Differentiated Banking

Question 1

Idea of Differentiated bank mooted by – comte for —. AKA —.
It can be classified as Payment Banks, Small
Finance Banks, Regional Rural Banks, Local
Area Banks Wholesale and Long-Term Finance
(WLTF) banks.

Answer 1

Nachiket More Committee 2014 for Fin. Inclusion

Niche banks.

Question 2

Payment banks- Generally promoted by —-.
Requirements-
1) Have min Cap of –
2) Maintain – of deposits in –. 3) Maintain – of deposits in other banks. 4) Have atleast 26% investment by —. 5) Get listed if net worth crosses —. 6) Have 25% of branches in —-. 7) Be fully – and — driven. 8) Have – cap for deposits in one acct.

Answer 2

Prepaid card issuers,
telecom companies,
NBFCs, Business
correspondents,
Supermarket chains,
Corporates, Realty
sector Co-ops and
PSUs.
Rs. 100 crores- 75% in govt bonds- 25%- Indians- Rs 500 crores- Unbanked areas- Networked and tech driven- Rs. 1 lakh cap for deposits in one account.

Question 3

Payment Banks can-

• Offer — banking.
• Sell —,–,–.
• Offer — service for customers.
• Have – and —
• Can function as – of another bank.

Answer 3

Internet banking- Sell mutual funds, insurance, pensions- Bill payment service- ATMs and Business- Banking correspondent.

Question 4

Payment Banks CANNOT-

• Offer – cards
• — loans
• Handle cross- border —
• Accept —.

Answer 4

Credit Cards- Extend loans- Handle cross border remittances- accept NRI deposits.

Question 5

Small Fin banks- Generally promoted by- —.

Min Cap of —-.

Answer 5

Individuals/
professionals with
10 years experience
in finance, NBFCs,
microfinance cos,
local area banks.
Rs 100 crore.

Question 6

Requirements-

• – loans to PSL
• — branches in — areas.
• Maintain —
• Cap loans to individuals and groups at – and– of net worth.
• Have a — network.

Answer 6

75%- 25% branches in unbanked areas- Reserve requirements- 10% and 15% of net worth- Have a business correspondent network.

Question 7

Small finance banks can-

• Sell — to customers
• Sell —,—,—
• Can convert into a — ONLY after – approval.
• — across country.

Answer 7

-Sell FOREX to
customers
-Sell mutual funds,
insurance, pensions
- Can convert into a full fledged bank
- Expand across the country
- Transform into a full fledged bank, but ONLY after RBI’s approval.

Question 8

Small finance banks CANNOT-

• Extend — loans
• Float —-
• Cannot deal in — products.

Answer 8

Large loans- Float subsidiaries- Cannot deal in sophisticated financial products.

Question 9

—- 1st UCB to convert in SFB on approval of RBI under scheme of —- of UCB into an SFB. Under this UCBs with a min net worth — and maintaining CAR of – and above are eligible to apply.

Answer 9

Shivalik Mercantile Cooperative bank ltd to a small finance bank- Voluntary transition Scheme.
Min net worth- Rs.500 million and CAR of 9% and above.

Question 10

Recently RBI released draft guidelines for — of SFBs- this would mean that RBI will accept applications throughout the —.

Answer 10

ON-TAP licensing- throughout the year.

Question 11

• – Min announced setting up of Devlp banks to boost econ.

- These banks provide — for capital intensive investments spread over long period.

Answer 11

Finance ministry.

Long-term credit for capital intensive investments.

Question 12

Devlp banks also provide services like- in-house —,— and—.
These are supported by govt in the form of — and admin mandates for — to — in their —.

Answer 12

in- house technical expertise- underwriting new capital issuance and creating confidence in other lenders.
Tax incentives- private sector banks and financial inst.- invest- securities.

Question 13

In India, development banking started with est of —- in — to provide fin to medium and large scale industries.
After— report on– in 1991, these were — to form—-.

Answer 13

Narsimhan Comte report- on fin. reforms- disbanded-converted into commercial banks

Question 14

RBI approved formn of — which will be the – banking network in Kerala which is a — bank.
2 types of coop. banks-

Answer 14

Kerala bank- Largest- Cooperative bank.

Urban and rural.

Question 15

Rural coop. banks based on – term coop credit are divided into-
—,—-,—.
and — inst are either — or —- .

Answer 15

Short term coop credit- State coop banks- Dist coop banks- Primary agricultural credit societies.
Long term inst- State Coop agri and rural devlp banks(SCARDBs) or Primary Coop agri and rural devlp banks (PCARDBs)

Question 16

Urban coop banks are - — and —.
— are further divided into multi state and – . Registered as coop societies under the provisions of — or —-.
Insurance- —- same as —-.
UCBs are under — regulation of – and –.

Answer 16

Sceduled and non scheduled- operating in single state.
State Cooperative
Societies Act of the State concerned or the Multi State Cooperative Societies Act, 2002.
in case of failure, deposits upto Rs 1 lakh per depositor are covered by DICG- same as Commercial bank.
Dual regulation

Question 17

— controlled by RBI and governed under 2 laws—.

RBI also provides the — to UCBs.

Answer 17

Banking operations are regulated and supervised by the
RBI, which lays down their capital adequacy, risk control, lending norms, issuing licenses,
new branches etc.
Banking Regulations Act, 1949, and the Banking Laws (Co-operative Societies)
Act, 1955

Question 18

Registration and mgmt related activities controlled by— in single state UCB and – in multi state UCBs.

Answer 18

Registrar of Coop societies (RCS)- Central RCS.