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******TIPSFORIBPSCLERK3INTERVIEWQUESTIONS

*******PART3******

1BANKRATE(8.75%)INIndiancontext,Bankrateis

theinterestratethatRBIchargesfromthecommercial

bankswhentheyborrowforalongperiod,beyond90

days..

2REPORATE(7.75%)RepoRateistheinterestratethat

RBIchargesfromthecommercialbankswhenthey

borrowforashortperiodupto90days.

3REVERSEREPORATE(6.75%)reversereporateisthe

rateatwhichthecentralbankofacountry(ReserveBank

ofIndiaincaseofIndia)borrowsmoneyfrom

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commercialbankswithinthecountry.Itisamonetary

policyinstrumentwhichcanbeusedtocontrolthe

moneysupplyinthecountry..

4 cashreserveratio(4%) Cash reserve Ratio

(CRR)is the amount of funds that the banks have to keep

with the RBI. If the central bank decides to increase theCRR, the available amount with the banks comes down.

The RBI uses the CRR to drain out excessive money from

the system.

5- SLR (23%)--- Everybankisrequiredtomaintainat

thecloseofbusinesseveryday,aminimumproportion

oftheirNetDemandandTimeLiabilitiesasliquidassets

intheformofcash,goldandunencumberedapproved

securities.The

ratio

of

liquid

assets

to

demand

and

time

liabilitiesisknownasStatutoryLiquidityRatio(SLR).

RBIisempoweredtoincreasethisratioupto40%.AN

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increase in SLR also restrict the banks leverage

position to pump more money into the economy.

6- MSF (8.75%)MARGINAL STANDING FACILITY

7PLR PRIME LENDING RATE IS A term applied in many

countries to a reference interest rate used by banks. The term originally

indicated the rate at which banks lent to their most favoured customers,

though this is no longer always the case some veriable interest rates may

be expressed as a percentage above or below prime rate

8---PRINTING OF SECURITIES AND MINTING IN INDIA

---INDIA SECURITY PRESS ( NASIK)

---SECURITY PRINTING PRESS 1882 FOR SOUTH STATES ONLY

(HYDERABAD)

---BANK NOTE PRESS (DEVAS MP) FOR 20, 50, 100, 500 RS

NOTES ONLY PRINTING

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----CURRENCY PRESS NOTE (NASIK) 10, 50, 100, 500, 1000

RUPEE K NOTE K PRINT K LIYE

---RBI NOTE PRINTING LTD ( SHAHBANI WB)

---SECURITY PAPER MILL ( MP) --- NOTE PAPER AND STAMP

PAPER KI PRINTING K LIYE

MINTS----MUMBAI,KOLKATA,HYDERABAD,NOIDA

************NEFT NATIONAL ELECTRONIC FUND

TRANSFER***********

Q.1. What is NEFT?

Ans: National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitatingone-to-one funds transfer. Under this Scheme, individuals, firms and corporates canelectronically transfer funds from any bank branch to any individual, firm or corporate having anaccount with any other bank branch in the country participating in the Scheme.

Q.3. Who can transfer funds using NEFT?

Ans: Individuals, firms or corporates maintaining accounts with a bank branch can transfer fundsusing NEFT. Even such individuals who do not have a bank account (walk-in customers) canalso deposit cash at the NEFT-enabled branches with instructions to transfer funds using NEFT.

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However, such cash remittances will be restricted to a maximum of Rs.50,000/- per transaction.Such customers have to furnish full details including complete address, telephone number,etc.NEFT, thus, facilitates originators or remitters to initiate funds transfer transactions evenwithout having a bank account.

Q.4. Who can receive funds through the NEFT system?

Ans: Individuals, firms or corporates maintaining accounts with a bank branch can receive fundsthrough the NEFT system. It is, therefore, necessary for the beneficiary to have an account withthe NEFT enabled destination bank branch in the country.

The NEFT system also facilitates one-waycross-border transfer of funds from India to Nepal.This is known as the Indo-Nepal Remittance Facility Scheme. A remitter can transfer funds fromany of the NEFT-enabled branches in to Nepal, irrespective of whether the beneficiary in Nepalmaintains an account with a bank branch in Nepal or not. The beneficiary would receive funds inNepalese Rupees.

Q.5. Is there any limit on the amount that could be transferred using NEFT?

Ans: No. There is no limit either minimum or maximum on the amount of funds that could betransferred using NEFT. However, maximum amount per transaction is limited to Rs.50,000/- forcash-based remittances and remittances to Nepal.

Q.7. Whether the system is centre specific or has any geographical restriction?

Ans: No. There is no restriction of centres or of any geographical area within the country. TheNEFT system takes advantage of the core banking system in banks. Accordingly, the settlement

of funds between originating and receiving banks takes places centrally at Mumbai, whereas thebranches participating in NEFT can be located anywhere across the length and breadth of thecountry.

Q.6. What are the operating hours of NEFT?

Ans : Presently, NEFT operates in hourly batches - there are twelve settlements from 8 am to 7pm on week days (Monday through Friday) and six settlements from 8 am to 1 pm on Saturdays.

Q.7. How does the NEFT system operate?

Step-1 : An individual / firm / corporate intending to originate transfer of funds through NEFThas to fill an application form providing details of the beneficiary (like name of the beneficiary,name of the bank branch where the beneficiary has an account, IFSC of the beneficiary bankbranch, account type and account number) and the amount to be remitted. The application formwill be available at the originating bank branch. The remitter authorizes his/her bank branch todebit his account and remit the specified amount to the beneficiary. Customers enjoying netbanking facility offered by their bankers can also initiate the funds transfer request online. Somebanks offer the NEFT facility even through the ATMs. Walk-in customers will, however, have to

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give their contact details (complete address and telephone number, etc.) to the branch. This willhelp the branch to refund the money to the customer in case credit could not be afforded to thebeneficiarys bank account or the transaction is rejected / returned for any reason.

Step-2 : The originating bank branch prepares a message and sends the message to its pooling

centre (also called the NEFT Service Centre).

Step-3 : The pooling centre forwards the message to the NEFT Clearing Centre (operated byNational Clearing Cell, Reserve Bank of India, Mumbai) to be included for the next availablebatch.

Step-4 : The Clearing Centre sorts the funds transfer transactions destination bank-wise andprepares accounting entries to receive funds from the originating banks (debit) and give the fundsto the destination banks(credit). Thereafter, bank-wise remittance messages are forwarded to thedestination banks through their pooling centre (NEFT Service Centre).

Step-5 : The destination banks receive the inward remittance messages from the Clearing Centreand pass on the credit to the beneficiary customers accounts.

********IFSC***********

IFSCor

Indian

Financial

System

Code

is

an

alpha

-numeric

code

that

uniquely

identifiesabank-branchparticipatingintheNEFTsystem.Thisisan11digit

codewiththefirst4alphacharactersrepresentingthebank,andthelast6

charactersrepresentingthebranch.The5thcharacteris0(zero).IFSCisused

bytheNEFTsystemtoidentifytheoriginating/destinationbanks/branches

andalsotoroutethemessagesappropriatelytotheconcernedbanks/

branches.

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*******RTGS***********

Q1. What is RTGS System?

Ans. The acronym 'RTGS' stands for Real Time Gross Settlement, which can be defined as thecontinuous (real-time) settlement of funds transfers individually on an order by order basis(without netting). 'Real Time' means the processing of instructions at the time they are receivedrather than at some later time; 'Gross Settlement' means the settlement of funds transferinstructions occurs individually (on an instruction by instruction basis). Considering that thefunds settlement takes place in the books of the Reserve Bank of India, the payments are finaland irrevocable.

Q2. How RTGS is different from National Electronics Funds Transfer System (NEFT)?

Ans. NEFT is an electronic fund transfer system that operates on a Deferred Net Settlement(DNS) basis which settles transactions in batches. In DNS, the settlement takes place with alltransactions received till the particular cut-off time. These transactions are netted (payable andreceivables) in NEFT whereas in RTGS the transactions are settled individually. For example,currently, NEFT operates in hourly batches. [There are twelve settlements from 8 am to 7 pm onweek days and six settlements from 8 am to 1 pm on Saturdays.] Any transaction initiated after adesignated settlement time would have to wait till the next designated settlement time Contraryto this, in the RTGS transactions are processed continuously throughout the RTGS businesshours.

Q3. Is there any minimum / maximum amount stipulation for RTGS transactions?

Ans. The RTGS system is primarily meant for large value transactions. The minimum amount tobe remitted through RTGS is ` 2 lakh. There is no upper ceiling for RTGS transactions.

Q4. What is the time taken for effecting funds transfer from one account to another underRTGS?

Ans. Under normal circumstances the beneficiary branches are expected to receive the funds inreal time as soon as funds are transferred by the remitting bank. The beneficiary bank has tocredit the beneficiary's account within two hours of receiving the funds transfer message.

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****************MSME***********

Q.1. What is the definition of MSME?

A.1. The Government of India has enacted the Micro, Small and Medium EnterprisesDevelopment (MSMED) Act, 2006 in terms of which the definition of micro, small and mediumenterprises is as under:

(a) Enterprises engaged in the manufacture or production, processing or preservation of goods asspecified below:

(i) A micro enterprise is an enterprise where investment in plant and machinery does not exceedRs. 25 lakh;

(ii) A small enterprise is an enterprise where the investment in plant and machinery is more thanRs. 25 lakh but does not exceed Rs. 5 crore; and

(iii) A medium enterprise is an enterprise where the investment in plant and machinery is morethan Rs.5 crore but does not exceed Rs.10 crore.

(b) Enterprises engaged in providing or rendering of services and whose investment inequipment (original cost excluding land and building and furniture, fittings and other items notdirectly related to the service rendered or as may be notified under the MSMED Act, 2006 are

specified below.

(i) A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10lakh;

(ii) A small enterprise is an enterprise where the investment in equipment is more than Rs.10lakh but does not exceed Rs. 2 crore; and

(iii) A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2crore but does not exceed Rs. 5 crore.

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respect to loans and advances

non-observance of Reserve Bank Directives on interest rates; delays in sanction, disbursement or non-observance of prescribed time schedule for

disposal of loan applications;

non-acceptance of application for loans without furnishing valid reasons to the applicant;and

non-adherence to the provisions of the fair practices code for lenders as adopted by thebank or Code of Banks Commitment to Customers, as the case may be;

non-observance of any other direction or instruction of the Reserve Bank as may bespecified by the Reserve Bank for this purpose from time to time.

The Banking Ombudsman may also deal with such other matter as may be specified bythe Reserve Bank from time to time.

6. When can one file a complaint?

One can file a complaint before the Banking Ombudsman if the reply is not received from thebank within a period of one month after the bank concerned has received one s representation, orthe bank rejects the complaint, or if the complainant is not satisfied with the reply given by thebank.

**********NBFC*****

1. What is a Non-Banking Financial Company?

A Non-Banking Financial Company (NBFC) is a company a) registered under the CompaniesAct, 1956, b) its principal business is lending, investments in various types ofshares/stocks/bonds/debentures/securities, leasing, hire-purchase, insurance business, chitbusiness, and c) its principal business is receiving deposits under any scheme or arrangement inone lump sum or in installments. However, a Non-Banking Financial Company does not includeany institution whose principal business is agricultural activity, industrial activity, trading

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activity or sale/purchase/construction of immovable property. (Section 45 I (c) of the RBI Act,1934) . One key aspect to be kept in view is that the financial activity of loans/advances as statedin 45 I ( c) , should be for activity other than its own. In the absence of this provision, allcompanies would have been NBFCs.

2. What are systemically important NBFCs?

NBFCs whose asset size is of Rs.100 cr or more as per last audited balance sheet are consideredas systemically important NBFCs. The rationale for such classification is that the activities ofsuch NBFCs will have a bearing on the financial stability in our country.

B. Entities Regulated by RBI

3. Does the Reserve Bank regulate all financial companies?

No. Some financial businesses have specific regulators established by law to regulate and

supervise them, such as, IRDA for insurance companies, Securities Exchange Board of India(SEBI) for Merchant Banking Companies, Venture Capital Companies, Stock Brokingcompanies and mutual funds, National Housing Bank (NHB) for housing finance companies,Department of Companies Affairs (DCA) for Nidhi companies and State Governments for ChitFund Companies. Companies which do financial business but are regulated by other regulators,are given specific exemption by the Reserve Bank from its regulatory requirements, such as,registration, maintenance of liquid assets, statutory reserves, etc. The Chart below gives thenature of activities and the concerned regulators.

4. What kind of specific financial companies are regulated by RBI?

The Reserve Bank of India regulates and supervises Non-Banking Financial Companies whichare into the business of (i) lending (ii) acquisition of shares, stocks, bonds, etc., or (iii) financialleasing or hire purchase. The Reserve Bank also regulates companies whose principal business isto accept deposits. (Section 45I (c) of the RBI Act, 1934)

5. What are the powers of the Reserve Bank with regard to 'Non-Bank Financial Companies,that is, companies that meet the 50-50 Principal Business Criteria?

The Reserve Bank has been given the powers under the RBI Act 1934 to register, lay downpolicy, issue directions, inspect, regulate, supervise and exercise surveillance over NBFCs thatmeet the 50-50 criteria of principal business. The Reserve Bank can penalize NBFCs for

violating the provisions of the RBI Act or the directions or orders issued by RBI under RBI Act.The penal action can also result in RBI cancelling the Certificate of Registration issued to theNBFC, or prohibiting them from accepting deposits and alienating their assets or filing a windingup petition.

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*****DEBIT CARD*******

BANKS ARE NOW PROVIDING DEBIT CARDS TOTHEIR CUSTOMERS HAVING SAVING ORCURRENT ACCOUNT IN THE BANKS. The customerscan use this card for purchasing goods and services atdifferent places in lieu of cash. The amount paid throughdebit card is automatically deducted from the customersaccount.

*******CREDIT CARD*******

Credit card are issued by the bank to persons who may ormay not have an account in the bank. Just like debit cards,credits are used to make payments for purchased. So thatthe individual does not have to carry cash. Banks allow

certain credit period to the credit cardholder to makepayment od the credit amt.

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*********RUPAY CARD

RuPayis an Indian domestic card scheme conceived and launched by NPCI- NATIONALPAYMENTS CORPORATION OF INDIA. Its mission is to fulfill the RBIs vision of having adomestic, open loop and multilateral system of payments in INDIA. RuPay works to enableelectronic payment at all Indian banks and financial institutions. RuPay hopes to provide bankswith new opportunities to operate in the card payments domain of India.

********CBS

------------What is Core Banking Solution ?

Core Banking Solution (CBS) is networking of branches, which enables Customers to operate

their accounts, and avail banking services from any branch of the Bank on CBS network,regardless of where he maintains his account. The customer is no more the customer of a Branch.He becomes the Banks Customer. Thus CBS is a step towards enhancing customer conveniencethrough Anywhere and Anytime Banking.

------------How shall CBS help Customers?

All CBS branches are inter-connected with each other. Therefore, Customers of CBS branchescan avail various banking facilities from any other CBS branch located any where in the world.These services* are:

To make enquiries about the balance; debit or credit entries in the account.

To obtain cash payment out of his account by tendering a cheque.

To deposit a cheque for credit into his account.

To deposit cash into the account.

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To deposit cheques / cash into account of some other person who has account in a CBSbranch.

To get statement of account.

To transfer funds from his account to some other account his own or of third party,provided both accounts are in CBS branches.

To obtain Demand Drafts or Bankers Cheques from any branch on CBS amount shallbe online debited to his account.

Customers can continue to use ATMs and other Delivery Channels, which are alsointerfaced with CBS platform. Similarly, facilities like Bill Payment, I-Bob, M-bob etc.shall also continue to be available. Bank is in the process of launching Internet-bankingfacility shortly.

All these aim to provide convenient, efficient, and high quality banking experience to the

customers, comparable to world class standards.

-----------What are other benefits to the Customers ?

A CBS branch is like a Sales & Service Delivery Center. Back office processes/activities arehandled through technology at some other site, called Data Center. Branch, therefore, has moretime for serving customers. This improves the quality and efficiency of the services rendered andthe customer is directly benefited by way of satisfying and happy banking experience.

Since a CBS branch is essentially designed to focus on customer-interface and customer service,the special lay-out and ambience of the branch is made to provide a convenient and delightful

banking experience. The Customer Service Representatives / Executives at the branch arespecially trained to understand, facilitate and deliver banking services efficiently and effectively.We wish our customers happy banking.

*************CASA

The CASA (current and savings account) ratiois the ratio of deposits in the CURRENT andSAVINGS accounts of a bank to its total deposits.

A high CASA ratio indicates that a higher portion of the banks deposits come from current andsavings accounts. This means that the bank is getting money at low cost, since no interest is paidon the current accounts and the interest paid on savings account is usually low.

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Current and Saving Accounts are demand deposits and therefore pay lower interest ratescompared to term deposits where the rates are higher. Thus higher CASA ratio means that moreof the money deposited in the bank is in the demand deposits i.e. the CASA, thus bank is gettingthe money at lower cost

******WHITE LEVEL ATM

WhiteLabelATMorWhiteLabelAutomatedTellerMachinesorWLAsinIndiawillbeownedand

operatedbyNonBankentities. FromsuchWhiteLabelATMcustomerfromanybankwillbeableto

withdrawmoney,butwillneedtopayafeefortheservices. Thesewhitelabelautomatedteller

machines(ATMs)willnotdisplaylogoofanyparticularbankandarelikelytobelocatedinnon

traditionalplaces.

-------What is the purpose for introduction of White Label ATMs in India

In India only Banks are allowed to set up ATMs. Although between 2008 - 2011, there has

been 30% growth in number of ATMs and by the beginning of 2012, we have about 87,000

ATMs in India, yet the penetration of ATMs in Tier III and Tier IV cities has been low and

downtime of such ATMs has been high. Thus, RBI is feeling that there is a need to expand

ATM network, which can be done by only with the help of private operators.

---------Who will benefit from White Label ATMs :

The white label automated teller machines are likely to benefit customers as well as banks.

With the expansion of ATM network, customers will be able to withdraw funds at more

locations which will be convenient and located near to their home or place of work. Banks

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too support introduction of white label ATMs as such machines are likely to reduce pre-

transaction cost for them and will be free from the problems relating to maintaining and

running such a payment channel

-------What Problems are Likely to be Faced by Bankers and Customers :

Bankers are already sounding caution about the pitfalls of white label ATMs. The first and

foremost concern for customers will be the inconvenience they may feel in case of failed

transactions on WLAs. In such cases the dispute resolution mechanism will involve three

entities the WLA operator, the sponsor bank of the operator, and the customer's bank.

The WLA operators being non bank entities and running purely on profit basis may take

longer time or avoid payments on account of failed transactions. The second concern for

customers will be the high cost they are likely to pay for use of such ATMs.

*********NPANONPERFORMINGASSETS

What are NPAs ? Which Accounts Are Classified as NPA ? When An Account isTermed as Non Performing Asset ?

An account is declared as NPA based on the recovery of installments and interest onloans and advances and other aspects as per RBI norms. The updated norms todeclare the account as NPA are as follows as per RBI guidelines:-

1. An asset, including a leased asset, becomes non-performing when it ceases togenerate income for the bank.2.

3. A non performing asset (NPA) is a loan or an advance where;

(i) Interest and/ or instalment of principal remain overdue for a period of morethan 90 days in respect of a term loan,

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(ii) The account remains out of order in respect of an Overdraft/Cash Credit(OD/CC), if the outstanding balance remains continuously in excess of thesanctioned limit/drawing power. In cases where the outstanding balance inthe principal operating account is less than the sanctioned limit / drawingpower, but there are no credits continuously for 90 days as on the date of

Balance Sheet or credits are not enough to cover the interest debitedduring the same period, these accounts should be treated as 'out of order'.(iii) The bill remains overdue for a period of more than 90 days in the case of

bills purchased and discounted,(iv) The instalment of principal or interest thereon remains overdue for two crop

seasons for short duration crops,(v) The instalment of principal or interest thereon remains overdue for one

Crop season for long duration crops,(vi) The amount of liquidity facility remains outstanding for more than 90 days,

in respect of a securitisation transaction undertaken in terms of guidelineson securitisation dated February 1, 2006.

(vii)

In respect of derivative transactions, the overdue receivables representingpositive mark-to-market value of a derivative contract, if these remainunpaid for a period of 90 days from the specified due date for payment

********MIBOR&LIBOR

---What is full form of LIBOR ? What is full form of MIBOR ?

The full form of LIBOR is London Inter Bank Offered Rate. The full form of MIBOR is

Mumbai Inter Bank Offered Rate.

--Define LIBOR and MIBOR ?How are LIBOR and MIBOR arrived at ?

The interbank borrowing is undertaken by financial institutions either to make profits or

to cover short-term liquidity shortfalls Thus, we can define LIBOR as the average

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interest rate estimated by leading banks in London that they would be paying if they

borrow from other banks. LIBOR is arrived at each day by BBA through a survey from

18 major global banks for the USD by asking the question "At what rate could you, borrow

funds, were you to do so by asking for and then accepting inter bank offers in a reasonable

market size just prior to 11.00 AM (London local time). Then BBA excludes the highest 4

and lowest 4 responses, and averages the remaining 10 responses. This average rate ispublished at 11.30 AM. As we have made it clear it is declared for 15 different maturities

i.e. 1 day (overnight) to 1 year. Thus, we can say that LIBOR is a set of indexes.

MIBOR is the interest rate at which banks can borrow funds, in marketable size, from

other banks in the Indian interbank market. MIBOR is calculated everyday by the

National Stock Exchange of India (NSEIL) as a weighted average of lending rates of a

group of banks, on funds lent to first-class borrowers. The MIBOR was launched on June15, 1998 by the Committee for the Development of the Debt Market, as an overnight rate.

The NSEIL launched the 14-day MIBOR on November 10, 1998, and the one month and

three month MIBORs on December 1, 1998. Further, the exchange introduced a 3 Day

FIMMDA-NSE MIBID-MIBOR on all Fridays with effect from June 6, 2008 in addition to

existing overnight rate. Thus, we can say that MIBOR is is arrived now a days by

FIMMDA and NSE, based on inputs from PS Banks, Private Sector Banks, Primary

Dealers and Foreign Banks

----LAF**********

Liquidity Adjustment Facility Liquidity Adjustment Facility is the primary instrument ofReserve Bank of India for modulating liquidity and transmitting interest rate signals to themarket.

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