Answer Posted / veena

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What is Electronic Clearing Service (ECS)?
Ans: It is a mode of electronic funds transfer from one
bank account to another bank account using the services of
a Clearing House. This is normally for bulk transfers from
one account to many accounts or vice-versa. This can be
used both for making payments like distribution of
dividend, interest, salary, pension, etc. by institutions
or for collection of amounts for purposes such as payments
to utility companies like telephone, electricity, or
charges such as house tax, water tax, etc or for loan
installments of financial institutions/banks or regular
investments of persons.
What is the meaning of the word ‘Free’ in the lending rate
prescription?
Banks are free to fix Benchmark Prime Lending Rate (BPLR)
for credit limits over Rs.2 lakh with the approval of their
respective Boards. BPLR has to be declared and made
uniformly applicable at all the branches. The banks may
authorize their Asset-Liability Management Committee (ALCO)
to fix interest rates on Deposits and Advances, subject to
their reporting to the Board immediately thereafter. The
banks should also declare the maximum spread over BPLR with
the approval of the ALCO/Board for all advances.
(i) What are the ‘intermediary agencies’?
(ii) What are ‘housing finance intermediary agencies’?
An illustrative list of Intermediary Agencies is as under:
1. State Sponsored organizations for on-lending to Weaker
Sections@
2. Distributors of agricultural inputs/ implements.
3. State Financial Corporations (SFCs)/ State Industrial
Development Corporations (SIDCs) to the extent they provide
credit to weaker sections.
4. National Small Industries Corporation (NSIC).
5. Khadi and Village Industries Commission (KVIC)
6. Agencies involved in assisting the decentralized sector.
7. Housing and Urban Development Corporation Ltd. (HUDCO)
8. Housing Finance Companies approved by National Housing
Bank (NHB) for refinance.
9. State sponsored organization for SCs/STs (for purchase
and supply of inputs to and/or marketing of output of the
beneficiaries of these organizations).
10. Micro Finance Institutions/ Non-Government
Organizations (NGOs) on lending to SHGs.
@ Weaker sections include –

i) Small and marginal farmers with landholdings of
5 acres and less, and landless labourers, tenant farmers
and share-croppers;
ii) Artisans, village and cottage industries where
individual credit requirements do not exceed Rs. 50,000/-;
iii) Beneficiaries of Swarnjayanti Gram Swarozgar Yojana
(SGSY);
iv) Scheduled Castes and Scheduled Tribes;
v) Beneficiaries of Differential Rate of Interest
(DRI) scheme;
vi) Beneficiaries under Swarna Jayanti Shahari Rozgar
Yojana (SJSRY);
vii) Beneficiaries under scheme of Liberation and
Rehabilitation of Scavengers (SLRS);
viii) Advances to Self-Help Groups (SHGs);
ix) Loans to distressed poor to repay their debt to
informal sector, against appropriate collateral or group
security.

Loans granted under (i) to (ix) above to persons from
minority communities as may be notified by Government of
India from time to time.
In states, where one of the minority communities notified
is, in fact, in majority, item (ix) will cover only the
other notified minorities. These States/Union Territories
are Jammu and Kashmir, Punjab, Sikkim, Mizoram, Nagaland
and Lakshadweep.
27. Whether banks can charge interest rate without
reference to their own BPLR?
Yes. Banks are free to determine the rates of interest
without reference to their BPLR and regardless of the size,
in respect of following loans:
(i) a. Loans for purchase of consumer durables.
b. Loans to individuals against shares and debentures/
bonds
c. Other non-priority sector personal loans including
credit card dues.
d. Advances/ overdrafts against domestic/ NRE/ FCNR(B)
deposits with the bank, provided that the deposit/s stands/
stand either in the name(s) of the borrower himself/
borrowers themselves, or in the names of the borrower
jointly with another person.
e. Finance granted to intermediary agencies (excluding
those of housing) for on-lending to ultimate beneficiaries
and agencies providing input support.
f. Finance granted to housing finance intermediary agencies
for on-lending to ultimate beneficiaries
g. Discounting of Bills
h. Loans/Advances/Cash Credit/Overdrafts against
commodities subject to Selective Credit Control

What is the definition of net worth of a bank?
Net worth would comprise of Paid-up capital plus Free
Reserves including Share Premium but excluding Revaluation
Reserves, plus Investment Fluctuation Reserve and credit
balance in Profit & Loss account, less debit balance in
Profit and Loss account, Accumulated Losses and Intangible
Assets. No general or specific provisions should be
included in computation of net worth. Infusion of capital
through equity shares, either through domestic issues or
overseas floats after the published balance sheet date, may
also be taken into account for determining the ceiling on
exposure to capital market.

Whether banks can invest in fixed deposits of non-financial
companies?
There is no prohibition on banks’ placing of funds with non-
banking non-financial companies under their Public Deposit
Schemes. However, investment in the Public Deposit Scheme
of such companies should be classified by banks as loans/
advances in their balance sheet and returns submitted under
the Banking Regulation Act, 1949 and the Reserve Bank of
India Act 1934.

What are the parameters to be adopted for identifying basic
banking services?

Banks have been advised to identify basic banking services
on the basis of two parameters indicated by the Working
Group, namely, (i) banking services that are ordinarily
availed by individuals in the middle and lower segments and
(ii) the value of transactions, namely, cheque collections
and remittances up to Rs. 10,000 for each transaction and
up to $500 for forex transactions. The indicative list of
banking services includes services relating to Deposit
Accounts (cheque book facility, issue of pass book /
statement, ATM Card, Debit Card, stop payment, balance
enquiry, account closure, cheque return - inward, signature
verification); Loan Accounts (no dues certificate);
Remittance facilities (Demand Draft – issue/ cancellation/
revalidation, Payment Order - issue/ cancellation/
revalidation/ duplicate, Telegraphic Transfer - issue/
cancellation/ duplicate, Electronic Clearing Service (ECS),
National Electronic Fund Transfer (NEFT) / Electronic Fund
Transfer (EFT); Collection Facilities (collection of
local /outstation cheques, cheque return- outward). Banks
are required to implement the recommendations of the
Working Group on making available the basic banking
services at reasonable prices/ charges and towards this,
delivering the basic services outside the scope of the
bundled products.
What are the principles to be followed by banks in order to
ensure reasonableness in fixing and communicating service
charges?

Banks are required to follow the following principles for
ensuring reasonableness in fixing and communicating the
service charges -
(a) For basic services to individuals, banks should
levy charges at rates that are lower than the rates applied
when the same services are given to non-individuals.
(b) For basic services rendered to special category of
individuals (such as individuals in rural areas, pensioners
and senior citizens), banks should levy charges on more
liberal terms than the terms on which the charges are
levied to other individuals.
(c) For basic services rendered to individuals, banks
should levy charges only if the charges are just and
supported by reason.
(d) For basic services to individuals, banks should
levy services charges ad-valorem only to cover any
incremental cost and subject to a cap.
(e) Banks should provide to the individual customers
upfront and in a timely manner, complete information on the
charges applicable to all basic services.
(f) Banks should provide advance information to the
individual customers about the proposed changes in the
service charges.
(g) Banks should collect for services given to
individuals only such charges which have been notified to
the customer.
(h) Banks should inform the customers in an appropriate
manner recovery of service charges from the account or the
transaction.

SIR MY NAME IS BALA IM GO FOR WRITE BANK BARODA POS EXAM ON MAY 30 2010 BUT II WANT KNOW WHEN THE RESULT DECLARE THE RESULT

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