Professional / Technical Knowledge (Post-specific)
Professional / Technical Knowledge (Post-specific)
For officer-level posts in a state cooperative bank, the professional paper blends cooperative banking, accounting, credit and compliance; specialist (IT, agriculture, law) candidates get discipline-specific papers. The general paper rewards precise definitions over depth in any one area.
Core rules
- Double entry: every transaction has two effects. Rules - debit the receiver, credit the giver; debit what comes in, credit what goes out; debit expenses and losses, credit incomes and gains.
- Bank balance sheet: liabilities are capital, reserves, deposits and borrowings; assets are cash, balances with RBI, investments and advances. Provisions are charged against profit; reserves are appropriations of profit.
- Asset classification: overdue beyond 90 days is an NPA. Substandard means NPA for up to 12 months; doubtful beyond that; loss assets are identified as uncollectible. Interest on NPAs is not recognised as income until received.
- Cooperative law: societies are registered under the state Cooperative Societies Act (Chhattisgarh, 1960) and audited under it; PACS borrow from the DCCB, which in turn is financed by the StCB and NABARD refinance.
- KYC/AML: Customer Due Diligence, PAN where required, beneficial ownership, and reporting of cash and suspicious transactions to FIU-IND under PMLA, 2002.
- Credit appraisal: the five Cs - character, capacity, capital, collateral, conditions - plus CMA data for working capital limits.
Worked example
A customer pays ₹10,000 cash into a savings account. Pass the entry. Reasoning: cash comes in, so Cash is debited; the bank now owes the customer more, so the deposit (a liability) is credited. Entry: Dr Cash ₹10,000 / Cr Savings Deposit ₹10,000. It is not income - the bank has taken on a liability, not earned revenue.
Traps
- Treating a deposit as income; it is a liability.
- Booking interest on an NPA.
- Confusing provision with reserve.
- Quoting RBI directions without checking whether they apply to cooperative banks.