Unit 4 Flashcards
Banking regulation
A form of gov regulation that requires requirements, guidelines in order to create market transparency btwn bankings inst or corp for conducting business.
Imp of banking
Regulation and strong supervision can help stop banks making similar mistakes in the future.
Banks also won’t think about how their actions could affect other banks, the whole financial system and even the wider society.
Regulation helps to reduce many of the problems that could get a bank into financial difficulty.
Regulations are indispensable to the proper functioning of economies and societies.
Banking regulation act 1949
The BR Act provides a framework for supervision and regulation of all banks.
It also gives the RBI the power to grant licenses to banks and regulate their business operation..
Kyc policy
The know your customer or know your client guidelines in financial services requires that professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship.
• It also enables banks to understand its customers and their financial dealings to serve them better and manage its risks prudently.
Aml guidelines
Anti money laundering guidelines to prevent criminals from illegally obtaining funds as legitimate income
For example, AML regulations require banks and other financial institutions that issue credit or accept customer deposits to follow rules that ensure they are not aiding.
• The purpose of the AML rules is to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.
Banking fraud
• Bank fraud is the use of potentially illegal means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors by fraudulently posing as a bank or other financial institution.
TYPES OF BANKING FRAUD:
accounting fraud
Demand draft fraud
Accounting fraud
• In order to hide serious financial problems, some businesses have been known to use fraudulent bookkeeping to overstate sales and income, inflate the worth of the company’s assets, or state a profit when the company is operating at a loss.
Demand draft fraud
Demand draft fraud refers to a type of fraud in which the dishonest bank employees, • who know the coding and punching of a demand draft (DD), will remove a few demand draft leaves or DD books from the stock of a bank
Banking code
The Banking Code of Practice is a set of promises outlining how a bank should conduct itself in its dealings with customers, as well as specific requirements for banking services.
• A bank code is a code assigned by a central bank, a bank supervisory body or a Bankers Association in a country to all its licensed member banks or financial institutions.
What are Basel norms
Basel norms or Basel accords are the international banking regulations issued by the Basel Committee on Banking Supervision.((BCBS)
What is Sarfaesi act?
The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the SARFAESI Act) is an Indian law.
• It allows banks and other financial institution to auction residential or commercial properties (of Defaulter) that have been pledged with them to recover loans from borrowers .
What is the procedure of Sarfaesi act?
Securitisation: Securitisation is the process of issuing marketable securities backed by a pool of existing assets such as auto or home loans.
• After an asset is converted into a marketable security, it is sold.
• A securitisation company or reconstruction company may raise funds from only the QIB (Qualified Institutional Buyers) by forming schemes for acquiring financial assets.
non Applicability of sarfasei act
The SARFAESI Act is not applicable to:
• Regional Rural Banks • Nationalized Banks • Co-operative Banks
Arc in banking
Accounts receivable conversion (ARC) is a process that allows paper cheque to be electronically scanned and converted into an electronic payment through the Automated Clearing House (ACH).
