion

Per Borrower limit or maximum specified


in the scheme whichever is lower

As applicable to Priority sector advancessmall loans

Remarks

SHG with satisfactory record and who fits


into norms of the schemes may be
encouraged to avail the loans for purchase
of land so as to enable them to diversify their
activities and to build
up community assets.

Payment directly to Non-Institutional lender


by way of pay order after getting due
authorisation
from
the
borrower

identification by Branch Manager with SHG/


Women Development Corporation

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Yes to be covered under Direct Agricultural


Advances
As Applicable to Agricultural Loans to individuals
for different purposes.
JLG members may open no-frills a/c and save
but not compulsory. Insurance under PAIS & NAIS
to be considered.

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Name

IOB Surya (Scheme A)

Target Group

All Individuals satisfying 50% take home pay


norms

Purpose

Quantum

Institutions like Educational Institutions,


Hospitals, Hotels/Restaurants, etc subject to
norms.
To purchase off grid renewable solar energy
equipments in India as under:

Solar Cookers

Solar Heaters

Home/Indoor Lighting Systems


80% on the project cost which includes cost of
the system, accessories, transportation &
installation.
Min. 1 lakh
Max. : Rs.10.00 lakhs

Base rate Plus 1.50%

Base rate Plus 2.25%

Security

IOB Surya (Scheme B)

To purchase off grid renewable solar energy


equipments in India as under:

Solar Cookers

Solar Heaters

Home/Indoor Lighting Systems


85% on the project cost which includes cost of
the system, accessories, transportation &
installation.
Min. : Rs.30,000 Max. Rs.10.00 lacs

Rate of
Interest

319
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For Loan up to Rs 1 lac, Hypothecation of


Solar Energy Equipments (financed by Bank)
along with third Party Guarantee to be
insisted.
For Loan above Rs 1 Lac, 100% Collateral
security to be obtained in any form as under.

Mortgage of land /House/flat.

Security in the form of LIC policy/


NSC/ Term Deposits, etc.

For Loan up to Rs 1 lac, Hypothecation of


Solar Energy Equipments (financed by Bank)
along with third Party Guarantee to be
insisted.
For Loan above Rs 1 Lac, 100% Collateral
security to be obtained in any form as under.

Mortgage of land /House/flat.

Security in the form of LIC policy/ NSC/


Term Deposits, etc.

Iob-Kisan Tatkal Scheme


a. Either individual or groups (not exceeding 4
farmers)
b. Only existing KCC holders are eligible
c. Sound track record of atleast 2 yrs is a pre
requisite
Single transaction Term Loan in addition to
KCC limit.
Providing instant credit to existing KCC holders
for meeting emergency requirement for
agricultural purposes
Minimum : Rs.1000Maximum : 50% of KCC limit or 25% of Annual
Income or Rs.50000/- whichever is less
Base Rate plus 0.75% (presently 11.25%) as
applicable for KCC (without interest subvention)

Existing security(ies) obtained for KCC should


continue.
No additional securities need be obtained even
when the combined exposure (KCC plus
proposed Kisan Tatkal Scheme) exceeds Rs. 1
lakh

Margin

15% of the project cost

20% of the project cost

Repayment

Maximum up to 5 years

Maximum up to 5 years

No holiday period

No holiday period

..

Yes under others

No Non Agri

Yes. Direct Agriculture

JM- 1.50 lacs; MM II- 3.00 lacs; MM III- 5.00


lacs; SM-IV & above 8.00 lacs; RLCC 10 lacs

Wherever Subsidy is available- credit the


same to the respective loan account of the
borrower.

An Undertaking letter from the borrower


must be obtained for the same.

Interest concession of 0.50% to our Housing


Loan borrowers whose accounts are regular
and prompt.

JM- 1.50 lacs; MM II- 3.00 lacs; MM III- 5.00 lacs;


SM-IV & above 8.00 lacs; RLCC 10 lacs

As applicable for KCC.

Holiday
period
Priority
status
Discretion

Remarks

Wherever Subsidy is available- credit the


same to the respective loan account of the
borrower.
An Undertaking letter from the borrower must
be obtained for the same.
Processing charge : as fund based loans
Ref: ADV/ 253 /2012-2013 dt : 15.10.2012

The Present Base rate of our Bank is 10.25% w.e.f 18.02.2013 Interest rates are subject to change in Base Rate

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Within 3 yr in half yearly/annual instalments.


The Kisan Tatkal loan is to be cleared in full
while enhancing KCC limit subsequently.

Processing and other charges : Upto `.25000 :


Nil: Above `.25000/- upto `. 50000/- : Rs. 56/Application: :Agri 1, Agri 15 and Agri 2 to Agri
12 depending upon the purpose.

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Take over of advances - Guidelines

Whenever Bank takes over borrowal accounts from other Banks / Financial
Institutions / Agencies / NBFCs and the following guidelines will be adhered to:
1.

Only borrowal accounts which are standard and performing for the past one
year will be taken over.

2.

No borrowal accounts should be taken over from any Bank where any of our
ED or CMD have worked earlier.

3.

Take over accounts falling under the purview of CRISIL RAM rating should
have a minimum rating equivalent to IOB 5.

4.

A certified copy of the statement of accounts duly signed by the officials of


the erstwhile Bank should be taken without relying on the mere photocopies
of the statement of the account produced by the applicant.

5.

Such statement of accounts, at least for the last 6 months, should be


studied and commented upon in the appraisal note.

6.

Account should have recorded cash generation / profit for the


preceding 2 years out of 3 years unless the account is not in operation for
three years and business conditions should indicate improvement in
profitability

7.

The project should not be in the implementation phase at the time of take
over of the loan.

8.

Treatment as takeover

If the borrowal account with the existing bankers is liquidated out of


advances extended by us, it is to be treated as takeover.

All other cases are not treated as takeover.

In the case of working capital finance through consortium or multiple


Banking, increasing our share as well as taking over of the share of other
Bank or induction of our bank by taking over of the share of other bank
shall not be reckoned as take over of the advances from other Banks.

Before taking over, credit report from transferor bank should be obtained.
No waiver.

Branches do not have delegated authority to finance additional facilities.

While take over accounts, the remaining repayment period shall not be
extended, No waiver shall be permitted at any level for this.

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321
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9.

Rating
i.

ii.

Internal Rating:
Accounts shall be with the rating equivalent IOB 1 to IOB 5.
External Rating:
Wherever external rating is available, the rating shall be not less than
investment grade (BBB and above).

10. In the case of taken-over accounts where sanctioning authorities have


already considered concession in pricing /charges etc at the time of take
over, generally no further concession can be considered till completion of one
year from the date of sanction. However, the next immediate higher
authority can consider any further concession including interest / charges
on case-to-case basis and on merits
11. The takeover norms are applicable for takeover of accounts from Banks,
Financial Institutions / Agencies and NBFCs.
*************
srn/12.05.2013
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Granting of excess & adhoc


A. General

Normally Excess should not be granted during first 3 months from the date
of sanction.

Any excess given has to be reported by branches to the next layer of


authority.

Excess or adhoc can be allowed only in rated accounts equivalent to IOB-1to


IOB-4 and SME 1 to SME 3.

Limits should be in force either renewed or reviewed. No excess /adhoc can


be allowed in lapsed sanctions /short reviewed accounts.

B. Discretionary Powers for Branch Managers (Including DGM


branches) FOR CASH CREDIT ACCOUNT including MCC account)

headed

Excess can be allowed for 10 times subject to the total period of excess not
exceeding 50 days per year and subject to each excess not exceeding a
maximum period of 5 days

10% of the limit (i.e. the specific facility) sanctioned to a borrower by any
layer of authority or 10% of the discretionary powers of the Branch Head
under per borrower limit whichever is lower subject to availability of
adequate drawing power (DP).

Where adequate DP is not available, but the outstanding is within the


sanctioned limit, in deserving cases, Branch Managers can grant 5% of the
limit (i.e the specific facility) sanctioned to a borrower by any layer of
authority or 5% of the discretionary powers of the Branch Head under per
borrower limit whichever is lower subject to the outstanding not exceeding
the sanctioned limit and subject to reporting to the appropriate authorities
as per existing guidelines.

Excess allowed against uncleared effects will not be treated as excess.

However, if the uncleared cheque is returned and results in excess such


excess should be treated as excess and the account should not be allowed to
remain in excess for more than 5 days. This excess will be taken into
account for calculation of total period of 50 days that can be allowed for an
account per year.

Forced excess, ie due to LG/LCs invoked or devolved and monthly interest


charged to the cash credit account will not be construed as excess if it is
regularized within 15 days.

If the above forced excess is not regularized within 15 days, such excess will
be treated as excess and the number of days the excess remained in the
account will be taken into account for calculation of aggregate period of 50
days that can be allowed per year for that account.

With regard to excess drawals in working capital limits other than cash
credit account, the excess allowed on any one occasion should be adjusted
within a maximum period of 30 days (as against 5 days allowed for CC

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account) and the maximum number of days for which excess can be allowed
in a year will be 50 as applicable to cash credit accounts.

Regional Heads and above can allow excess for a maximum period of 30
days (as against 5 days for Branch Heads). However, the total no. of days
permissible for allowing excess to a borrower in a financial year should not
exceed 90 days, including the 50 days permitted for Branch Heads. These
guidelines are applicable for Cash Credit as well as other than Cash Credit
accounts

Regional Heads and above are empowered to allow excess irrespective of the
ratings of the borrowal accounts as also for unrated accounts, on merits of
the case within the delegated powers vested with them for granting excess

C. Excess beyond the delegated powers of Branch Head / Regional Head:

Whenever excess is to be granted by the branch managers beyond their


powers (to grant excess), it should be ensured that prior permission of
Regional Head is obtained (if RM is on leave, permission may be given by the
person officiating / holding additional charge).

Likewise Regional Heads should obtain prior permission of General


Manager heading Large Corporate, Mid Corporate and MSME as the case
may be, if Regional Heads permit excess beyond their powers to grant excess
in borrowal accounts.

D. Reporting

Any excess given under the Branch Managers delegated powers has to be
reported to the Regional Office in CAF-1 statement on a monthly basis.

Excess allowed by branch Manager, beyond his discretionary powers, with


prior approval of Regional Manager, but within the powers of Regional Head
should be reported on the SAME day to Regional Head in CAF-XS format for
confirmation

Excess allowed by Regional Head, beyond his discretionary powers, with


prior approval of C.O. Executives, but within the powers of C.O. Executives
should be reported in the CAF-XS format by Branches to R.O. on the SAME
day. Regional Office, in turn, should submit the same to Central Office with
their comments and recommendations immediately on receipt of excess
report from Branch.

Similar type of reporting system on a monthly basis to the next layer of


authority may be followed at Central office in respect of excess allowed by
CO Executives within their delegated powers. i.e. GMs to ED and CMD as
the case may be.

Branch Managers/Regional Managers and other connected officials will be


made accountable for not reporting the excess/late reporting beyond the
stipulated period and such excess will be treated as unauthorized, if the
same is not confirmed by the approving authorities.

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E. Disposal of Excess Report:

All excess drawings allowed are to be confirmed or otherwise disposed of by


the appropriate/competent layer of authority.

The decision on the excess report (i.e. to ratify or reject such excess) should
be taken by the appropriate authority within 15 days of the receipt of
the report.

In case queries / clarifications are necessary before taking a decision, the


authorised official may allow another 15 days for taking a final view in this
regard.

In any event, it should be ensured that a decision either way is taken within
a period of one month of receipt of the original report. Otherwise, the
transaction in question shall be deemed to have been ratified by the
appropriate authority.

F. Unauthorised excess:

Excess drawals duly reported and confirmed are not to be treated as


unauthorised excess.

If the sanctioning / confirming authority views the excess drawal as not


justifiable and declines the same, such excess drawal is to be treated as
unauthorised excess.

G. Monitoring of unauthorized excess:

In case such excess drawings are declined by R.O. / C.O., efforts should be
taken by Branch/R.O./C.O., to ensure that the account is regularized
immediately.

In such cases a weekly report should be submitted (until regularization) to


the next higher authority advising the steps taken and progress in
regularizing the account.

H. Adhoc limits (for working capital) :

25% of the limit (i.e specific facility) sanctioned to a borrower by any layer of
authority or 25% of the discretionary powers of the Branch Head under per
borrower limit whichever is less.

Adhoc limits can be granted only 2 times in a year for an account, subject
to each adhoc not exceeding 90 days on any one occasion.

Excess and adhoc cannot be granted simultaneously in the same facility.

Adhoc can be granted subject to acceptance in writing by the borrower that


the outstanding under adhoc facility will be reduced gradually atleast 15
days prior to the due date so that the adhoc will get adjusted fully on the
due date.

Documentation / extension of mortgage will be compulsory for adhoc limits.


However, extension of mortgage need not be made if adhoc limits are

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granted for bills purchasing / discounting limits which are of self liquidating
nature.

The adhoc limits granted should be reported to authorities who have


sanctioned the regular limits

RLCCs and above are empowered to sanction adhoc limits irrespective of the
internal ratings of the borrowal accounts as also for unrated accounts, on
merits of the case, within the delegated powers vested with them for adhoc
limits.

Extension of adhoc facility can be permitted by RLCC (GM) / HLCC (GM) for
the adhoc facilities sanctioned upto their level for 30 days.

In these cases, further extension by another 60 days can be permitted


by HLCC (ED).

Extension upto 90 days can be permitted by HLCC (ED) for the adhoc
facilities sanctioned upto and including the level of HLCC (ED); CAC can
permit extension of adhoc facility sanctioned by CAC/ MCB.

In the case of restructured accounts which are Standard & performing


(restructured by higher authorities), Branch Managers can exercise the
powers to grant adhoc limits only after 6 months from the date of
restructure, on merits. This restriction to sanction of adhoc limit is not
applicable to the authority who has restructured the limits.

srn/18.05.2013

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JOINT RESPONSIBILITY FOR LOANS AND ADVANCES

It is primarily the responsibility of the Branch Managers to ensure the safety


of all the advances of their branches.

Appraisal of proposals
First Line Manager of the branch, Second Line Manager in charge of
advances and the officer who had prepared the proposal will be jointly
responsible for the appraisal content of the proposal.
All parties including the guarantors to a borrowal account should be
subjected to KYC procedure and due diligence. Failure to do so, will
attract joint responsibility of First Line Manager, Second Line Manager in
charge of Advances Department and the officer who had prepared the
proposal.
All the business proposals shall be prepared by an officer attached to
advances department and signed by him along with the Second Line
Manager in charge of advances department and the First Line Manager.
In a branch where no separate advances officer is functioning and the
portfolio is looked after by the Second Line Manager , that fact should be
recorded in the proposal itself.
For this purpose the First Line Manager should clearly mention in the
periodical office order, the portfolios of each Supervisory Staff in the
branch and get their acknowledgement thereon.
The office order book should be in the custody of the First Line Manager
of the branch. Failure to do so will attract sole responsibility of the
Branch Manager.
For AGM/DGM headed branches, the proposals beyond the discretionary
powers of Scale IV officer are to be routed through approval grid.

Compliance with
Endorsement

the

Terms

and

Conditions

of

the

Sanction

The certificate of compliance with the Terms and Conditions should be


submitted by the branch within 30 days from date of sanction for all
advances sanctioned by Regional Office / Central Office to Credit
Department at Regional Office keeping a copy for branch records along
with the documents.
For branch sanctioned facilities, the certificate of compliance will be kept
with the loan documents for verification by the inspectors.
In case, on receipt of the sanction endorsement from RO/ CO, the branch
feels that certain conditions could not be fulfilled, branch should take up
with Regional Office for amending / waiver of such conditions, giving
proper reasons and supported by documents to that effect.

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Pending a decision on such representation, the loan / facility should not


be released.
Conditions if any, given in the pre-release clearance / observations by the
next level of sanctioning authority should be addressed to as though
forming part of the sanction.
No advance / loan can be released by the branch (other than branch
discretion) without the submission of the certificate of compliance to
Regional Office.
The certificate of compliance with the Terms and conditions shall be
signed by the First Line Manager of the branch, Second Line Manager in
charge of advances department and the officer who has prepared the
proposal / the officer who is disbursing the facilities. The certificate
should be without any qualifying clauses.
In case any deficiency is noted at a future date in complying with the
Terms and conditions, all the three officials noted above shall be jointly
responsible.

Documentation
No loans or advances shall be released without obtaining proper
documents, complete in all respects.
The Second Line Manager of the branch in charge of the advances
department should give a certificate to the Branch Manager before
disbursement of loans/ advances that all the relevant documents for
releasing the facility have been obtained, duly filled in and completed and
signed by the Executants in the capacity intended.
This certificate should be obtained by First Line Branch Manager in
respect of each loan/ advances from the Second Line Manager of the
branch in charge of the advances department or in his absence from the
advances department officer who is authorised to release the facility.
If the branch is manned by only one Manager, the Manager should
himself send the certificate to Credit Department, Regional office keeping
the copy with the documents.
First Line Branch Manager should not disburse the loan /credit facility
without obtaining this certificate.
If such a certificate is not submitted by the Second Line Manager and the
First Line Manager authorises release of loan/ facility, then the First Line
Manager will be solely responsible for deficiencies in documentation.
In case of any non co-operation by the Second Line Manager or the
advances department officer as the case may be, the First Line Manager
should file a report with Regional Office that because of non co-operation

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by the Second Line Manager / Advances Department Officer in obtaining


this certificate, he had authorised the release of the loan / credit facility.

A copy of such reporting should be held with the documents and be


made available to visiting officials from Regional Office / Inspectors.

If such a report had been filed, then the Second Line Manager will also be
jointly responsible for deficiency in documentation.

Reporting
Documentation Execution Register with perforated sheet should be
maintained by branch as per instructions in force. The perforated sheet
should be sent along with the appraisal note, sanction endorsement to
Credit Monitoring Department, Regional office along with CAF1 control
return.
Failure to do so, will attract joint responsibility of the First Line Manager,
Second Line Manager in charge of Advances Department and the officer
who had prepared the proposal / officer who had disbursed the loan /
facility.

Vetting of documents
For limits over Rs.1 Crore and upto Rs.10 Crores the documents have
to be vetted by Lawyers in Banks approved panel and certified by Second
line officers at branches before release of limits. A certificate to this effect
should be kept with the documents.
For limits above Rs.10 Crores and upto Rs.50 Crores the documents have
to be vetted by Lawyers in Banks approved panel and certified by Second
line officers at Branches. The certificate regarding vetting has to be sent
to Regional Office, based on which Regional Office will permit release of
limits. Only on receipt of confirmation from Regional Office the limits can
be released.
For limits above Rs.50 Crore, the documents have to be vetted by
Lawyers in Banks approved panel and certified by Second line officers of
the branch and the same is to be sent to concerned Credit Departments
at Central Office who will permit release of the limits. Only on receipt of
such confirmation from Central Office the limits can be released.

In case any branch releases the limit without vetting of documents as


above, the First Line Manager of the Branch, the Second Line Manager
in-charge of advances department and the Officer who had released the
limits will be jointly held responsible in case of any deficiency in
documentation.
Disbursement of loans
Disbursal of the loan proceeds should always be in favour of the supplier
with authority so obtained from the borrower, unless specifically
authorised in the sanction.

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In case any advance is remitted by the borrower to the supplier, suitable


evidence should be verified and branch should be satisfied about such
remittance. In case of Cash Credit accounts and Packing Credit Loans
also, the end use verification should be done to ensure that payments
have been made to the suppliers only.
All loan vouchers should be countersigned by the First Line Branch
Manager and the Second Line Manager in charge of advances department
along with the officer releasing the loan.
Any withdrawals of more than Rs.5 lakhs from Cash Credit accounts or
Current Accounts where Packing Credit loan proceeds are credited (if
specifically permitted) should be countersigned by the First Line Manager
of the branch and the Second Line Manager in charge of the advances
dept along with the cash credit / current account department officer
ensuring that such withdrawals are made only for creation of working
capital assets as envisaged in the business proposal.
Subsequently if it is found that no assets had been created or funds had
been diverted for purposes other than the purpose for which the loan /
facility had been sanctioned, the First Line Manager, the Second Line
Manager in charge of advances department and the officer who had
permitted such withdrawals will be held jointly responsible.
In case any non co-operation is experienced by the First Line Manager
from the Second Line Manager or officers in charge of the departments on
the verification of end use of funds , the First Line Manager should report
such issues to Regional Office and make available a copy of such
reporting to visiting officials / inspectors. In such a case, all the three
officials as mentioned above would be held jointly responsible.
In case such a reporting is not done by the First Line Manager, he would
be solely responsible for end use verification.

Inspection of security assets


The inspection of the property should be jointly carried out by the Branch
Manager and Second Line Manager in charge of advances department or
the officer who had made the proposal.
The Pre-inspection report and F 337 should be signed by the Branch
Manager and the official who had accompanied the Branch Manager.
In case of any lacunae in the property taken as security, both of them
would be jointly held responsible.

Monitoring of Accounts
Monitoring should be done through verification of debits made in the
account, periodical inspection of stocks as per laid down procedure,
perusing the periodical stock statements, continuous surveillance
statements, prompt renewal of the account, adequate and live insurance
policies, Registration of charge with the Registrar of Companies,

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adherence to the terms and conditions given in the sanction


endorsement, periodical review of the account for the changing market
conditions etc.
At a future date if any deficiency is noted in the monitoring of the
account, the First Line Manager, the Second Line Manager in charge of
advances department and the officer who is assigned to handle this
particular account will be held jointly responsible.
For any indiscriminate or unauthorized excesses and delayed submission
of excess reports, the First Line Manager, The Second Line Manager in
charge of advances department and the officer who is assigned to handle
the particular account(s) will be held jointly responsible.

Single man branches


In the case of single man branches, Branch Manager will be solely
responsible in the operational areas detailed as above.
************

srn/04.04.2013

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Loan Review Mechanism

1. In tune with the Guidance Notes on Risk Management issued to all


commercial banks by Reserve Bank of India, Our Bank introduced;

Loan Review Mechanism, an off-site Audit process, and

Credit Audit, an on-site Audit process

2. The purpose of Loan Review Mechanism is to review the status of compliance


of terms and conditions of sanction and post sanction process.
3. Coverage of borrowal accounts under Loan Review Mechanism:

All borrowal accounts with FUND-BASED CREDIT LIMIT of Rs. One


Crore and above sanctioned or renewed.

4. The following types of advances are exempted from purview of Loan Review
Mechanism:
a.

Advances against Banks own Term Deposits or Government Securities.

b.

Advances against liquid securities.

c.

Accounts sanctioned within the discretionary powers of overseas


branches

d.

Standalone term loans where simple review has been done and where
outstanding has been allowed to run off

Branches shall submit LRM-1 form only to the respective Regional Office

LRM-1 should reach Regional Office within 90 days from the date of sanction
or renewal.

Accounts with exposure of Rs 1 crore and above but below Rs 20 crore


sanctioned by branches/Regional Offices are reviewed by Loan Review
Committees at respective Inspectorates.

All accounts with exposure of Rs 1 crore and above sanctioned by Central


Office and all accounts with exposure of Rs 20 crore and above sanctioned
by Regional Offices are reviewed by Loan Review Committee at Central
Office.

LRM-1 need NOT be submitted in the case of Short-Reviews and sanction of


Adhoc Limits for short periods upto 6 months.
*********

srn/15.05.2013

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Restructuring of advances
General Guidelines & Instructions of RBI

Restructuring
would
normally
involve
modification
of
terms
of
advances/securities, which would generally include, among others, alteration of
repayment period/repayable amount/amount of instalments/rate of interest
etc.

Those accounts classified under Standard, Sub-standard and Doubtful


categories can also be restructured.

Bank cannot reschedule/restructure/renegotiate


retrospective effect.

Customer should agree for the changes/alterations in the terms and conditions
on restructuring

The borrower account should be financially viable.

The customer indulging in frauds and malfeasance are not eligible.

Amounts may be fully-secured / partly-secured / unsecured. For restructuring


purpose State /Central Government guarantees and Bank guarantees will be
treated as tangible security.

Upon restructuring, diminution in fair value of the advance due to change in


the terms of original agreement, such as interest, repayment period etc, will be
computed and provided for.
This provision will be in addition to the normal
provision applicable for the classification of the restructured advance.

All restructured advances, which have been classified as Non-performing (i.e.


SS, DD)
upon restructuring,
would be eligible for upgradation to the
Standard category after observation of satisfactory performance during the
specified period

Specified period means a period of one year from the date when the first
payment of interest or instalment of principal falls due, as per restructuring
package.

Satisfactory performance means

borrowal

accounts

with

- CC accounts: The account should not be out of order anytime during the
specified period for a duration of more than 90 days AND there should
not be any overdue at the end of the specified period
- TL accounts:
No payment of instalment should remain overdue for a
period of more than 90 days AND there should not be any overdue at the
end of the specified period
Agri Accounts:
period

Account should be regular at the end of the specified

All business activities are covered under SPECIAL REGULATORY TREATMENT


(SRT), excepting the following 3 categories:

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Consumer and personal advances


Advances classified as Capital market exposures
Advances classified as commercial real estate exposure. (Advances to
Hospitals, Hotels, Educational Institutions etc., are not covered under
exposure to commercial real estate.)

The special regulatory treatment has the following two components :


Incentive for quick implementation of the restructuring package.
Retention of the asset classification of the restructured account in the prerestructuring asset classification category

All accounts of activities, other than under SPECIAL REGULATORY


TREATMENT are to be downgraded to NPA on restructuring, if they were in
standard category at the time of restructuring.

The other guidelines and instructions under Special Regulatory Treatment

Restructuring package should be implemented within 90 days from the date


of receipt of application in cases other than under CDR mechanism

Under CDR mechanism, implementation is to be done within 90 days.

The following categories are considered fully secured even if security to


cover the outstanding is not available.
i.

SSI borrowers, where the outstanding is up to Rs.25.00 lacs

ii. Infrastructure projects with adequate cash flow for repayment and
appropriate mechanism to escrow cash flows with clear and legal first
claim on cash flows
iii. Dues of Micro Finance Institutions (MFIs) restructured up to March 31,
2011

The unit becomes viable in 10 years, if it is engaged in infrastructure


activities and in 7 years in the case of other units.

Repayment period : 15 years for infrastructure advances &


others (except for home loans).

Promoters sacrifice and additional funds brought by them should be atleast


15% of Banks sacrifice. (Proof , such as CA certificate, to be obtained to this
effect)

BIFR cases are not eligible for restructuring without their express approval.

Corporate Debt Restructuring (CDR) Mechanism

10 years for

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This mechanism will be available to all borrowers engaged in any type


of activity subject to the following conditions:
a. The borrowers enjoy credit facilities from more than one bank/FI
under multiple banking / syndication / consortium system of lending
(in a co-ordinated manner).
b. The total outstanding (fund-based and non-fund based) exposure is
Rs.10 crore or above.
CDR system in the country will have a three tier structure :
1. CDR Standing Forum and its Core Group
2. CDR Empowered Group
3. CDR Cell
The CDR Standing Forum shall meet at least once every six months
and would review and monitor the progress of corporate debt
restructuring system.
The CDR Empowered Group would be mandated to look into each case of
debt restructuring, examine the viability and rehabilitation potential of
the Company and approve the restructuring package within a specified
time frame of 90 days, or at best within 180 days of reference to the
Empowered Group.
The decisions of the CDR Empowered Group shall be final
******************
srn/04.04.2012

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Credit Monitoring
1. Standard Assets showing overdue for more than one month are classified as
Watch Category accounts
2. Loan Review Mechanism is an off-site audit procedure with the main
objective of ensuring compliance of terms and conditions of sanction and post
sanction processes laid down by the Bank from time to time.
3. Credit Audit is an on-site audit function Credit Risk mitigation tool to be
used by the Sanctioning Authorities to evaluate the quality of Loan asset and to
take appropriate decisions in the best interests of the Bank.
4. The inspection of godown should be carried out meticulously as per terms of
sanction. Normally for all advances unit inspection will be conducted on
monthly basis.
5. QIS forms: Submission of QIS forms I, II & III is discontinued.
6. CMA data: In all cases where working capital limits are Rs 2 crore and above
CMA data will be called for, along with audited balance sheets.
7. Auditors Certificate: Whenever the borrower is advised to produce auditors
certificate by the Bank, during the course of dealing with the borrower in
respect of finance made to them, such auditors certificates should be obtained
from the Auditor who has originally audited and certified the books of
accounts of the concern/firm/ company.
8. Review/Renewal of borrowal account:
All the credit limits are renewed / reviewed at least once in a year
Review/Renewal of borrowal accounts sanctioned will be ensured within 3
months from due date.
Secured term loans /Demand loans granted for approved purposes, against
various securities such as gold ornaments, NSC/LIC policies/Resurgent
India Bonds/IMDs etc are allowed to run off and once sanctioned by the
authority, they are not subject to renewal but only review.
Term loan accounts should be reviewed periodically at least once in a year.
All
mortgaged
property
review/renewal of limits
obtained once in 3 years.

shall
and

be
physically
inspected
encumbrance
certificate

before
to be

9. Short Review & Renewal Proposal (SRRP)


Whenever there is delay in submitting renewal proposal due to genuine
reasons short review can be done for a maximum period of 6 months. Such
short reviews will be resorted to only once between two regular sanctions.

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If the Branch submits a complete renewal proposal before expiry of the


existing limits or before the expiry of the extended period of the limits,
branch will be in order in continuing the existing facilities till a decision is
taken by the sanctioning authority.
10. Revalidation of Sanction

Credit Sanctions (including term loans) are valid for 6 months from the date
of sanction. Unless availed within this period, they require revalidation by
sanctioning authority.

Sanctions by MCB can be considered for revalidation by CAC and for others
by the respective authority who has sanctioned the loan.

11.

Compulsory Audit Of Borrowal Accounts


All borrowers with credit limits of above Rs.25 lakhs from the banking
system should get themselves audited compulsorily by Chartered
Accountants.

Submission of financial Statements by individual agricultural borrower for


availing agricultural advances for less than Rs.50 lac is waived.

12. Guidelines for Operations in NPA Account Showing Signs of Revival:


In those NPAs (due to factors beyond the control of borrower) where borrowers
are willing to revive the business activities, Bank can allow operations in the
NPA account, not only to help them to revive their business but also to reduce
their dues in NPA accounts. The guidelines to be followed are as follows:
The holding on operations will be a temporary affair
Branch Managers are permitted to allow operations in NPA accounts
(irrespective sanctioning authorities of these loan accounts) under report
to Regional Office and Sanctioning Authority.
Unit should be a going concern.
While allowing holding on operations in NPA accounts, the exposure in
such accounts will not be allowed to go above the level of outstanding as
on the date of allowing such holding on operations.
Within a period of 3 months of allowing operations, a view is to be taken in
its entirety about future course of action and the manner in which further
recoveries have to be effected, by way of rehabilitation/ restructuring or by
filing suit / action under SARFAESI Act 2002.
Such decision to allow operation should be reported to Regional Office and
Sanctioning Authority.

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13.

Quick mortality
The Bank will classify accounts that become NPA within a year of its
sanction as quick mortality. Annual review of such accounts will be done.

14.

Willful defaulters
Entrepreneurs/promoters of Companies where diversion of funds, siphoning
of funds, misrepresentation, falsification of accounts and fraudulent
transactions have been identified by Other Banks/FIs will be debarred from
financial assistance from us for a period of 5 years from the date the name
of Willful Defaulter is disseminated in the list of Willful Defaulters by RBI.
********************
srn/14.05.2013
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Restrictions for financing


A. Statutory restrictions
1. Advances against Bank's Own Shares: In terms of BR Act, 1949, Bank
shall not grant any loans and advances on the security of its own shares
2. Bank shall not extend advances to employees / Employees' Trusts set up by
them for the purpose of purchasing Banks shares under ESOPs / IPOs or
from the secondary market.
3. Holding Shares In Companies: In terms of BR Act, 1949, banks should not
hold shares in any company except as provided in sub-section (1) whether as
pledgee, mortgagee or absolute owner, of an amount exceeding 30 % of the
paid-up share capital of that company or 30 % of its own paid-up share
capital and reserves, whichever is less.
4. Credit to Companies for Buy-Back of their Shares/Securities: Bank will
not provide loans to companies for buy-back of shares/securities except buy
back of FCCB as per extant RBI guidelines
B. Regulatory Restrictions
1.

Loans and advances against shares, debentures and bonds:

No loans to be granted against partly paid shares.

No loans to be granted to partnership/proprietorship concerns against


the primary security of shares and debentures.

2. Advances against fixed deposit receipts issued by other banks: Advances


against FDRs, or other term deposits of other Banks will not be granted
3. Loans against Certificate Of Deposits (CDS): Bank will not grant loans
against Certificate of Deposits
4. Advances against bullion / primary gold: Bank will not grant any advance
against bullion/primary gold except gold coins purchased from banks
5. Bank will not grant any advance to partnership firms in which NBFC is a
partner.
6. Bridge Loans To NBFCs: Bridge loans will not be granted pending raising of
long-term funds from the market by way of capital, deposits, etc. to any
category of NBFC and also Residuary Non- Banking Company.
7. Bank shall not grant any loan/advances for subscription to Indian
Depository Receipts (IDRs). Bank also shall not grant any advance against
security (either as prime or collateral) of IDRs issued in India.
srn/14.05.2013

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Guidelines on Enforcement of Securities under


SARFAESI Act 2002

SARFAESI Act stands for The Securitisation And Reconstruction of


Financial Assets and Enforcement of Security Interest Act, 2002.

SARFAESI Act 2002 is one of the tools available with Bankers for recovery of
NPAs, without intervention of Court.

A. Requirements for initiating action under SARFAESI Act 2002 .


1. Loan account must have been classified as NPA
2. Outstanding in the account including the interest accrued/applied should
be more than Rs.One lakh.
3. Outstanding dues should be above 20% of the principal and interest.
4. Secured asset should not be an agricultural land. Agricultural land used
for Non-Agricultural activities can be enforced under this Act.
5. Documents should be enforceable and unexpired period of a minimum of 6
months must be available (not specified in the Act).
(Action under SARFAESI Act 2002 will not extend limitation period of
documents).
6. In case of multiple lenders/consortium advances, ensure lenders having
3/4th of dues outstanding are agreeable for initiating action under
SARFAESI Act 2002.
B. Different steps involved in initiating action under SARFAESI Act 2002.
1. Demand Notice under section 13(2) is to be serviced to the borrower and to
guarantors, if any with the prior approval of the delegated authority(see D
below).
Notice should be issued by Authorised Officer of the Bank who is not
below the rank of Scale IV officer.
Notice must be addressed to the borrower/guarantor at the place where
he/she resides or carries on business or works for gain (Rule 3(1)).
In case of corporate bodies the notice can be served on the registered
office or on any of the Branches (Rule 3(2)).
60 days time is to be allowed for payment/discharge of the dues.
The amount claimed in the notice should be the total dues as on the date
of the notice including upto date undebited interest.
The secured asset must be detailed in the notice.
Clause can be incorporated in the demand notice to the effect that Bank
reserves its right to publish their photos, if the account is not regularised
/ settled within time).
The notice can be issued by any one of the following ways;
a. Registered post A/D
d

Fax Message

b. Speed Post

c.Courier

e. E-mail.

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If the service of notice cannot be made as aforesaid for the reason that
the borrower is avoiding the service or otherwise, then

The service can be effected by the Authorised Office by affixing a copy


of the demand notice on the outer door or some other conspicuous
part of the house of building in which the borrower resides/carries on
business or personally works for gain and also

By publishing the contents of the demand notice in two leading


newspapers (one in vernacular language) having sufficient circulation
in the locality.

2. One office copy of the notice together with proof of despatch and
acknowledgement, newspaper publication of notice and any undelivered
covers without being opened etc. must be kept by the branch/Authorised
officer as proof which may require on a later date.
3. If the borrower makes any objection or representation after the receipt of the
demand notice, Authorised Officer shall communicate his reply within 15
days of receipt of such objection u/s 13 (3A).
4. If the borrower does not pay the demanded amount in 60 days the
Authorised Officer can take possession on the secured asset (as detailed in
Sec 13 (4) of the Act, including the right to transfer by way of lease,
assignment or sale.
Taking possession should be in the presence of two witnesses (preferably
independent witnesses)
If secured assets are movable;
Simultaneously inventory should be prepared by the Authorised Officer
in the specified format and one copy should be delivered to the borrower
or the guarantor as the case may be.
The movable assets taken possession should be immediately transferred
to a nearby godown for storage and protection.
If insurance cover is available, the insurer should be informed.
Insurance cover, if not available, then insurance should be taken
immediately (Rule 4(3)).
If the property taken into possession is subject to natural decay or the
expenses of keeping such property in custody is likely to exceed its value,
the authorized officer may sell it.
5. Possession Notice shall also be published, as soon as possible but in any
case not later than seven days from the date of taking possession, in 2
leading newspapers, one in vernacular having sufficient circulation in that
locality by the authorised officer. Branches can consider publishing the
photos in the SARFAESI possession notices.
6. Authorised officer should obtain a valuation report from one of our approved
valuers. Approved valuer means a person registered as valuer under
section 34AB of the Wealth-Tax Act, 1957.
7. Thereafter, the Authorised Officer should fix the Reserve price, which
should not be less than the estimated value; in consultation with Regional
Office/SARFAESI committee.
8. Authorised Officer should issue 30 days notice for sale under section 13(4).

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Sale notice should contain;


a. Reserve price fixed
b. Mode of sale is e-auction
c. Proposed date & time of sale

10. The authorised officer may sell the secured assets taken on possession
through e_auction, as per the directives of Ministry of Finance.

For the purpose of e_auction, the services of any one of the following
service providers is to be used.
Sl.No
1.

Name and address of service providers


M/s.Matex Net P Ltd.,
124, 2nd Floor, Karpagam Avenue, 4th
Street, RA Puram, Chennai 600 028
Tel. 044 43437474/42107062
E_mail: matexche@matexnet.com

2.

M/s.AbcProcure
B-704/705, Wall Street II
Nr.Gujarat college, Ellisbridge
Ahamedabad 3800006
Tel. +917640016843

Fee : Rs.3500 + service charge per auction


11. The Ministry of Finance has issued a direction to all PSBS/ FIs to upload all
SARFAESI auction notices in the official website of the Government
tender.gov.in to give wider publicity with a view to get better response. The
banks have to confirm that no auction takes place henceforth without
auction notice being put on the website for at least 30 days.
12. Sale confirmation:
Sale should be confirmed by the Authorised Officer only if the bid is
higher than the reserve price.
If the highest bid is equal to the reserve price, the Authorised Officer can
confirm the sale only with the consent of the owner of the property and
also the Bank.
As obtention of consent of the owner is difficult, proper marketing should
be done to receive more than one bid so that the offer / bid is more than
the reserve price.
The Act empowers the banks to accept the immovable property in full or
partial satisfaction of the banks claim against the defaulting borrower in
times when the bank cannot find a buyer for the securities.
13. On payment of the sale price the Authorised officer shall issue a certificate of
sale.
14. Any amount received as sale price, over and above the dues and expenses to
us shall be paid to the owner of the secured asset. For any shortfall civil
suit/DRT can be approached.

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C. Right vested in borrower/guarantor to challenge action taken by Bank


under sec 13(4).

Cause of Action arises to the borrower/guarantor only on taking possession


of the property.

Borrower/Guarantor can file an application before DRT within a 45 days


questioning the action taken by the Bank

DRT is expected to dispose of the borrowers application within 60 days,


which can be extended upto 4 months.

Aggrieved party can prefer an appeal before DRAT within 30 days from the
date of receipt of DRTs order.

The appeal will be entertained only if the borrower has remitted 50% of the
debt demanded by the Bank or determined by DRT whichever is less.

The DRAT has the discretion to reduce the deposit to 25% of the above
amount.

D. Delegated powers for SARFAESI Action

Accounts fall under RO follow up:


The Regional Head shall permit issuance of demand notice in respect
of all RO follow up accounts.
Regional Office SARFAESI Committee shall take all further actions
under Section 13(4) of SARFAESI Act. including taking possession,
fixing reserve price and confirmation of sale.

Accounts fall under Central Office follow up


For Substandard
department at C.O

accountsRespective

GMs

handling

credit

For Doubtful and loss accounts GM (Law).


Once permission is granted as above for CO follow up accounts for
initiation of SARFAESI action and issuance of demand notice,
subsequent decisions to take all further actions under Sec 13(4) of
SARFAESI Act. including taking possession, fixing reserve price,
confirmation of sale shall be taken by RO SARFAESI Committee.
If Reserve Price to be fixed is lower than FSV , the same shall be
referred to CO SARFAESI Committee through CO, Law Department
along with proper justification for such recommendation
srn / 10.05.2013
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Prudential accounting norms Classification of Assets


(Some points)
In line with the international practices and as per the recommendations made by
the Committee on the Financial System (Chairman Shri M. Narasimham), the
Reserve Bank of India has introduced, in a phased manner, prudential norms for
income recognition, asset classification and provisioning for the advances portfolio
of the banks so as to move towards greater consistency and transparency in the
published accounts.
A. Income recognition
Income recognition has to be objective and based on the record of recovery. Based
on Income recognition assets are classified into;
a. Performing Assets &

b. Non Performing Assets [N P A]

Performing Assets: Assets which generate income for the Bank


Non Performing Assets [NPA]: Assets, including leased assets, becomes NonPerforming when it ceases to generate income for the Bank. NPA is an asset/loan
account;

In which interest and/instalment of principal remain overdue for a period of


more than 90 days in respect of a term loan.
(Overdue is any amount due to the bank under any credit facility, if it is not
paid on the due date fixed by the Bank)

Which remains out of order for more than 90 days in respect of an OD/CC
account?
(An account is treated as out of order if;
The outstanding balance remains
limit/DP.

continuously in excess of the sanctioned

Account where the regular/ad hoc credit limits have not been
reviewed/renewed within 180 days from the due date/date of adhoc
sanction.
Submission of stock statements older than 3 months.
No credit in the account for a period of 90 days
Credit in the account not adequate for servicing interest.)

A bill remains overdue for a period of more than 90 days from the date of
purchase or in the case of bills purchased and 90 days from due date in the
case of bills discounted.

Asset classification of accounts under consortium should be based on the


record of recovery of the individual member banks and other aspects having
a bearing on the recoverability of the advances

Agricultural advances :

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A loan granted for short duration crops will be treated as NPA, if the
instalment of principal or interest thereon remains overdue for two crop
seasons.
A loan granted for long duration crops will be treated as NPA, if the
instalment of principal or interest thereon remains overdue for one crop
season. For the purpose of these guidelines, long duration crops would
be crops with crop season longer than one year and crops, which are not
long duration crops would be treated as short duration crops. The
crop season for each crop, which means the period up to harvesting of the
crops rose, would be as determined by the State Level Bankers Committee
in each State.
Income Recognition policy

The policy of income recognition has to be objective and based on the record of
recovery

Advances against Term Deposits, NSCs, KVP/IVP, etc : Advances against


term deposits, NSCs eligible for surrender, IVPs, KVPs and life policies need not
be treated as NPAs, provided adequate margin is available in the accounts

Government guaranteed advances


Guarantee of Central Govt.: The credit facilities backed by guarantee of the
Central Government though overdue may be treated as NPA only when the
Government repudiates its guarantee when invoked. This exemption from
classification of Government guaranteed advances as NPA is not for the
purpose of recognition of income.
Guarantee of State Govt.: State Government guaranteed advances and
investments in State Government guaranteed securities attract asset
classification and provisioning norms if interest and/or principal or any
other amount due to the bank remains overdue for more than 90 days.

Reversal of Income
If any advance, including bills purchased and discounted, becomes NPA, the entire
interest accrued and credited to income account in the past periods, should be
reversed if the same is not realized. This will apply to Government guaranteed
accounts also.
B. Asset Classification:
categories

Banks are required to classify assets in to the following 4

a. Standard assets

b. Sub standard assets

c. Doubtful Assets

d. Loss assets

i. Performing Asset:
Standard asset: An asset which is not an NPA.
ii. Nonperforming Assets:
Sub-standard Asset:
exceeding 12 months

An asset which has remained NPA for a period of not

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Doubtful asset: An asset which has remained NPA for a period of exceeding
12months
Loss Asset: An Asset where loss has been identified by the Bank or internal or
external auditors or RBI Inspectors

Borrower wise: Assets are classified on borrower wise and not on facility
wise. Therefore, all the facilities granted by a bank to a borrower will have to
be treated as NPA, even if one of the facilities becomes NPA and not the
particular facility.

Upgradation of restructured accounts: The substandard accounts which


have been subjected to restructuring etc., whether in respect of principal
instalment or interest amount, by whatever modality, would be eligible to be
upgraded to the standard category only after a period of one year after the
date when first payment of interest or of principal, whichever is earlier,
falls due, subject to satisfactory performance during the period.

Accounts where there is erosion in the value of security/frauds committed by


borrowers

If the erosion in the value of security is more than 50%, such NPAs may be
straightaway classified under doubtful category and provisioning should be
made as applicable to doubtful assets

If the realisable value of the security, due to erosion, as assessed by the bank/
approved valuers/ RBI is less than 10 per cent of the outstanding in the
borrowal accounts, the existence of security should be ignored and the asset
should be straightaway classified as loss asset

In cases of serious credit impairment the asset (due to fraud or so), such
accounts should be straightaway classified as doubtful or loss asset as
appropriate:

C. Provisioning Norms
The primary responsibility for making adequate provisions for any diminution in
the value of loan assets, investment or other assets is that of the Bank
Management and statutory auditors.
Loss Assets:

100 % of the outstanding should be provided for.

Doubtful assets: 100 % of the extent to which the advance is not covered by
realizable value of the security.
Plus

For secured portion, provision may be made depending upon the period for
which the asset has remained doubtful.
Period for which the
asset remained
doubtful

Provision
required

up to 1 year

25 %

One to 3 years

40 %

More than 3 years

100 %

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Sub-Standard Assets : A general provision of 15 % on total outstanding should be


made without making any allowance for ECGC guarantee cover and securities
available. The unsecured exposures [realizable value of security is not more than
10% ab-initio of the outstanding exposure] which are identified as substandard
would attract additional provision of 10 % (total provision 25%).
Standard assets: Bank should make general provision for standard assets at the
following rates for the funded outstanding on global loan portfolio basis:
Banks exposure

Provision
required

Direct advance to Agr. & SME Sector

0.25 %

commercial real estate

1.00 %

Other advances

0.40 %

Restructured accounts classified as


standard advances;
In the first two years from the date of
restructuring
In cases of moratorium on payment of
interest / principal after restructuring
period covering moratorium and two
years thereafter
Restructured accounts earlier classified
as NPA and later Upgraded to standard
category ,in the first year from the date
of upgradation

2.75%
2.75%

2.75%

Advance covered by CGTMSE guarantee In case the advance covered by CGTMSE


guarantee becomes nonperforming, no provision need be made towards the
guaranteed portion. The amount outstanding in excess of the guaranteed portion
should be provided for as per the extant guidelines on provisioning for non
performing advances.
Projects under implementation

A loan for an infrastructure project will be classified as NPA if it fails to


commence commercial operations within two years from the original Date of
Commencement of Commercial Operations (DCCO), even if it is regular as per
record of recovery.

Loan for a non-infrastructure project - classified as NPA if it fails to commence


commercial operations within six months from the original DCCO, even if is
regular as per record of recovery
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Central Registry of Securitization Asset Reconstruction


and Security Interest of India

Sec 20 of the Securitisation and Reconstruction of Financial Assets and


Enforcement of Security Interest Act, 2002(SARFAESI) provides for
establishment of Central Registry to register transactions relating to
Securitisation of financial assets
Reconstruction of financial assets &
Creation of security interest.

Central Registry of Securitization Asset Reconstruction and Security Interest of


India (CERSAI) is a company licensed under section 25 of the Companies Act,
1956 and registered by the Registrar of Companies, New Delhi.

The Registry has come into operation from 31st March 2011.

The Company is a Government Company with a shareholding of 51% by the


Central Government and select Public Sector Banks and the National Housing
Bank are also shareholders of the Company.

The Registration would be applicable to transactions of security interest over


property created to secure loans and advances from the banks and financial
institutions as defined under the SARFAESI Act.

The Company is providing the platform for filing registrations of transactions of


securitization, asset reconstruction and security interest by the banks and
financial institutions.

Any person can also search and inspect the records maintained by the Registry
on payment of fees prescribed under the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest (Central Registry) Rules,
2011.

Following are the key Goals and Objectives of the Central Registry System:
To provide mechanism for registration of transaction of securitization and
reconstruction of financial Asset and security interest created under
SARFAESI.

Create a central data repository for collateral related information.

To develop a web based system for financial institutions and general public
to access this information.
To enable lenders and other stake holders to get real time current
information regarding the securities being mortgaged by borrower.

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To prevent fraudulent transactions arising out of same asset being


mortgaged with multiple lenders.
To collect and disseminate information regarding the priority and amount
secured by the charge on securities.
Provide potential buyers of
encumbrances on the assets.

assets

with

information

about

any

Maintaining history of charges created and satisfied on a particular asset.

To start with, the registration of charges is restricted to the mortgages created


by deposit of title deeds i.e., equitable mortgages.

Entity Registration can be done by Central Registry admin user through web
portal www.cersai.org.in. Link for registration will be provided to him once he
logs on to the system

All the securities created have to be registered with Central Registry


(Agricultural lands taken as security need not be registered under CERSAI).

Registration shall be made on-line within 30 days of creation of equitable


mortgage which is mandatory.

As per sec-27 of the SARFAESI Act, non-registration within the time stipulated
will be treated as a default and is punishable with fine upto Rs.5000 per day.
This fine is not applicable for registration of cases where mortgage was created
prior to 31.03.2011.

Fee payable for creation and modification of charge


As per the rules framed by Government of India, following is the amount of fee
payable:-

S.
No

Nature of transaction to be
registered

Form No.

Amount of fee payable

Particulars of creation or
modification of security
interest in favour of secured
creditors

FORM 1

Rs.500 for creation and for any


subsequent modification of
security interest in favour of a
secured creditor for a loan above
Rs.5 lakh. For a loan upto Rs.5
lakh, the fee would be Rs.250 for
both creation and modification
of security interest.

Satisfaction of any existing


security interest

FORM II

Particulars of securitization or
reconstruction of financial

FORM III

Rs.250

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assets

Rs.1000

Particulars of satisfaction or
securitization or
reconstruction transactions

Any application for information


recorded/maintained in the
Register by any person

Any application for


condonation of delay upto 30
days

FORM 1V

Rs.250

Rs.50
Not exceeding Rs. 2500 in case
of creation of security interest
for a loan upto Rs. 5 lakh and
not exceeding Rs. 5000 in all
other cases.

The fee as shown above is to be collected from the customer to the debit of his
account and credit the amount to Sundry creditors account. Then transfer the
amount to current account No.970749 with Cathedral branch (code No.109).

srn/04.04.2012

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Basel accord & Risk Management

Risk Management is a planned method of dealing with uncertainties to reduce


losses.
The steps involved in risk management are:
Identification of risk
Measurement of risk
Monitoring and
controlling
The methods for measurement and quantification have been well established
internationally through the Basel Committee for Banking Supervision (BCBS).
Basel committee on Banking Supervision (BCBS) is a committee on Banking
Regulations and supervisory practices.
The committee is a standing committee under the auspices of the Bank for
International Settlements (BIS).
The Committee's members come from Argentina, Australia, Belgium, Brazil,
Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy,
Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia,
Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United
Kingdom and the United States.
The present Chairman of the Committee is Mr Stefan Ingves, Governor of
Sveriges Riksbank
This committee usually meets every quarter at the Bank of International
Settlements in Basel, a place in Switzerland.
Basel I accord: The Basel Committee published in 1988, a set of minimum
capital requirements for banks. These requirements have come to be known as
the 1988 Basel-1 accord
With banks increasingly taking market risks, the Basel committee decided to
update the 1988 Basel-1 accord to include bank capital requirements for market
risk. It is known as the 1996 amendment and went to effect in 1998.
Basel II accord: The Basel Committee replaced the Basel -1 accord with Basel-II
in the year 2006. This is based on the following 3 pillars.
Pillar-I Minimum Capital requirements
Pillar-II Supervisory Review Process
Pillar-III Market Discipline.

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Basel II accord has laid down the method of calculating the minimum capital
requirements. This covers credit risks, market risks and operational risk.
Capital to Risk weighted Assets ratio (CRAR) is calculated as follows;
Eligible total capital funds
CRAR

-----------------------------------------------------------------Credit risk RWA+ Market risk RWA + Operational RWA

Market discipline (Transparency & Disclosures)


disclosure requirement for external reporting.

sets out the minimum

Banks are financial institutions subject to various risks both financial and
non-financial. Credit risk, interest rate risk, liquidity risks, legal risk operational
risks etc. These are highly interdependent events. However, they are broadly
classified in to Credit risk, Market risk and operational risk.
Credit risk is the possibility of losses sourced by default due to inability or
unwillingness of a customer or counterparty to meet commitments relating to
lending, trading, settlement and other financial transaction. Basel Committee
suggests the following approaches for calculating Capital adequacy ratio.
1. Standardised approach
2. Internal rating based (IRB) approaches
o

Foundation IRB approach

Advances IRB approach.

IRB approach is based on measuring Unexpected Loss (UL) and Expected


Losses (EL).
Market risk is the possibility of losses caused by changes in the market variable
such as interest rate, foreign exchange rate etc. Different approaches for
calculating capital adequacy are:
1. Standard approach
2. Mark to market approach
Operational risk is the possibility of loss resulting from inadequate or failed
internal processes, people and systems or from external events. Different
approaches for calculating capital adequacy are:
1. Basic Indicator approach
2. Standardized approach
3. advanced approach
The menu of approaches for credit, market and operational risk enable a bank to
choose its approach depending on its own ability to do so.

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If a bank desires to adopt advanced approaches, it will have to secure the


approval of RBI. It is mainly because; adopting the advanced approaches for its
credit, market and operational risk could enable the bank to have lesser capital
than when they follow standardized approach.
RBI has to be fully satisfied with the banks capability to adopt the advanced
approaches.
Foreign Banks operating in India and Indian Banks having operational presence
abroad adopted Basel-II (New Capital adequacy framework) on 31st March 2008
and all other commercial banks (Except Local area Banks and Regional Rural
Banks) migrated to the New framework on 31st March 2009 for computing their
capital requirements.
On implementation of the Basel-II
approaches;

accord, banks migrated to the following

Credit Risk - The Standardised approach,


Operational risk- Basic Indicator Approach and
Market risk Standardised Duration Approach.
Basel III accord

The Basel Committee on Banking Supervision


comprehensive reform packages entitled;

(BCBS)

has

issued

Basel III: A global regulatory framework for more resilient banks and
banking systems and
Basel III: International framework for liquidity risk measurement,
standard and monitoring in December 2010.

Objective: Improving banking sector resilience by strengthening global


capital and liquidity regulations.
Also aims to improve risk management and governance as well as strengthen
banks transparency and disclosure standards relating to regulatory capital.

The reform package addresses the lessons of the financial crisis and aims at
enhancing banking sectors ability to absorb shocks arising from financial
and economic stress.

Basel III : Requirements


Presently, a banks capital comprises Tier 1 and Tier 2 capital with a
restriction that Tier 2 capital cannot be more than 100% of Tier 1 capital.
Within Tier 1 capital, innovative instruments are limited to 15% of Tier 1
capital. Further, Perpetual Non-Cumulative Preference Shares along with
Innovative Tier 1 instruments should not exceed 40% of total Tier 1
capital at any point of time.
Within Tier 2 capital, subordinated debt is limited to a maximum of 50%
of Tier 1 capital.

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However, under Basel III, with a view to improving the quality of capital,
the Tier 1 capital will predominantly consist of Common Equity.

Enhancing Risk Coverage


At present, the counterparty credit risk in the trading book covers only
the risk of default of the counterparty.
The reform package includes an additional capital charge for Credit Value
Adjustment (CVA) risk which captures risk of mark-to-market losses due
to deterioration in the credit worthiness of a counterparty.
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Valuation of securities

Fair Market Value is the price that would be agreed to in an open and
unrestricted market between knowledgeable and willing parties dealing at
arms length who are fully informed and are not under any compulsion to
transact.

Gross Book Value of a Fixed Asset is its historical cost or other amount
substituted for historical cost in the books of account or financial
statements.

Net book value :When the fixed asset is shown as net of accumulated
depreciation.

The immovable property mortgaged as First Charge to the Bank for any
advance shall be revalued at least once in 3 years, by our panel valuer.

For our banks empanelment, the valuer has to register himself under the
Wealth Tax Act ( Sections 34 AA to 34 AE ).

The duration of empanelment of valuers for immovable properties/TEV


consultants by Banking Operations Department and for plant & machinery
by Credit Support Services Department at Central Office shall be for a period
of five years.

Whilst the duration of empanelment is for 5 years, every year, the


performance of the valuers shall by reviewed by the bank on an annual
basis.

The professional code of conduct prescribed for Valuers as applicable to


Corporate Member / Fellows of Institution of Valuers (India) and also
prescribed in Handbook on Policy, Standards and Procedures for Real
Estate Valuation by Banks and HFIs in India issued by the Indian
Banks Association and the National Housing Bank, concerning interest of
the banks is valid, legitimate and the Bank should ensure the conduct and
integrity from the approved Valuers at all times.

Rotation among the panel Valuers shall be preferred for periodical


revaluation.

Desk Top Valuation (DTV) is valuation done by the First Line Manager,
based on the property demarcation furnished in the legal opinion of the
Banks approved counsel, fair market value ascertained from the local
residents and visit to the site.

In cases of Standard Assets with limits of Rs. 25 Lakhs and below, DTV
by branch managers must be undertaken once in three years.

For all loans above the limit of Rs.50 lacs, 100 % physical verification of
assets has to be done.

Valuation Report should be obtained from one valuer for all properties
valued up to Rs. 5 Crores.

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The Branch should obtain minimum two independent valuation reports


from Approved Valuers for all properties valued at above Rs. 5 Crores.

If the variation in the two valuations is not more than 10%, the lower value
of the two, should only be accepted.

If the variation is more than 10%, a third valuer will be engaged at the cost
of borrower and of the three valuations, lowest would be taken as the fair
market value of the property.

The approved valuer should verify the legal opinion of the properties,
furnished by Banks legal counsel. It should form an integral part of the
valuation report.

In case of standard assets with limits exceeding Rs.25 lacs, the legal
opinion which would be a part of the valuation report should contain a
clause that the lawyer has personally visited the Registrar Office, searched
the records and ensured the correctness of the entries in the Registry and
there is no omission of any encumbrances in the E.C.

Undertaking letter from the borrower stating that the proposed


superstructure will be as per the National Disaster Management Authority
(NMDA) guidelines should be obtained.

For all NPA accounts (irrespective of the limits) the valuation of property
is required to be done once in three years.

In the case of Agricultural Advances for more than Rs. 5 Lakhs, the
valuation should be done by a competent person approved by the Bank.

VALUATION FEE STRUCTURE OF APPROVED VALUERS


(For land and buildings only)
FEE STRUCTURE BASED ON ASSET VALUE:
On the first Rs.50000/- of the Asset valued % of the value,
On the next Rs.100000/- of the Asset valued % of the value,
and
On the balance of the Asset valued 1/8 % of the value, subject to a
maximum of Rs.10000/- for valuation of land, building and machinery
for each party account.
However, the minimum fees to be paid to an empanelled valuer for the
valuation of a property will be as under :
Category of Valuer - A - Rs. 2,500.00
Category of Valuer - B - Rs. 2,000.00
Category of Valuer - C - Rs.1,500.00

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Note : In case of Diploma Holders, the minimum fees shall be


Rs.1,500.00
In case the valuer is required to undertake the valuation in a city other
than that in which the valuer normally resides, the bank shall reimburse
the outstation travel TA/DA charges as agreed to between both the
parties in the beginning itself before the valuer starts the assignment.
CONDITIONS:
Where two or more assets are required to be valued at the instance of an
assessee, all such assets shall be deemed to constitute a single asset for
the purpose of calculating fees.
If the same property has to be revalued at the instance of Bank, 50% of
the above prescribed charges only is payable for the second instance of
valuation, provided the first set of valuation report/documents are made
available to the valuer
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Significant Accounting policies of our Bank

Income is recognized on accrual basis on performing assets and on


realization basis in respect of non-performing assets as per the
prudential norms prescribed by Reserve Bank of India.

Recovery in Non Performing Assets is first appropriated towards interest


and the balance, if any, towards principal, except in the case of Suit Filed
Accounts and accounts under One Time Settlement

Legal expenses in respect of Suit Filed Accounts is charged to Profit and


Loss Account. Such amount when recovered is treated as income

Balances in NOSTRO and ACU Dollar accounts are stated at closing


rates.

FCNR/EEFC/RFC/FCA (all foreign currency deposits including interest


accrued thereon) and PCFC/WCFC/TLFC/FCL (all foreign currency
lendings) are stated at the FEDAI weekly average rate applicable for the
last week of the quarter.

Assets & Liabilities of overseas branches are translated at the closing


spot rates notified by FEDAI at the end of each quarter

Income & expenses of overseas branches are translated at quarterly


average rates notified by FEDAI at the end of each quarter.

Investments in India are classifed into Held for Trading, Available for
Sale and Held to Maturity categories in line with the guidelines of RBI.

Individual securities under Held for Trading and Available for Sale
categories are marked to market at quarterly intervals.

Held to Maturity
cost/amortised cost.

Depreciation is provided on straight-line method at the rates as under :

investments

Premises

: 2.50 %

Furniture

: 10 %

are

carried

at

acquisition

Electrical Installations, Vehicles & Office Equipments : 20 %


Computers

: 33 1/3 %

Fire Extinguishers : 100 %

Depreciation is provided for the full year irrespective of the date of


acquisition/revaluation.
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Capital adequacy framework (Basel - accord)

1. The Basel Committee on Banking Supervision [BCBS] had published the


first Basel Capital Accord (popularly called as Basel I framework) in July,
1988 prescribing minimum capital adequacy requirements in banks for
maintaining the soundness and stability of the International Banking
System.
2. The basic approach of capital adequacy framework was that a bank should
have sufficient capital to provide a stable resource to absorb any losses
arising from the credit risks in its business.
3. RBI introduced a minimum CRAR of 8% in 1992, for the commercial banks
based on the recommendations of the Committee on Financial Sector
Reforms (Narsimham Committee I), in a phased manner.
4. Credit risk is most simply defined as the potential that a banks borrower or
counterparty may fail to meet its obligations in accordance with agreed
terms.
5. Reserve Bank has issued guidelines to banks in June 2004 on maintenance
of capital charge for market risks on the lines of Amendment to the Capital
Accord to incorporate market risks issued by the BCBS in 1996.
6. Market risk is defined as the possibility of loss to a bank caused by changes
in the market variables.
7. The BCBS released the "International Convergence of Capital Measurement
and Capital Standards: A Revised Framework" (Basel II) on June 26, 2004.
The Revised Framework was updated in November 2005 to include trading
activities.
8. Operational risk is defined as the risk of loss resulting from inadequate or
failed internal processes, people and systems or from external events. This
definition includes legal risk, but excludes strategic and reputation risk.
9. The Revised Framework consists of three-mutually reinforcing Pillars, viz.
minimum capital requirements, supervisory review of capital adequacy, and
market discipline.
Pillar 1: Minimum Capital Requirements which prescribes
computation of capital requirements for operational risk in addition to
market and credit risk.
Pillar 2: Supervisory Review Process (SRP) which envisages the
establishment of suitable risk management systems in banks and their
review by the supervisory authority.
Pillar 3: Market Discipline which seeks to achieve increased
transparency through expanded disclosure requirements for banks.
10. Indian banks having operational presence outside India and Foreign banks
operating in India have migrated to the Standardised Approach for
computation of credit risk capital under the revised framework with effect
from March 31, 2008.

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Computation
11. The process for computation of credit risk capital under the Standardized
Approach (SA) starts with the segmentation of the balance sheet assets,
non-funded items and other off-balance sheet exposures.
12. The segregation of the exposures to any one of the above categories has to
be done counter-party / customer wise (ie. taking into account all the fund
and non-fund based exposures of a customer). The equivalent credit risk
exposure for the off-balance sheet items for the purpose of computation of
risk-weighted assets has to be arrived at by multiplying the face value of
each of the off-balance sheet item by a credit conversion factor (CCF).

Matured LCs and LGs Credit conversion factor


For Performance guarantee

: 50%

For financial guarantee

:100% &

for LC I

: 20%

Under drawn/undrawn portion of term loans CCF


For short term loan

: 20%

For long term loan

: 50%

13. Some examples for financial & performance guarantee


Financial guarantee
1. Advance Payment
1.
2. Mobilisation Advance
2.
3. For
supply
of
Raw 3.
Materials by Buyer
4.
5.
6.
7.
8.
9.
10.
11.

Performance guarantees
Performance of Contract
Payment of Bills
Warranty Period
Retention Money
Drawing funds against part execution
Bid Bond
EPCG
Security Deposit
Earnest Money
Release of Goods
Disputed Liability

14. The exposures have to be multiplied by the risk weights assigned to the
relevant counter-party for arriving at Risk Weighted Asset (RWA).
15. The Reserve Bank of India has decided that banks may use the ratings of the
following international credit rating agencies for the purposes of risk
weighting their claims for capital adequacy purposes where specified:
a) Fitch;

b) Moodys; and

c) Standard & Poors

16. RBI has identified four domestic External Credit Rating Agencies (ECRAs)s
for the purpose of risk weighting for borrowers for capital adequacy purpose.
Based on term of exposure, the ratings given by ECRAs shall be either Long
Term or Short Term. The names of rating agencies are:

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a. Credit Analysis and Research Limited (CARE);


b. Credit Rating Information Services of India Limited (CRISIL);
c. India Ratings and Research Private Limited (India Ratings) erstwhile
FITCH
d. ICRA Limited.
e. M/s Brickwork Ratings India Pvt Ltd
f. SME Rating Agency of India Ltd (SMERA)
17. Under the revised standardized system, the long term rating symbols display
the rating agency's name as a prefix. Eg. CRISIL AAA. In the short term
ratings, a rating scale denoted by 'A' on a scale of '1' to '4' (i.e. A1, A2, A3
and A4) and 'D' are used.
18. Four qualifying criteria for claims to be included in the Regulatory Retail
Portfolio (RRP)

Orientation criterion .The exposure should be to an individual person


or persons or to a small business:

Small business is one where the total annual turnover is less than Rs.50
crore.

The turnover criterion will be linked to the average of the last three years
in the case of existing entities;

projected turnover in the case of new entities; and

Both actual and projected turnover for entities which are yet to complete
three years.

Product Criterion: The exposure should be in the form of any of the


following product categories

Revolving credits and lines of credit (including credit cards and


overdrafts), personal term loans and leases (e.g. installment loans, auto
loans and leases, student and educational loans, personal finance) and
small business facilities and commitments.

Granularity criterion: The RRP should be sufficiently diversified to


reduce the risks in the portfolio:

One way of achieving this is that no aggregate exposure to one


counterpart should exceed 0.2% of the overall regulatory retail portfolio.

NPA under retail loans are to be excluded from the overall regulatory
retail portfolio when assessing this granularity criterion.

Low value of individual exposures criterion: The aggregate exposure to


one counterpart should be within absolute threshold limit:

The maximum aggregated retail exposure to one counterpart should not


exceed the absolute threshold limit of Rs.5 crore.

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For this purpose, the exposure would mean sanctioned limit or the actual
outstanding, which ever is higher for all fund based and non-fund based
facilities, including all forms of off-balance sheet exposures.

In the case of term loans and EMI based facilities where there is no scope
for redrawing any portion of the sanctioned amount, the exposure would
mean the actual outstanding.

19. Claims secured by Residential Property:

Lending to individuals meant for acquiring residential property which are


fully secured by mortgages on the residential property that is or will be
occupied by the borrower, or that is rented, shall be risk weighted as
indicated below;

If LTV ratio is below 75% and amount of loan sanctioned is up to


Rs.30 lacs, risk weight is : 50%

If LTV ratio is below 75% and amount of loan sanctioned is above


Rs.30 lacs and below 75 lacs, risk weight is : 75%

If LTV ratio is above 75% and loan amount is below 75 lacs, risk
weight is 100%

If the loan amount is Rs.75 lacs or more, irrespective of the LTV ratio
risk weight is : 125%

Restructured housing loans should be risk weighted with an


additional risk weight of 25 per cent to the risk weights prescribed
above.

Loans / exposures to intermediaries for on-lending will not be


eligible for inclusion under claims secured by residential property but
will be treated as claims on corporate or claims included in the
regulatory retail portfolio as the case may be.

20. Bank has to maintain capital for undrawn amounts (sanctioned and not
availed).
21. Risk weight for Specified categories

Commercial real estate. : 100%

Venture capital : 150%

Risk weight for claims to be included in the Regulatory Retail Portfolio


(RRP): 75%

Consumer credit, including personal loans and credit card receivables


will attract a higher risk weight of 125%

Capital market exposures will attract a higher risk weight of 125%

Claims on NBFC-ND-SI: The claims on the rated as well as unrated


NBFC-NDSI (other than AFCs), regardless of the amount of claim, shall
be uniformly risk weighted at 100 %.

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Staff Loans: Loans and advances to banks own staff, which is fully
covered by superannuation benefits and/or mortgage of flat/house, will
attract a 20% risk weight.

Other loans and advances to banks own staff will be eligible for inclusion
under regulatory retail portfolio and will therefore attract a 75 per cent
risk weight.

The claims on ECGC will attract a risk weight of 20%.

Export Bills not Under LC covered by ECGC Risk Weight - 20%

SME loan guaranteed by CGTMSE : 0%

The risk weight applicable to central government exposures will also


apply to the exposures on the Reserve Bank of India, and CGTMSE:
Zero risk weight.

22. Risk weight for Non Performing Assets (NPA) other than qualifying
residential mortgage loan:

The unsecured portion of NPA (net of specific provisions):


150% risk weight when specific provisions are less than 20% of the
outstanding amount of the NPA;
100% risk weight when specific provisions are at least 20% of the
outstanding amount of the NPA;
50% risk weight when specific provisions are at least 50% of the
outstanding amount of the NPA.

23. NPA Qualifying Residential Mortgage Loan secured by residential


property: will be risk weighted at 100% net of specific provisions.
If the specific provisions in such loans are at least 20% but less than 50%
of the outstanding amount, the risk weight applicable to the loan net of
specific provisions will be 75%.

If the specific provisions are 50% or more the applicable risk weights
will be 50%

24. Credit Mitigation Techniques (CRM) techniques under Standardized


Approach for taking the capital relief

Collateralised Transactions (through Eligible Financial Collaterals)

Only Cash, Deposit, LIC surrender Value and Gold will be eligible for
Financial mitigants (Security).

On-balance sheet netting

Guarantees as a credit protection

In case of CRM held by leaders in consortium / Multiple banking /


syndicating agents on behalf of other member banks, prorate share of

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CRM has to be incorporated in the CRCC. Branches have to collect this


information from leader bank and add this in CRCC data.
25. Basel III: A global regulatory framework for more resilient banks and
banking systems is released during December 2010.
26. Date of implementation of Basel III capital regulations is April 1, 2013. The
Basel III capital ratios will be fully implemented as on March 31, 2018.
27. Transitional Arrangements - Scheduled Commercial Banks (excluding
LABs and RRBs)
(% of RWAs)
Minimu
m capital
ratios

April 1,
2013

March
31,
2014

March
31,
2015

March
31,
2016

March
31,
2017

March
31,
2018

Minimum
Common
Equity Tier 1
(CET1)

4.5

5.5

5.5

5.5

5.5

Capital
conservation
buffer (CCB)

0.625

1.25

1.875

2.5

Minimum
CET1+ CCB

4.5

6.125

6.75

7.375

Minimum Tier
1 capital

6.5

Minimum Total
Capital*

Minimum Total
Capital
+CCB

9.625

10.25

10.875

11.5

Phase-in of all
deductions
from
CET1(in%)

20

40

60

80

100

100

28. Capital Conservation Buffer: The capital conservation buffer (CCB) is


designed to ensure that banks build up capital buffers during normal times
(i.e. outside periods of stress) which can be drawn down as losses are
incurred during a stressed period.
29. In addition to the minimum total of 8% above, banks will be required to
hold a capital conservation buffer of 2.5% of RWAs in the form of Common
Equity to withstand future periods of stress bringing the total Common
Equity requirement of 7% of RWAs and total capital to RWAs to 10.5%. The
capital conservation buffer in the form of Common Equity will be phased-in
over a period of four years in a uniform manner of 0.625% per year,
commencing from January 1, 2016.

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30. Elements of Common Equity Tier 1 Capital


a. Elements of Common Equity Tier 1 capital will remain the same under
Basel III. Accordingly, the Common Equity component of Tier 1 capital
will comprise the following:
Common shares (paid-up equity capital) issued by the bank which
meet the criteria for classification as common shares for regulatory .
Stock surplus (share premium) resulting from the issue of common
shares;
Statutory reserves;
Capital reserves representing surplus arising out of sale proceeds of
assets;
Other disclosed free reserves, if any;

srn/16.05.2013
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Capital Structure of banks


Basel II
'Capital funds' would include the components Tier I capital and Tier II capital.
The elements of Tier I capital include
Paid-up capital (ordinary shares), statutory reserves, and other disclosed free
reserves, if any;
Perpetual Non-cumulative Preference Shares (PNCPS) eligible for inclusion as
Tier I capital - subject to laws in force from time to time;
Innovative Perpetual Debt Instruments (IPDI) eligible for inclusion as Tier I
capital; and
Capital reserves representing surplus arising out of sale proceeds of assets.
The elements of Tier II capital include
undisclosed reserves,
They can be included in capital, if they represent accumulations of post-tax
profits and are not encumbered by any known liability and should not be
routinely used for absorbing normal loss or operating losses
revaluation reserves,
It would be prudent to consider revaluation reserves at a discount of 55 percent
while determining their value for inclusion in Tier II capital. Such reserves will
have to be reflected on the face of the Balance Sheet as revaluation reserves.
general provisions and loss reserves,

General provisions/loss reserves will be admitted up to a maximum of 1.25


percent of total risk weighted assets.

Banks are allowed to include the General Provisions on Standard Assets


and provisions held for country exposures in Tier II capital. However, the
provisions on standard assets together with other general provisions/ loss
reserves and provisions held for country exposures will be admitted as Tier
II capital up to a maximum of 1.25 per cent of the total risk-weighted assets,
etc.

'Floating Provisions' held by the banks, which is general in nature and not
made against any identified assets, may be treated as a part of Tier II capital
within the overall ceiling of 1.25 percent of total risk weighted assets.

Excess provisions which arise on sale of NPAs would be eligible Tier II capital
subject to the overall ceiling of 1.25% of total Risk Weighted Assets

Hybrid capital instruments,


Those instruments which have close similarities to equity, in particular when
they are able to support losses on an ongoing basis without triggering
liquidation, may be included in Tier II capital.

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subordinated debt: the instrument should be fully paid-up, unsecured,


subordinated to the claims of other creditors, free of restrictive clauses, and
should not be redeemable at the initiative of the holder or without the consent
of the Reserve Bank of India.

Limit for Tier II elements: Tier II elements should be limited to a maximum of


100 percent of total Tier I elements for the purpose of compliance with the
norms.

Banks should not issue Tier 1 or Tier 2 capital instruments with step-up
option so that these instruments continue to remain eligible for inclusion in
the new definition of regulatory capital. However, such instruments can be
issued with only call option as per existing rules.

Minimum requirement of capital funds: Banks are required to maintain a


minimum CRAR of 9 percent on an ongoing basis.

Market risk is defined as the risk of losses in on-balance sheet and off-balance
sheet positions arising from movements in market prices.

The market risk positions subject to capital charge requirement are:


The risks pertaining to interest rate related instruments and equities in the
trading book; and
Foreign exchange risk (including open position in precious metals)
throughout the bank (both banking and trading books).

Capital for market risk would not be relevant for securities, which have
already matured and remain unpaid.

These securities will attract capital only for credit risk. On completion of 90
days delinquency, these will be treated on par with NPAs for deciding the
appropriate risk weights for credit risk.

Computation of capital charge for market risk: The Basel Committee has
suggested two broad methodologies for computation of capital charge for market
risks
1. the Standardised method and
2. the banks Internal Risk Management models (IRM) method.

Foreign exchange contracts with an original maturity of 14 calendar days or


less, irrespective of the counterparty, may be assigned "zero" risk weight as
per international practice.

Capital for market risk would not be relevant for securities, which have already
matured and remain unpaid. These securities will attract capital only for credit
risk.

On completion of 90 days delinquency, these will be treated on par with NPAs


for deciding the appropriate risk weights for credit risk.

Banks shall continue to apply the Standardised Duration Approach (SDA) for
computing capital requirement for market risks.

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Operational risk capital charges


The New Capital Adequacy Framework outlines three methods for calculating
operational risk capital charges in a continuum of increasing sophistication and
risk sensitivity:
1. the Basic Indicator Approach (BIA);
2. the Standardised Approach (TSA); and
3. Advanced Measurement Approaches (AMA).

All commercial banks in India shall adopt Standardised Approach (SA) for
credit risk & Basic Indicator Approach (BIA) for operational risk.

Basel III :

Implemented w.e.f 01.04.2013. The Basel III capital ratios will be fully
implemented as on March 31, 2018.

The capital requirements for the implementation of Basel III guidelines may
be lower during the initial periods and higher during the later years.

srn/04.05.2013

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Branch Authorisation Policy of RBI:

Opening of new Branches and shifting of existing branches of Banks are


governed by provision of Sec 23 of BR Act 1949.

Domestic scheduled commercial banks (other than RRBs) are free to open
branches in Tier 3 to Tier 6 centres as identified in the Census 2001
(with population up to 49,999) under general permission.

Opening of branches by domestic scheduled commercial banks (other


than RRBs) in Tier 1 and Tier 2 centres (with population of 50,000 &
above) will continue to require prior authorization

Domestic scheduled commercial banks (other than RRBs) has been


granted permission to open Administrative Offices and Central Processing
Centres (CPC) / service branches in Tier- 3 to Tier- 6 centres and in
rural, semi urban and urban centres in the North Eastern States and
Sikkim, subject to reporting.

Domestic scheduled commercial banks (other than RRBs) have been


permitted to open offices exclusively performing administrative and
controlling functions (RegionalOffices/Zonal Offices) in Tier 1 Centres
without the need to obtain prior permission in each case, subject to
reporting.

New private sector banks are required to ensure that at least 25% of their
total branches are in semi-urban and rural centres on an ongoing basis.

Population-group wise classification of centres


Rural Centre

Population upto 9,999

Semi-urban centre

from 10,000 to 99,999

Urban centre

from 1,00,000 to 9,99,999

Metropolitan centre

10,00,000 and above

Classification of centres(tier-wise) Population(as per 2001 Census)

Tier 1 -

1,00,000 and above

Tier 2-

50,000 to 99,999

Tier 3-

20,000 to 49,999

Tier 4-

10,000 to 19,999

Tier 5-

5,000 to 9,999

Tier 6-

Less than 5000

Further, new private sector banks are required to ensure that at least
25% of their total branches are in semi-urban and rural centres on an
ongoing basis.
Back to index

Ref: .RBI cir. Dt.20.11.2012;

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Base Rate

Working Group on Benchmark Prime Lending Rate (Chairman: Shri Deepak


Mohanty recommended for Base Rate for banks in lieu of BPLR.

The Base Rate system replaced the BPLR system with effect from July 1,
2010.

Base Rate shall include all those elements of the lending rates that are
common across all categories of borrowers.

All categories of loans (exempted categories are give below) should are priced
only with reference to the Base Rate.

The following categories of loans could be priced without reference to the


Base Rate:
a.

DRI advances

b.

loans to banks own employees

c.

Loans to banks depositors against their own deposits

Government of India extends interest subvention for Agricultural loans and


some export finances. Where interest subvention is available, if interest rate
charged goes below the Base rate, such lending rate will not be construed as
violation of base rate guidelines.

In case of restructured loans, if some of the working capital term loan


(WCTL), Funded Interest Term Loan (FITL) etc. need to be granted below the
base rate for the purpose of viability of restructure, the same are not
considered as violation of Base Rate principle

Since the Base Rate is the minimum rate for all loans, banks are not
permitted to resort to any lending below the Base Rate.

Base rate will be arrived at taking the following factors into consideration.
o

Cost of deposits/funds

Cost of capital

NIL return for CRR balance

Low return on SLR investments

Unallocated overhead costs and deployable funds

Average return on networth

Incidence of NPA

Present Base rate of our Bank is 10.25 % w.e.f 18.02.2013


srn/19.05.2013
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Security arrangements in Bank

1. Insurance coverage for cash in transit is Rs.300 lacs


2. Cash remittances will be escorted as follows: (CO: SECY: 17: 5 04 June
2012). Issuance of cover is based on escort.
Upto Rs. 30 lakhs -No armed escort
Above Rs. 30 lakhs upto Rs.50 lakhs -1 Armed guard
Above Rs. 50 lakhs upto Rs.300 lakhs -2 Armed guards
Above Rs. 3 crore-Police escort
3. The key of the cash box should not accompany the remittance / withdrawal
party. One set of the cash box key should be available at the Currency Chest
/ branch where such remittance / withdrawal are carried out.
4. Bullion / Gold coins in transit will be escorted as done for cash.
5. In case the distance covered is short and no mode of transport is available,
cash may be sent on foot.

In such cases, remittance should not exceed Rs.2 (two) lakhs.

The escort should walk a few paces behind the carrier.

At least 2 confirmed employees must accompany all remittances.

6. Usage of fire extinguishers

Appropriate fire extinguisher to extinguish the fire as under:


Electrical fire - Use CO2 or DCP type fire extinguisher.
Computer fire -Use CO2 type fire extinguisher.
Other fire viz. Wood/carpet/cloth/paper - Use DCP or CO2 type fire
extinguisher.
Both the DCP & CO2 fire extinguishers are to be refilled once in two
years.

Refilling Of Fire Extinguishers


Both the DCP & CO2 fire extinguishers are to be refilled once in 2
years. (Ref: CO:SECY:17:4 29 May 2012)

7. Detection and impounding of counterfeit Bank notes

The designated Nodal Officers (identified by Regional Offices) should


obtain details of detection and impounding from branches (including NIL
report) and maintain a record for verification.

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Reporting in a consolidated manner every month to Central Crime


Branch /District Crime branch along with the impounded FICN in
respect of detection having 1 to 4 pieces in a single transaction.

Filing FIR separately then and there in case of detection of five or more
in a single transaction.

A consolidated report of both categories should be submitted to Issue


Dept of RBI having jurisdiction over the concerned District.

A NIL report should be submitted in case there was no detection in any


month.

srn/17.03.2013
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Application supported by blocked amount (ASBA)

SEBI has introduced an alternative mode of payment for Initial Public Offer
called Application Supported by Blocked Amount

Under this process, the application amount will be blocked and will be
debited to applicants account only upon allotment.

In case of part allotment, part amount only will be debited and the block for
the remaining amount will be removed.

Similarly, in the case of non-allotment, block for the entire amount will be
removed.

In order to encourage ASBA facility, ASBA banks are now being offered a
marketing fee by the issuing companies.

Self Certified Syndicate Bank is a Bank (SCSB), which has been


recognized by Securities and Exchange Board of India (SEBI) to accept
application (ASBA) for an Issue from the customers who hold bank accounts
with our bank.

Our Bank has been recognized as ASBA Bank (SCSB) by SEBI, included in
SCSB list w.e.f 15.11.2010 and permitted to accept the ASBA Applications
from 01.12.2010.

After receipt of ASBA Applications, the branches should provide


acknowledgement to the Investors, enter the data in our CBS package.

After approval of the entries, the bank accounts (with any branch of our
Bank) except specialized branches) are blocked to the extent specified by
investors.

All applications received should be punched on the same day.

All the entries will be uploaded to NSE/BSE by the Controlling Branch

The application particulars are transmitted to Registrar and Transfer Agent


(RTA) to Issue by NSE/BSE.

RTA finalises allotment and sends file to each ASBA Bank i.e. to the
Controlling Branch

The ASBA Application will be retained by the SCSB for a period of 6 months
and thereafter forwarded to the issuer.

As the Bank account and demat account of the customers are being opened
at Banks/DPs only after complying with all KYC norms including verification
of PAN, there is no responsibility for the branch receiving the ASBA
application form.

Even the account holder can be different from the applicant. Hence, ASBA
application has a provision for the signature of the applicant and of the
account holder.

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As the applicant can be different from the account holder ASBA is very
useful for contributing to CASA of the Bank. People who want to apply
through ASBA bring their deposit into our bank account.

SEBI has restricted an account for only 5 applications.

Only for blocking the account, the branch has to verify the signature with
that available in the application or in the relevant box (if the applicant is
different from account holder).

After finalisation of the basis of allotment, when the data provided by the
Registrar is run at the controlling branch, amounts in the accounts held at
various branches are automatically debited/part-transferred/ unblocked
depending upon the status of allotment. The Escrow account opened at the
controlling branch is also credited automatically.

The funds collected in the account are transferred to the account of Bankers
to the Issue/Company as the case may be by means of RTGS.

All branches of Indian Overseas Bank (except specialized branches) have to


accept ASBA applications tendered at the Branch by any IPO / FPO / Rights
applicant.

No ASBA application completed in all respects and which is eligible for being
accepted can be rejected by any of the branches of the Bank for any reason.

Rejection of a valid ASBA application by any Branch has financial


implications and can therefore attract severe action on the Bank by the
Regulatory Authority.
srn/22.05.2013

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Customer Service

Monthly staff meeting to discuss about new products.

Observance of Customers Day on 15th of every month.

To hold meetings of small group of customers every fortnight

Opening of account of minors


Section 6 of the Hindu Minority and Guardianship Act, 1956, stipulates that
the father alone should be deemed to be the guardian, while father is alive.
Therefore accounts are opened in the name of minors with father as
guardian.
The facility of allowing opening of minors accounts with mothers as
guardians may be extended to Savings Bank and fixed Deposit Accounts.
These accounts are not allowed to be overdrawn and that they always
remain in credit. In this way, the minors' capacity to enter into contract
would not be a subject matter of dispute.

Opening of current accounts ;


Banks do not open current accounts of entities which enjoy credit facilities
(fund based or non-fund based) from the banking system without specifically
obtaining a No-Objection Certificate from the lending bank(s).
Violation of the above would make the concerned banks liable for penalty
under Banking Regulation Act, 1949.
Banks may open current accounts of prospective customers in case no
response is received from the existing bankers after a minimum waiting
period of a fortnight.

Business hours
No particular banking hours have been prescribed by law.
Hence banks may fix, after due notice to its customers, whatever business
hours are convenient to it i.e., to work in double shifts, to observe weekly
holiday on a day other than Sunday or to function on Sundays in addition to
the normal working days, subject to observing normal working hours for
public transactions.
Banks should extend business hours for banking transactions other than
cash, up till one hour before close of the working hours.

Helping customers
All branches, except very small branches should have Enquiry or May I
Help You counters either exclusively or combined with other duties, located
near the entry point of the banking hall.

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Operation in old/sick account holders With a view to enabling the old / sick
account holders operate their bank accounts, banks may follow the
procedure as under;
o

Wherever thumb or toe impression of the sick/old/incapacitated account


holder is obtained, it should be identified by two independent witnesses
known to the bank, one of whom should be a responsible bank official.

Where the customer cannot even put his / her thumb impression and
also would not be able to be physically present in the bank, a mark can
be obtained on the cheque / withdrawal form which should be
identified by two independent witnesses, one of whom should be a
responsible bank official.
The customer may also be asked to indicate to the bank as to who
would withdraw the amount from the bank on the basis of cheque /
withdrawal form as obtained above and that person should be identified
by two independent witnesses. The person who would be actually
drawing the money from the bank should be asked to furnish his
signature to the bank

Facilities to visually challenged persons:


Banks to offer banking facilities such as cheque book facility including third
party cheques, ATM facility, Net banking facility, locker facility, retail loans,
credit cards etc., are invariably offered to the visually challenged as they are
legally competent to contract.

Persons with Autism, Cerebral Palsy, Mental Retardation


Banks are to rely upon the Guardianship Certificate issued either by the
District Court under Mental Health Act or by the Local Level Committees
under the National Trust for the Welfare of Persons with Autism,
Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999
for the purposes of opening / operating bank accounts with due precautions
and with due compliance regarding approval from competent authorities..

Issue of Duplicate Demand Draft;


Duplicate draft, in lieu of lost draft, up to and including ` 5,000/- may be
issued to the purchaser on the basis of adequate indemnity and without
insistence on seeking non payment advice from drawee office irrespective of
the legal position obtaining in this regard.
Banks should issue duplicate Demand Draft to the customer within a
fortnight from the receipt of such request.
For the delay beyond this stipulated period, banks were advised to pay
interest at the rate applicable for fixed deposit of corresponding maturity in
order to compensate the customer for such delay.

Returning dishonoured cheques

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Banks to implement the recommendation of the Goiporia Committee dishonoured instruments are to be returned / despatched to the customer
promptly without delay, in any case within 24 hours.

Standardised Public Grievance Redressal System (SPGRS )


Our bank had introduced IOB Grams (IOB Grievances Redressal And
Monitoring System) for the redressal and monitoring of public complaints.
As per the instructions of Department of financial services, Govt.of India,
IOB Grams has been modified to have a Standardised Public Grievance
Redressal System (SPGRS).
Standardised Public Grievance Redressal System called SPGRS is uniform in
all banks.
In the new system the public can register the complaint online through our
website www.iob.in. The complainants can monitor the status of their
complaint on a day to day basis.
Such complaints can be viewed by the branch through the Menu option
"Receive Complaints-OnLine channel
Time Limit for redressal of Complaints:
For Branches - 5 Days
For ROs - 5 Days
Complaints pending for more than 5 days in branch will be automatically
escalated to the concerned Regional Office. As also the case of complaints
pending with RO escalated to CO dept.
Resolved complaints have to be closed by Regional Offices on collecting
necessary documentary evidence such as mail/letter from the complainant
by Regional Office.
ATM and Net Banking related complaints have to be attended by Transaction
Banking Department (TBD) at Central Office from day one of complaint and
if they notice any discrepancy due to branch action, corrective action should
be made by TBD.
The complaints received from RBI, Banking Ombudsman and Directorate of
Public Grievances and Ministry Of Finance (MoF) will be closed by CO after
satisfactory redressal of the complaints.
Other Complaints should be closed by the concerned Regional Office after
satisfactory redressal of the grievances.
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Compensation Policy

This policy is to establish a system whereby the bank compensates the customer
for any financial loss he/she might incur due to deficiency in service on the part of
the bank or any act of omission or commission directly attributable to the Bank
Policy covers only compensation for financial losses which customers might incur
due to deficiency in the services offered by the bank which can be measured
directly.
1. Unauthorised/Erroneous debit

The bank has raised an unauthorised/erroneous direct debit to an account,


the entry will be reversed immediately on being informed of the erroneous
debit, after verifying the position.

In the event the unauthorised/erroneous debit has resulted in a financial


loss for the customer by way of reduction in the minimum balance
applicable for payment of interest on saving bank deposit or payment
additional interest to the bank in a loan account, the bank will compensate
customer for such loss.

Further, if the customer has suffered any financial loss incidental to return
of a cheque or failure of direct debit instructions due to insufficiency of
balance on account of the unauthorised/erroneous debit, the bank will
compensate the customer to the extent of such financial losses.

In case verification of the entry reported to be erroneous by the customer


does not involve a third party, the bank shall arrange to complete the
process of verification within a maximum period of 7 working days from the
date of reporting of erroneous debit .

In case, the verification involves a third party, the bank shall complete the
verification process within a maximum period of one month from the date of
reporting of erroneous transaction by the customer.

Erroneous transactions reported by customers in respect of credit card


operations which require reference to a merchant establishment will be
handled as per rules laid down by card association.

Not withstanding internal regulations for the members of VISA International


on disputes of credit card transactions, the guidelines of Reserve Bank of
India regarding provision of explanation /documentary evidence to the card
holders within a maximum period of 60days shall be followed by the Bank.

2. In case of erroneous debits arising out on Fraudulent or other transactions

The bank would compensate the customer forthwith without demur, where
the bank is at fault.

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Even when the bank or the customer is not at fault, and the fault lies
elsewhere in the system, then also bank would compensate the customer.

As a measure of our Banks commitment to speedy customer service, the


customer will be compensated up to Rs. 1.00 lac where erroneous debits
have taken place in the customers accounts ,either through our fault or
where the fault is elsewhere in the system after getting necessary approval
from the concerned layer of authority.

3. Where it is established that the bank had issued and activated a credit card
without written consent of the recipient, the bank would not only reverse the
charges immediately but also pay a penalty without demur to the recipient
amounting to twice the value of charges reversed as per regulatory guidelines
in this regard.
4. Payment of cheque after stop payment instructions:

In case a cheque has been paid after stop payment instruction is


acknowledged by the bank, the bank shall reverse the transaction and give
value dated credit to protect the interest of the customer.

Any consequential financial loss to the customer will be compensated as


explained earlier.

Such debits will be reversed within 2 working days of the customer


intimating the transaction to the Bank

5. Undue delay in crediting foreign remittance:

Bank will compensate the customer for undue delays in affording credit once
proceeds are credited to the Nostro Account of the bank with its
correspondent.

Inward remittances will be credited within 7 days from the date of credit in
our nostro account, if the beneficiarys account particulars are available
correctly.

Customers will be compensated by way of interest for the delayed credits


beyond 7 days at 2% above SB interest rate.

6. Violation of the Code by banks agent: In the event of receipt of any complaint
from the customer that the banks representative/courier or Direct Selling Agent
has engaged in any improper conduct or acted in violation of the Code of Banks
Commitment to Customers which the bank has adopted voluntarily, bank shall
take appropriate steps to investigate and to handle the complaint and to
compensate the customer for financial losses, if any.
7.

Issue of duplicate drafts and compensation in case of delay.

Duplicate draft will be issued within a fortnight from the receipt of such
request from the purchaser thereof.

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For delay beyond the above stipulated period, interest at the rate applicable
for Fixed Deposit of Corresponding period will be paid as compensation to
the customer for the delay.

8. Returning of securities to the borrowers & compensation in case of delay:

In terms of the Code of Banks Commitment to customers adopted by the


bank,
the
bank
would
return
to
the
borrowers
all
the
securities/documents/title deeds to mortgaged property within 15 days of
repayment of all dues agreed to or contracted subject to right of set off, if
any.

The bank will compensate the borrower for monetary loss suffered, if any,
due to delay in return of the same.

In the event of death of owner of the property, the title deed would be
delivered as per banks policy for settlement of deceased customer asset.

In the event of loss of title deeds to mortgage property at the hands of the
bank the compensation will cover out of pocket expenses for obtaining
duplicate documents plus a lump sum amount of Rs.5000/-.
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Staff Matters

1. Staff Clerical:

Duties attracting special pay in our bank


Special Assistants
Head Cashier II
Single Window Operator B

Some of the duties of Single Window Operator A


Passing and cash payment of all cheques/withdrawal forms/bankers
cheques/gift cheques etc upto and including of Rs.10,000/ Passing independently clearing and transfer cheques/vouchers etc
upto and including of Rs.15,000/ Receipts of cash and issuance of pre-signed drafts/gift
cheques/travellerss cheques/pay orders/bank orders etc., upto and
including Rs.15,000/-

Some of the duties of Single Window Operator B


Passing and cash payment of all cheques/withdrawal forms/bankers
cheques/gift cheques etc upto and including of Rs.20,000/ Passing independently clearing and transfer cheques/vouchers etc
upto and including of Rs.25,000/ Receipts of cash and issuance of pre-signed drafts/gift
cheques/travellerss cheques/pay orders/bank orders etc., upto and
including Rs.25,000/-

2. Cash Department:

For any shortage in cash balance held under the single custody of the
cashier, he / she is solely responsible. Hence the shortage must be
recovered on the same day from the concerned cashier.

As regards the genuineness and quality of the currency notes of all


denominations, the responsibility for the same will vest on the cashier
who has accepted such notes.

For any shortage in vault balance, the joint custodians viz., the
supervising official and the cashier shall be jointly responsible.

In case of any shortage in any book of notes, the Officer and/or


cashiers who have signed the denomination slips shall be responsible for
the shortage.

Any excess in the cash balance must be credited to Sundry Creditors


Account on the same day after the preparation of a credit voucher
bearing complete particulars of such excess cash.

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Such instances of excess cash should be reported to Regional Office on


the same day.

Amounts which have been lying unclaimed for more than six months
will be transferred to Central Office every half year by March and
September.

Cases of negligence and cash shortages upto Rs.10,000/- to be


reported as fraud if the intention to cheat/defraud is suspected/proved.

However, the following cases where the fraudulent intention is not


suspected/proved at the time of detection will be treated as fraud and
reported accordingly;
a. Cases of cash shortage more than Rs.10,000/- and
b. Cases of cash shortage more than Rs.5,000/- if detected by
management/auditor/inspector and not reported on the day of
occurrence by the persons handling the cash.

The cashier preparing the packets remains responsible for both the
quality and quantity of the notes in the packets prepared by him for
denominations from Rs.1/= to Rs.50/=.

The cashier is solely responsible for quality of notes of denominations


above Rs.50/-.

The Officer/SA or any authorised official who recounted notes packet are
jointly responsible for quantity of notes in such packets

3. Checking of supplementary/reports

Checking of supplementary is a must even in CBS environment.

It helps the Branch to detect the fraudulent transactions/wrong posting


of vouchers so that necessary remedial measures can be immediately
taken to avert the loss and to avoid customers complaints/ grievances.

The Supervising staff checking the supplementary shall ensure that the
number of vouchers shown in the supplementary corresponds to the
number of vouchers available for verification.

All reports of exceptional transactions have to be checked and


authenticated by Branch Manager.

4. Commencement of employees working hours 15 minutes before the


commencement of working hours : Goiporia Committee Recommendations.
5. Rotation of duties in respect of both workmen and officer employees: Ghosh
Committee Recommendations.

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6. Second signature in vouchers passing by supervisory staff

In case of cash payments exceeding Rupees Twenty thousand.

In clearing Cheques for amounts exceeding Rupees Fifty thousand.

Transfer debit vouchers using Cheques for amounts exceeding Rupees


Fifty thousand.

Debits vouchers exceeding Rupees One lakh Fifty thousand must be


Countersigned and passed finally by the Branch Manager

Special cadre assistants can pass independently, manually or online,


cash instruments up to Rs.35000/- and also clearing and transfer
instruments.

7. Staff Subordinate:

Some of the duties


carrying of cash not exceeding Rs.5,000/-

8. All Staff members should wear Identity Card while on duty. This is a
mandatory provision. Non-wearing of Identity Card while on duty is a
misconduct as per Bipartite Settlement.

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Some terminologies used in financials


1.

Memorandum of association:
It is a public document of a company.
It sets out the constitution of the company, its objective etc.
It defines the scope of companys activities and its relation with the outside
world.
A bank or any other person lending to a company for purposes ultrvires the
memorandum of association cannot recover.

2.

Articles of Association:
It is a document of a company which sets out its by-laws or rules and
regulation that govern the management of its internal affairs and the conduct
of its business.

3.

Certificate of Incorporation:
It is a certificate issued by Registrar of companies (ROC).
It is a conclusive evidence that all the requirements of the Companies Act
have been complied with in respect of registration.

4.

Karta : Senior most male member of a Hindu Undivided family (HUF),


competent to enter into a contract.

5.

Co-parcener : The male members other than the Karta in a HUF. In some
states female members are also co-parcenors

Some terms used in balance sheet:


6.

Fixed Assets: Are the long term assets/capital assets employed by the
enterprise for production of goods or services. These items are not for sale in
the normal course of business.
Eg: Building, land, plant & machinery, vehicles, furniture & fixture etc.

7.

Gross block: Represents the original cost of fixed assets without adjustment
of depreciation.

8.

Current Assets: Are the short term assets of an enterprise which can be
converted to cash within a period of one year.
Eg: Inventories, Receivables (book debt), cash, bank deposits, investment in
banks, post offices and other Govt. securities

9.

Intangible Assets: These items represent monetary values different rights


enjoyed by the enterprise.
Eg: Good will, patents, copyrights, trade mark right
Some fictitious assets like expenses like preliminary expenses not charged to
profit & loss account.

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10. Authorised Capital: The maximum number of shares a company can issue in
terms of the documents of its incorporation. Authorised Capital is not forming
part of balance sheet.
11. Issued Capital: A part of the
company/subscribed by the investors

authorised

capital

issued

by

the

12. Paid up capital: This is the portion or full of the issued capital paid by the
investors.
In the context of balance sheet analysis, the term capital refers to subscribed
and paid up capital.
13. Reserves & Surplus : This consist of the portion of the earnings, receipts or
other surplus of an enterprise kept aside by the management for a general or
specific purpose.
14. Capital Reserve
This represent the premium on issue of shares, forfeited shares etc.
15. current liabilities
Money owed by the business that is generally due for payment within 12
months of balance sheet date.
Examples: creditors, bank overdraft, taxation, the portion of term loan due
during the year.
16. Gross Working Capital (GWC)
The funds required to finance the total current assets of a unit.
In other words gross working capital is nothing but total current assets.
The need for GWC arises from the operating or cash cycle of the unit.
The operating cycle refers to the length of time required to convert noncash current assets into cash.
Gross Working Capital (GWC) = Total Current Assets (TCA)
17. Net Working Capital (NWC)
The long term sources of funds which are available, for financing current
assets.
In other words, NWC is the excess of current assets over current liabilities
or
Excess of long term sources over the long term uses.
NWC = TCA TCL

OR Long term source (LTS) Long Term Use (LTU)

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18. Working Capital Gap (WCG)


The portion of current assets which are not financed from other current
liabilities is known as working capital gap (WCG).
WCG = TCA OCL

or

NWC + BB

WCG is financed by NWC (long term sources) and BB (Bank borrowing).


Total current assets (financed by) = Net working capital + other current
liabilities + Bank borrowing
19. Fixed cost: A cost which does not vary with changing sales or production
volumes.
Eg. Building lease costs, permanent staff wages, rates, depreciation of capital
items.
20. Variable cost: A cost which varies with sales or operational volumes,
Eg. Raw materials cost, fuel cost, commission payments etc.
21. Debt Service Coverage Ratio (DSCR) : It is ratio indicating the capability of
an enterprise with regard to servicing of the debt (interest & principal)
DSCR =

NPAT + Depreciation + Interest on TL


Annual Principal instalment + Interest on TL

22. Debt Equity Ratio (DER):


This gives the relation between debt and equity of an enterprise.
This indicates solvency of the firm.
23. Gearing ratio:
A ratio of debt to equity and indicates the relationship between long-term
borrowings and shareholders' funds.
Used to decide as to go for debt or equity in terms of profitability.
24. Capital gearing ratio:
Capital Gearing Ratio =

Fixed Charge bearing Long term fund


Total Long Term Fund
********************

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Some monetary terms


1.

Call/Notice Money market:

Under call money market, funds are transacted on an overnight basis

Under notice money market; funds are transacted for a period between 2 days
and 14 days.

Eligible participants are free to decide on interest rates in call/notice money


market.

Deals in the call/notice money market can be done upto 5.00 pm on weekdays
and 2.30 pm on Saturdays or as specified by RBI from time to time.

List of Institutions Permitted to Participate in the Call/Notice Money Market


both as Lenders and Borrowers
Scheduled Commercial Banks (excluding Regional Rural Banks);
Co-operative Banks other than Land Development Banks; and
Primary Dealers

2.

Demand Liabilities
Demand Liabilities of a bank are liabilities which are payable on demand.
These include current deposits, demand liabilities portion of savings bank
deposits, margins held against letters of credit/guarantees, balances in
overdue fixed deposits, cash certificates and cumulative/recurring
deposits, outstanding Telegraphic Transfers (TTs), Mail Transfer (MTs),
Demand Drafts (DDs), unclaimed deposits, credit balances in the Cash
Credit account and deposits held as security for advances which are
payable on demand.

3.

Time Liabilities
Time Liabilities of a bank are those which are payable otherwise than on
demand.
These include fixed deposits, cash certificates, cumulative and recurring
deposits, time liabilities portion of savings bank deposits, staff security
deposits, margin held against letters of credit, if not payable on demand,
deposits held as securities for advances which are not payable on demand
and Gold deposits.

4.

Other Demand and Time Liabilities (ODTL)


ODTL include interest accrued on deposits, bills payable, unpaid dividends,
suspense account balances representing amounts due to other banks or
public, net credit balances in branch adjustment account etc.
Participation Certificates issued to other banks, the balances outstanding
in the blocked account pertaining to segregated outstanding credit entries
for more than 5 years in inter-branch adjustment account, the margin

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money on bills purchased / discounted and gold borrowed by banks from


abroad, also should be included in ODTL.
5.

Marginal Standing Facility (MSF) scheme


Under this facility, the eligible entities may borrow overnight, up to two per
cent of their respective NDTL outstanding at the end of the second preceding
fortnight.

6.

7.

Cash Reserve Ratio (CRR)

CRR is maintained in terms of RBI Act 1934

RBI is empowered to fix CRR without a floor limit or ceiling

CRR is computed on bank's total of demand and time liabilities.

No Interest Payment on Eligible Cash Balances maintained by SCBs with


RBI under CRR

All Scheduled Commercial Banks are required to maintain minimum CRR


balances up to 70 per cent of the required reserves on a daily basis on all
days of the fortnight during a reporting fortnight so that the average
balance will be equal to minimum CRR requirement.

In cases of default in maintenance of CRR requirement on a daily basis


which is presently 70 per cent of the total CRR requirement, penal interest
will be recovered for that day at the rate of three per cent per annum above
the Bank Rate on the amount by which the amount actually maintained
falls short of the prescribed minimum on that day and if the shortfall
continues on the next succeeding day/s, penal interest will be recovered at
a rate of five per cent per annum above the Bank Rate.

In order to determine the rupee equivalent liability under FCNR (B) Scheme
for the purpose of Cash Reserve Ratio (CRR), RBI Reference rate
announced on the Reserve Banks web site at around 12:30 pm for the
purpose of converting foreign assets/deposits for reporting in Form A
Return is used w.e.f 13.07.2012.

Statutory Liquidity Ratio (SLR)


The ratio of liquid assets to demand and time liabilities is known as
Statutory Liquidity Ratio (SLR).
SLR is maintained in terms of provisions contained in Banking Regulation
Act 1949
RBI can prescribe the SLR for Scheduled Commercial Banks (SCB) in
specified assets. The value of such assets of a SCB shall not be less than
such percentage not exceeding 40 per cent of its total demand and time
liabilities in India as on the last Friday of the second preceding
fortnight
SLR is maintained in the form of cash, gold (valued at current market
price), unencumbered approved securities and net balance with any
scheduled bank.

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8.

If a banking company fails to maintain the required amount of SLR, it


shall be liable to pay to RBI in respect of that default, the penal interest
for that day at the rate of 3 per cent per annum above the Bank Rate
on the shortfall and if the default continues on the next succeeding
working day, the penal interest may be increased to a rate of 5 per
cent per annum above the Bank Rate for the concerned days of default
on the shortfall

CAMELS rating system


In the on-site examination process, the Banks are rated by the regulator on
CAMELS model once in a year.
The six factors examined are as follows:
C - Capital adequacy
A - Asset quality
M - Management quality
E - Earnings
L - Liquidity
S System & Procedure compliance
Bank supervisory authorities assign each bank a score on a scale of one
(best) to five (worst) for each factor.
If a bank has an average score less than two it is considered to be a highquality institution, while banks with scores greater than three are
considered to be less-than-satisfactory establishments.
The system helps the supervisory authority identify banks that are in need
of attention.

9.

Bank Rate
The Standard rate at which RBI is prepared to buy or rediscount bills of
exchange or other commercial paper eligible for purchase under the RBI
Act.
The rate at which RBI advance money to banks, banking companies and
other financial institutions.
This is the most important tool in the hands of RBI through which it
controls the credit flow.
The Bank rate of the RBI is a pace settler to other market rates of interest,
both for short term and long term credit.

10. Repo rate:


Repo is a collateralized lending of RBI to banks.

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The banks which borrow money from Reserve Bank to meet short term
needs have to sell securities, usually bonds to Reserve Bank with an
agreement to repurchase the same at a predetermined rate and date.
Reserve bank charges some interest rate on the cash borrowed by banks.
This interest rate is called repo rate.
11. Reverse Repo rate:
Reverse Repo rate is the rate at which the RBI borrows money from
commercial banks.
An increase in reverse repo rate can prompt banks to park more funds with
the RBI to earn higher returns on idle cash.
It is also a tool which can be used by the RBI to drain excess money out of
the banking system.
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Miscellaneous Points
1.

2.

Aadhaar:

It is a 12-digit unique identification (UID) number which the Unique


Identification Authority of India (UIDAI) is issuing for all Indian residents.

The UID number is stored in a centralised database and linked to the basic
demographics and biometric information photograph, ten fingerprints
and iris of each individual.

This has an additional four digits that will be hidden from the common
man. These four digits, which the authority terms a virtual number, will
change as and when the resident changes his pin number or residence

As far as people are concerned, there would only be a 12-digit number


that would be relevant for their identification and use.

Lok Adalat : Eligible Accounts


Pre-litigative cases / accounts with outstanding upto Rs.20 lacs
Suit filed cases/accounts where the plaint amount does not exceed Rs.20
lacs.
the cases referred to Lok Adalat conducted by the DRT No ceiling

3.

Acceptable use policy


Acceptable use policy deals with the use of information and information
system assets for purposes and in the manner acceptable to the bank.

4.

5.

Interest subvention for Agri. Advances

INTEREST SUBVENTION SCHEME for Short Term Crop Loans had been
extended for the 2012-13.

Interest subvention at 2% p.a for short term production credit/crop loans


upto Rs. 3 lakhs per farmer.

Additional Interest subvention of 3% as an incentive to those farmers who


repay their short term crop loans as per schedule.

In addition to the above interest subvention on post harvest loans up to 6


months against warehouse receipt was also available

Minority communities:The following communities have been notified as


minority communities by the Government of India, Ministry of Welfare;
Sikhs, Christians, Muslims,Zoroastrians & Buddhists.

6.

Economically weaker sections & Low Income Group


Ministry of Housing and Urban Poverty Alleviation (MoHUPA) fixed income
limits/ceiling with respect to EWS and LIG as under, by their memorandum
dated: 14.11.2012.
For EWS Rs.1, 00,000/- as household income per annum

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For LIG Rs, 1, 00,001/- to 2, 00, 000/- as household income per annum
7.

National calendar:
Government of India has accepted Saka Samvat as National Calendar. All
Government statutory orders, notifications; Acts of Parliament, etc. bear both
the dates i.e., Saka Samvat as well as Gregorian calendar. instrument written
in Hindi having date as per Saka Samvat calendar is a valid instrument.
Cheques bearing date in Hindi as per the National Calendar (Saka Samvat)
should, therefore, be accepted by banks for payment.

8.

Payment of customs duty: Central Board of Excise & Customs have made
e_payment mandatory for all the importers registered under Accredited Clients
Programme and importers payment Customs Duty of Rs.1.00 lakh or more per
Bill of entry, w.e.f 17.09.2012.

9.

Scheme of incentives and penalties for bank branches based on customer


service : Incentives

Opening of and maintaining currency chests at centres having less than 1


lakh population in under-banked States:
a. Capital cost: 50% of capital expenditure subject to ceiling of Rs.50 lakh
per currency chest.
b. Revenue cost : 50% of revenue expenditure for the first 3 years

Exchange of soiled notes / adjudication of mutilated banknotes


a. Exchange of soiled notes -One Rupee per packet in Rs.5, Rs.10, Rs.20
and Rs.50 denomination.
b. Adjudication of mutilated notes Rs.2.00 per piece

Distribution of coins counter : Rs.25 per bag

Establishment of vending machines :


a. Capital cost - Urban/Metro centres 50% &. Rural and semi urban
centres 75%
b. Operational cost @ Rs.25 per bag

10. Detection and Impounding of Counterfeit Bank Notes

The counterfeit notes can be impounded by all branches of public sector


banks. It should be done in the presence of the tenderer.

Each banknote impounded by the branch should be affixed with a stamp


of impounding and an acknowledgement receipt should be issued to the
tenderer.

In no case, the counterfeit note should be returned to the tenderer or


destroyed by the bank branches/treasuries.

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Branches shall report the detection of counterfeit notes to the Police on a


monthly basis in a consolidated manner in respect of detection upto 4
pieces in a single transaction.

If detection is 5 pieces and above, separate FIR should be filed then and
there.

All bank branches having average daily cash receipts between Rs 50 lakhs
and above shall use Note Sorting machines, conforming to Note
Authentication and Fitness Sorting parameters prescribed by RBI, before
issuing them over the counter or through ATMS.

All notes in the denomination of Rs 100 and above should be processed


through Note Sorting machines.

In compliance with Sec 39 of Cr.P.C. the impounded counterfeit notes


should be submitted to the Police along with the consolidated report/FIR.

Dispensation of counterfeit notes through ATMS would be construed as an


attempt to circulate counterfeit notes by the banks concerned.

Counterfeit notes identified and impounded by the Bank have to be


reported to FIU-IND as per regulations of PMLA-2002.

Hence, District-wise Nodal Officers designated for reporting detection of


counterfeit notes are advised to furnish to AML CELL, Inspection Dept,
Central Office the name of branch, details of counterfeit notes detected and
a copy of the FIR within 7 days from the date of detection, to enable
them to escalate the same to FIU-IND.( Transient Series (File: 7-D) Circular No. 3 of 2012-13
Date: 12.06.2012)

11. Central Office Inspection

The system of present auditing is Risk Based Internal Audit (RBIA)


(Inspection/ Misc/237/2012-13 dt. 19.01.2013).

The proposed new software for Risk Based Internal Audit is called eTHIC.

The audit plan for a branch will be fixed by mapping the Inherent Business
Risk and Control Risk in an Audit Risk Matrix (ARM).

Audit Periodicity: The overall risk category referred above in ARM will
determine the audit intervals of the branch concerned:
OVERALL RISK
CATEGORY

AUDIT INTERVALS
IN MONTHS

Low

15

Medium

12

EXTENSION OF TIME,
IF NECESSARY
PERMISSIBLE BY GM
INSPECTION.
Maximum by 3
months
Maximum by 2
months

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High/Very
High/
Newly
opened/
Upgraded/tak

09

Maximum by 1
month

09

Branches will be rated as below:

Grading
Very Good
Good
Satisfactory
Moderate
Poor
Critical
Time schedule for submission

Risk
Low
Low
Medium
Medium
High
High
of reply by;

Rural and Semi Urban Branches: within 30 days from the closure
of audit.
URBAN, METRO BRANCHES: within 45 days from the date of
closure of audit.
12. Implementation of formation of Preventive Vigilance Committee:

Criteria for the Formation of Preventive Vigilance Committees:


All Branches having the staff strength of 10 excluding watchman/Armed
Guard staff and above have to constitute the Preventive Vigilance
Committee at Branch Level.
Branches which are identified as High Risk & Medium Risk based on
the Fraud Sensitivity Analysis submitted by the Central Office
Inspectors during the inspection of Branches irrespective of the staff
strength.
Branches where fraud has been detected shall also constitute
Preventive Vigilance Committee irrespective of the staff strength.
All the Regional Offices.

Vigilance Committee is to be formed in all branches in a phased


manner as follows:
In the first phase : The Preventive Vigilance Committee have to be
formed in all Regional Offices and at Branches classified as Very large
and above. This came into effect from 01.04.2010

In the second phases : The Preventive Vigilance Committee has to be


formed at all our large Branches. This comes into
effect from
01.10.2010

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In the third phase: The preventive Vigilance Committee has to be


formed in other branches (as per the criteria given above). This comes
into effect from 01.04.2011.

All Branches having the staff strength of 10 excluding watchman/Armed


Guard staff and above have to constitute the Preventive Vigilance
Committee at Branch Level.

Constitution of committee :

Branches having staff strength 15 and above


Branch Manager (member Convener of the Committee)
Two Officers (rotates at yearly interval)
Two Award staff members (rotates at yearly interval)
Branches having staff strength 10 and above but less than 15
Branch Manager
One Officer (Rotates at yearly interval)
One Award staff member (rotates at yearly interval)
Other branches identified as High & Medium Risk/ where fraud detected
irrespective of the staff strength
Branch Manager
Two staff members (officer/Award Staff rotated at yearly interval)
At Regional Office
Regional Head
AGM/CM
AGM/CM of Local Branch (to be called by rotation at yearly interval)
Officer at Regional Office looking after Vigilance matters (the convener)
Periodicity of Preventive Vigilance Committee Meeting

The Preventive Vigilance Committee shall meet once in a month in the


Branches identified as High Risk and once in quarter in Branches
identified as Medium Risk

The Preventive Vigilance Committee at other Branches and Regional Offices


should hold meetings on a quarterly basis

Fraud reporting
The cases of negligence and cash shortages and irregularities in
foreign exchange transactions are to be reported as fraud irrespective
of the amount if the intention is to cheat / defraud is suspected
/proved.

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However, the following cases where fraudulent intention is not even


suspected /proved at the time of detection still it shall be treated as
fraud.
Cash shortage of more than Rs.10,000 and
Cash shortage more than Rs.5,000 if detected by the Management/
Auditor /Inspecting Officer and not reported on the day of occurrence
by the persons handling cash.

Cash Shortage cases upto Rs.5,000 will not be treated as a fraud if the
intention is not suspected/ proved.

13. The agency commission payable to agency banks Govt. Transactions


Receipts

Rs.50/- per transaction

E receipts Rs.12.00 per transaction


Payments other than pension . 5.50 paise per Rs. 100/- turnover
Pension payments

Rs.65/- per transaction

14. Obtention of certificates for pensioners


The
following
certificates
are
to
be
obtained
from
the
Central/Civil/Defence/Telecom/Railway Pensioners in the month of November
every year by the pension paying branches.
a. Life certificate
b. Non-employment certificate
c. Family pensioner- Re-marriage/marriage certificate
15. TRANSFER PRICING MECHANISM (TPM) - Rates

Transfer Pricing Mechanism (TPM) is an effective tool to analyse the


profitability of Business Units (BU), considering each branch as a
Business Unit

A Transfer Price is an internal rate of interest used to calculate transfer


income or cost due to an internal flow of funds in a financial institution.

Transfer Pricing Mechanism (TPM) is market related (w.e.f. Oct 2012).

Pricing is risk based.

The branches are responsible only for the credit risk.

All elements of market risks, viz. interest rate risk and liquidity risk etc
are for the fund centre (corporate office) through this TPM.

The framework is designed based on the concept called Matched Funds


Transfer Pricing Mechanism (MFTP).

Transfer Price interest receivable by branches (BID RATE) is different for


CASA deposits and Term deposits.

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For CASA deposits


In CASA deposits, interest is calculated separate for volatile portion and
Core portion.
The minimum balance of Savings Account & Current Account of the
Branch for the period of computation shall be treated as Core and
balance portion as Volatile.
CASA
Deposits
Current
Account
&
Savings
Account

CO Interest to be received by Branches


For Volatile portion of CASA = Retail Deposit rate
of the bank for 91 day (presently 7.25%) + Retail
Spread (0.50%) =Effective rate becomes 7.75% at
present
For Core portion of CASA = TPM applicable for 5
year deposit i.e. Retail Deposit rate of the bank for
5 year period (presently 9%) + Retail Spread (1.00%)
= Effective rate becomes 10.00% at present.

The TP rates for CASA shall vary from time to time based on change in
retail term deposit rates in 91 days and 5 years period - Hence market
related.

For term deposits:


Tenure of deposit

Benchmark fixed

For Retail deposits =0.50%


For Bulk Deposits =0.20%

TD up to < 1 year
TD 1 year up to 3
years
TD > 3 years
Overdue Deposits
FCNR Deposits
Overdue FCNR
Deposits

Spread

CARD rate for the


respective period
(Yield Curve)
Card Rate for 15
days
Cord Rote
NIL

For Retail deposits=0.75%


For Bulk Deposits= 0.25%
For Retail deposits =1.00%
For Bulk Deposits = 0.25%
NIL
0.50%
3.00%

Bulk Deposits= Single Rupee Term Deposit of Rs. l Crore & above
Retail Deposits = Single Rupee Term Deposits up to less than Rs.l crore
The Transfer Price for Term Deposit shall be fixed at the time of
origination of the deposit liability. This transfer price shall remain fixed
till maturity of the deposit. Subsequent changes in Transfer price shall
not affect the transfer price for existing deposits.
The transfer price for term deposits (TO) shall be account specific

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Transfer Price interest payable by branches (OFFER RATE)


Bench
marked
Loans and advances linked to Base Rate/BPLR
MSE Borrowers
Exposures below Rs.2 Crore
irrespective of internal rating
Advances

Exposure of Rs. 2 Cr and above having


Internal Rating equivalent to lOB 1,lOB
2 and lOB 3 / external rating
AAA/AA/A (Any one)
Exposures of Rs. 2 Crore and above
having Internal Rating equivalent to
IOB 4 and IOB 5
Exposures of Rs. 2 Crore and above
having Internal Rating equivalent to
lOB 6 and below and unrated
Non-MSE borrowers
Exposures below Rs.1 Crore
irrespective of internal rating
Exposure of Rs.1 Cr and above having
Internal Rating equivalent to lOB 1,lOB
2 and lOB 3 / external rating
AAA/AA/A (Any one)
Exposures of Rs. 1 Crore and above
having Internal Rating equivalent to
IOB 4 and IOB 5
Exposures of Rs. 2 Crore and above
having Internal Rating equivalent to
lOB 6 and below and unrated
Others
For all retail /Schematic Loans like
Housing Loan, Vehicle Loan
Others not classified elsewhere Above

91 day
Retail
Bid Rate
= 91 day
domestic
deposit rate
(7.25% at
present) +
Retail
Spread
(0.50%) =
7.75% at
present

spread

Effective
rate

1.25 %

9.00%

1.25%

9.00%

1.50%

9.25%

1.75%

9.50%

1.50%

9.25%

1.50%

9.25%

1.75%

9.50%

2.00%

9.75%

1.50%

9.25%

2.00%

9.25%

The Transfer Price rates are linked to the internal rating / external rating of
borrowers in case of limits of Rs.1 Crore and above {(s. 2 Crore and above
in case of MSE)
The Transfer price for loan I advances linked to floating rate are
benchmarked to 91 days retail deposit bid rate
The transfer price for floating option loans would correspondingly vary
with revision in Base Rate
The Transfer Price rates for loans / advances under fixed rate option are
linked to corresponding period retail deposit Bid rate with spread. This TP
rate shall decided at the time of origination of loan and continue till
maturity.
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The staff loans and loans/advances against deposits ore kept spread
neutral.
The periodicity of computing CO interest is monthly covering period 16th
of previous month 15th of the current month.
Benchmark
fixed

Advances

spread

Effective
rate as on
date

Loans/Advances under fixed rate option


MSE borrowers
0.25%

8.75%

0.25%

10.00%

0.25%

10.25%

Upto < 1 year

0.50%

9.00%

1yr to 3 years

0.50%

10.25%

>3 years

0.50%

10.50%

5.00%

Upto < 1 year


Corresponding
retail bid rate

1yr to 3 years
>3 years

Non MSE Borrowers

Compensation categories
Agriculture & allied advance
Export/Gold loans(FC)/Foreign
currency loans

Flat rate
Applicable rate

100 bps less than the


corresponding rate

Restructured advances

91 day retail
bid rate

1.25%

9.00%

Funded Interest Term Loan

Applied rate

Applied rate

Applicable
deposit rate

Same as
deposit TPM

Staff Loans

Applicable rate

Applicable
rate

NPA balance

Flat rate

5.00%

Loans/cash credit against


deposit

16. Issuance of high value demand drafts

Branches headed by AGM and above are permitted to issue High Value
drafts and there is no change in the existing procedure- for Rs.10 lacs and
above but less than Rs.10 crores (the maximum permissible in our bank).

Branches headed by Managers in Scale I to IV will forward their request to


their respective Regional Office.

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399
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After forwarding the request to Regional Office, branch should create lot and
post the details in the High Value data entry menu in CBS to enable
Regional Office to authorise the transaction and enable the branch to post
and pass.

17. SMS >< REDRESS

In order to offer the customers with much convenient and faster way to
access the bank, bank has introduced the SMS >< REDRESS facility.

The customer has to type REDRESS Space IOB Branch Code in his
mobile. SMS has to be sent to +919551099007.

18. City Back Offices (CBO)

City Back Offices are established in our bank as part of the CCO / Main
branch in some centres.

The CBO shall handle all inward clearing cheques related to the branches
in their centre and as well as other CBS branches ie., cheques that are
received under speed clearing system.

19. Corporate social Responsibility (CSR)

"CSR is a concept whereby companies integrate social and environmental


concerns in their business operations and in their interactions with their
stake holders on a voluntary basis".

20. IOB GRAMS.

Electronic mode of complaint handling system is called IOB Grievance


Redressal and Monitoring System (IOB GRAMS).

21. Claytons rule:

Payments are presumed to be appropriated to debts in the order in which


the debts are incurred.

22. Personal Accident Insurance Scheme (PAI)

IOB provides Personal Accident Insurance Schemes to the following


deposit customers:
Scheme
SB-Silver
SB-Gold
CD Classic
CD Super
RD Gold
SB Student
Account
SB Corp
SB
Platinum

Insurance cover
(Rs.in lacs)
1.00
5.00
1.00
5.00
1.00
1.00
1.00
0.75

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400
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The Insurance is provided free-of cost to the customers

The maximum coverage for SB-Silver, CD Classic and RD gold is Rs. 1.00
lac only per account.

In respect of SB-Gold and CD Super maximum coverage per account is


Rs.5.00 lacs

The maximum coverage under PAI scheme is Rs.5.00 lacs irrespective of


whether the customer is having more number of accounts in the same
branch or at different branches.

23. PAYMENT OF CHEQUES /DRAFTS/PAY ORDERS/ BANKERS CHEQUES


In exercise of the powers conferred by Section 35A of the Banking Regulation
Act 1949, Reserve Bank of India has directed that with effect from 1st April ,
2012, banks should not make payment of cheques / drafts /pay orders/
Bankers cheque bearing that date or any subsequent date, if they are
presented beyond the period of three months from the date of such
instrument.
24. Details of MICR code and IFSC code of the branch must be made available in
the
passbook/
statement
of
account
of
all
account
holders
(MSD/MISC/139/2012-13 dt.24.05.2012)
25. Issue of Demand Draft
Reserve Bank of India has advised banks to ensure that demand drafts of
Rs.20,000/- and above are issued invariably with account payee crossing.
26. Registration Of Mandate For ECS Debit

As per Reserve Bank of India guidelines Debit ECS mandate has to be


registered with the Account holders Bank and a unique reference number
generated from their system has to be advised to the User organization.

This reference number has to be quoted in the data given by the user
organization for cross verification at the time of processing the data.

It will facilitate the incorporation of the said reference number in the ECS
debit data to correlate the transactions.

27. One Time Settlement Policy For Sick Non-Viable MSME Accounts

Our Banks policy covers all NPA accounts including those assets where
action is initiated under SARFAESI Act, Lok Adalats, DRTs, Decreed
accounts subject to obtaining consent decree from Court DRT/Lok Adalat.

Accounts falling under willful default Fraud /Malfeasance shall be


considered on a case to case basis with permission of CO

Consortium if any with 75 % lenders consent

Security value is 75 % of the FMV of the property OR Net Present Value


as per our existing policy outlined herein whichever is lower.

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28. Charge creation

Hypothecation is defined in SARFAESI Act 2002

Pledge is defined in Contract Act 1872

Mortgage is defined in Transfer of property act 1882

29. Paripassu charge:

The phrase is used to indicate simultaneous and equal charge or to


describe similar ranking of securities

The use of "Pari Passu" when creating a charge means that when
company/firm goes into dissolution, the assets over which the charge has
been created will be distributed in proportion to the creditors' respective
holdings.

30. Small Savings Scheme- Senior Citizen Savings Scheme 2004

The interest rates on SCSS 2004 will be aligned with G-Sec rates with a
spread of 100 bps (1%).

The interest rates for every financial year will be notified before April 01st of
that year.

As per the rules of small savings schemes, the rate of interest on an


investment made in all schemes except PPF, 1968 on a particular date,
remains unchanged for the entire duration of the investment, till maturity,
irrespective of the revisions in subsequent years.

31. Hypothecation
The term hypothecation is defined in SARFAESI Act.
32. E-collection of Customs Duty EASeR-C

Our Bank is one of the 17 accredited agency banks for handling online
payment of Customs duty.

Our Bank has been enabled to receive Customs Duty on behalf of all
customs locations in India on Anytime Anywhere basis.

Every branch of our Bank can help their customer to make payments
through their own accounts.

Income @ Rs. 45/ per chalan (transaction)

33. Deposit Insurance and Credit guarantee Corporation (DICGC)


All commercial banks including branches of foreign banks functioning in
India, local area banks and regional rural banks are insured by the
DICGC. The deposit insurance scheme is compulsory and no bank can
withdraw from it.
Each depositor in a bank is insured upto a maximum of Rs.1,00,000 for
both principal and interest amount held by him in the same right and

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same capacity as on the date of liquidation/cancellation of bank's license


or the date on which the scheme of amalgamation/merger/reconstruction
comes into force
The DICGC insures all deposits such as savings, fixed, current, recurring,
etc. of individuals.
The deposits kept in different branches of a bank are aggregated for the
purpose of insurance cover and a maximum amount upto Rupees one lakh
is paid.
The deposits held in two separate joint accounts in combination of say "A"
and "B" and "B" and "A"; will now be treated as two separate accounts, and
each category of the joint account will be eligible for a claim upto Rs. one
lakh.
Deposit insurance premium is borne entirely by the insured bank

In the event of a bank's liquidation of a bank, the liquidator prepares


depositor wise claim list and sends it to the DICGC for scrutiny and
payment. The DICGC pays the money to the liquidator who is liable to pay
to the depositors. In the case of amalgamation / merger of banks, the
amount due to each depositor is paid to the transferee bank

All the registered banks are liable to pay corporation insurance premium at
the rate of 10 paise per annum for every deposit of Rs.100 (ie. 0.10% p.a)
at half yearly intervals.

Any default in payment of premium, banks are liable to pay to DICGC


interest on such amount at such rate not exceeding 8% over bank rate ( At
present it is 9.5% + 8%=17.5%).

34. Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH)

The Ministry of Housing & Urban Poverty Alleviation, Government of India


has set up the CRGFTLIH

The Trust guarantees housing loans extended by eligible lending


Institution(s) to an new eligible borrower in the low income housing
sector (both EWS/LIG categories) in urban areas for housing loan not
exceeding 5 lakh by way of housing loans on or after entering into an
agreement with the Trust.

Banks may assign zero risk weight for the guaranteed portion. The
balance outstanding in excess of the guaranteed portion would attract a
risk-weight as appropriate to the counter-party.

In case the advance covered by CRGFTLIH guarantee becomes nonperforming, no provision need be made towards the guaranteed portion

35. Held-to-Maturity

Accounting standards necessitate that companies/banks classify any


investments in debt or equity securities when they are purchased.
The investments can be classified as;

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Held to maturity,
Held for trading or
Available for sale.

A held to maturity security is a debt or equity security that is purchased


with the intention of holding the investment to maturity.

This type of security is reported at amortized cost on a company's financial


statements and is usually in the form of a debt security with a specific
maturity date.

36. Structured Financial Messaging System(SFMS) : Public Sector Banks issued


LC or LG through SFMS.
37. Monetary Policy Rates (as on 18.05.2013)
Bank rate

: 8.25%

Repo Rate

: 7.25%

Reverse Repo Rate

: 6.25%

Marginal Standing facility rate: 8.25%


38. Reserve Ratios (as on18.05.2013)
CRR

: 4.00%

SLR

: 23.00%

39. IOB as at 31.03.2013


Total Business

Rs.3,66,501 Cr.

Total Capital Fund

Rs.18,366.03 Cr

Percentage of shares held by GOI

73.80

Percentage of shares held by Public

26.20

RBI nominee Director

Sri.S.V.Raghavan
************************

srn/18.05.2013

Kindly mail your feedback to

unnisarjun@gmail.com
rajendrannair@iobnet.co.in
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