Banking Flashcards
Is FDI allowed in ARC?
Yes. 51%
What is Securitisation?
Converting documents that are basis for loans into security and sell into market
What is stress test?
Simulation financial / economic stress - stock market plunge, rupee swing, deflation, growth crash.
Bank ability to deal with it.
Main pillars in Basel norms?
Risks
Role of Banking supervisors
Higher disclosure on Capital Adequacy, Asset Quality and Risk Mgt
What is Basel I?
Minimum CAR. Focus entire Credit Risk
What is Basel III?
Start 2013. Till 2019. Total CAR 11.5%. Earlier 9pc.
What is Basel II?
Start 2001. More risk and remedies
Small Finance Banks are - registered under? licensed under? governed under? established as?
Registered under Companies Act.
Licensed under Banking Act
Governed under RBI Act by RBI
Public limited company
Is foreign investment allowed in Small Finance Bank
Yes.
Do SFB keep CRR and SLR and do Prudential Norms apply to them?
Yes.
Yes.
Can SFB set up subsidiary to take NBFC functions?
No.
Do SFB have restrictions like RRB and LAB
No.
SFB can be promoted by?
Individuals, Corporate, trusts.
Minimum paid up capital of 100crore.
Promoters must have 10 years experience in banking
What is condition on SFB for PSL and Unbanked area
Minimum 25% branches in unbank rural area
No restriction but beginning preference to unbank area clients
75% credit to PSL required. atleast 50% upto 25 Lakh
SFB were recommended by?
Raghuram Rajan Committee
Payment banks are estb under and licensed under
Companies act
BRA
Minimum Deposit for Payments bank
1 lakh. Can have more provided that at end of day it is 1 Lakh
Can Payment Bank - FD RD Lending Debit Card Credit Card ATM BCs DD Utility Bills NRI Deposits Net and Mobile Banking Mutual Funds Cross border remittance transactions Subsidiary for NBFC
No No No Yeas No Yes Yes Yes Yes No Yes Yes Yes No
Minimum eligibility for Payment banks
100 crore paid up capital
25% branch in unbank areas
Are deposits under Payment Bank eligible for DICGC
Yes. Max 1 lakh
Condition on Payment Banks wrt SCB
Maximum 25% in Current and Time Deposits with other SCBs
Do Payment Banks have to comply with CRR and SLR
Yes. Have to keep CRR + 75% securities in T-Bills having one year maturity and are eligible under SLR
Operational risk high so CRR is more than other Banks
Payment Banks recommended by
Nachiket Mor Committee
India post payment bank recommended by
TSR Subramaniam Committee
Govt role in India post payment bank
it is under Dept of Post
100% govt equity in IPPB
Nature of IPPB
Public limited company
90% in rural areas
Mudra Bank is estb under?
Companies Act
Later as NBFC under RBI
Mudra bank is subsidiary of?
It is wholly owned subsidiary of SIDBI
Mudra bank operate thru?
MFI FI SHG Credit coop societies
Mudra banks loan to?
NBFC and MFI - loan to final needy
Priorty to underprivileged
Credit guarantee in Mudra?
Yes. Under NCGTC for Credit guarantee
What are Development banks and give some examples
they are financial institutions giving long term credit to agri and industries
Egs IFCI IDBI ICIC NABARD SIDBI EXIM NHB
Difference b/w Commercial Banks and Development Banks
Commercial banks - short term credit
Development Banks - long term credit
SR Khan Committee
Transfer DFIs to universal committee
First Development Banks
IFCI in 1948 - IFCI act
What are cooperative banks
specialize in agri and housing. earlier non agri only
Earlier mostly small buz, now wider
Cooperative banks get help from>
Fianncial and other help from NABARD RBI SG CG
Cooperative bank funds from
Money market + capital Market
Cooperative banks loan?
Short term + long term
LDB only long term
Do cooperative banks need CRR and SLR
Yes
Types of cooperative banks
Schedule
Non Schedule
What are shadow banks
FI function like banks - raise deposits, float equity, bonds
But not covered under strict bank rules
Lax conduct - led to sub prime crisis
What is Bank Run
People not confident of bank capacity to honour commitment
Fear insolvency
Large number customers want withdraw deposit at same time
What is countercyclical buffer?
Part of Basel III
Keep aside capital that can be used later when cycle turns down
Due to slowdown or recession and loans turn Bad
What is Bank of international settlements
Banks for central Banks
International Financial institution owned by CBs
international monetary and financial cooperation
What is Hair cut
Bank parlance. asset value reduced as it cant be fully realised
Types -
Write down - cant recover fully
Write off - cant recover at all
WHat is Twin Balance sheet challenge
Balance sheet of borrowing and lending companies both under pressure
What are Public sector asset reconstruction agency
Proposed in ES 2017
Raise money by govt bonds to buy big bad loans of PSB
Kind of bad bank
What was PK Nayak Committee
Set up by RBI for Bank governance issue Recommended - Govt decrease PSB holding Board apt professionalise Fix 5 year Ch and MD and 3 year for whole term directors
What is Indradhanush Scheme
Revive NPA burdened PSB started in 2017 Apt professionals bank Board Bureau Capitalise banks Non govt interference Accountability framework Governance reforms Gyan sangam
What is bank board bureau
Autonomous board
recommed Apt of PSB FI heads
recommend on PSB consolidation
What do you understand by Differentiated banking
Diff types of bank - diff aims, clients, mode of working
Brown label ATM
3rd party
non banking
logo of bank
White label ATM
Third party
not logo of bank but logo of third party
What are holding companies
invest in other comapnies aka subsidiaries
not involve in day to functions
What are types of holding company
pure holding company - non operative, solely investing, hold voting share, income from dividend
General / operational holding company - income from selling GnS
Pyramid holding company - own controlling interest is subsidiaries with less invested capital
Urjit patel committee recommednations
CPI C be used for inflation target
4=-2
MP committee
fix fiscal deficit to gdp by dec to 3.0%
WHat was nachiket mor committee
set up by RBI for financial inclusion universal bank account licensing, lower barriers risk based supervision reorient NABARD SIDBI NHB
Basel norm india
started 1992
Disclosed reserve
total liquid cash and SLR of bank that may be used at a time
part of core capital i.e. Tier I
Undisclosed reserves
unpublished hidden reservese
not appear on public available document but are assets
part of core cpaital that is Tier 2
What is stock of money
2nd WG on MS
M1 M2 M3 M4
What are Narsimhan I committee recommendations
direct investment
dec CRR
PSL phase out, redefine
ARC set up to tackle NPA
IR structure - market force, RBI role simiplify
reorganise bank structure - PSB reduce, Dual control of RBI and MoF end
Narsimhan committee II recommendations?
Three tier bank strucutre higher norms of CRAR PSB budget recapitalise legal framework for loan recovery - SARGESI net NPA below 5% Depoliticize Bank boards
New pvt banks opened in india when
1993
What are provision of SARFESI act
crackdown wilful defaulter power to bank to issue notice take possession of security take over management apt person to mng sell security to ARC set on lines of USA
