Maharashtra HSC Bifocal Banking flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Banking definition, Section 5(b)

Accepting deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise, for the purpose of lending or investment.

Scheduled bank, Second Schedule

A bank included in the Second Schedule of the RBI Act, 1934, having paid-up capital and reserves of at least Rs. 5 lakh and affairs not conducted in a manner detrimental to depositors.

Banking licence, Section 22

No company may carry on banking business in India without a licence from the Reserve Bank, which may be cancelled after giving the company an opportunity of being heard.

RBI commencement and nationalisation

The Reserve Bank of India commenced operations on 1 April 1935 under the RBI Act, 1934, and was nationalised on 1 January 1949.

Monetary Policy Committee target

The statutory framework sets CPI inflation at 4 per cent with a tolerance band of plus or minus 2 per cent; the six-member committee has three RBI members and three government appointees.

CRR and SLR statutes

CRR is imposed under Section 42 of the RBI Act and SLR under Section 24 of the Banking Regulation Act; SLR is currently 18 per cent of net demand and time liabilities.

Payments bank restrictions

A payments bank may accept demand deposits up to Rs. 2 lakh per customer, cannot lend or issue credit cards, and must invest at least 75 per cent of demand deposits in short-term Government securities.

Regional Rural Bank shareholding

Under the RRB Act, 1976, the Central Government holds 50 per cent, the State Government 15 per cent and the sponsor bank 35 per cent; RRBs are scheduled banks.

NABARD role

The National Bank for Agriculture and Rural Development, set up in 1982, is the apex institution for rural credit and refinances regional rural banks and cooperative credit institutions.

Banker as trustee and bailee

When holding securities for collection or articles in a locker, the bank acts as trustee or bailee, while a credit balance creates a debtor-creditor relationship with the bank as debtor.

Banker's duty of secrecy

The bank must not disclose a customer's account information except under compulsion of law, duty to the public, the bank's own interest, or with the customer's consent.

Section 45ZA nomination

A single account holder may nominate one person to receive the deposit on death; the nominee receives the money as a trustee for the legal heirs.

Deposit insurance cover

The Deposit Insurance and Credit Guarantee Corporation insures deposits up to Rs. 5 lakh per depositor per bank, covering both principal and accumulated interest.

Section 269SS restriction

Accepting a deposit of Rs. 20,000 or more otherwise than by account payee cheque, draft or electronic mode is prohibited, attracting penalty under the Income-tax Act.

Recurring deposit maturity formula

For equal instalments paid at the start of each period, maturity equals the instalment multiplied by the annuity future value factor, using the periodic rate and number of instalments.

Cheque definition, Section 6

A bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand, including a truncated cheque and a cheque in electronic form.

Holder in due course

A holder who obtained the instrument for value, in good faith, before maturity and without notice of any defect in the transferor's title, and so gets a better title.

Section 138 timeline

Presentation within three months, written demand within 30 days of the dishonour memo, 15 days for the drawer to pay, and a complaint within one month thereafter.

Pledge versus hypothecation

In a pledge the possession of goods passes to the bank, whereas in hypothecation possession stays with the borrower and the bank gets a charge by agreement only.

Non-performing asset test

A loan becomes an NPA when interest or principal remains overdue for more than 90 days; it is then classified as substandard, doubtful or loss with prescribed provisioning.

Loan-to-value caps

Home loans up to Rs. 30 lakh allow 90 per cent LTV, above Rs. 30 lakh up to Rs. 75 lakh allow 80 per cent, and above Rs. 75 lakh allow 75 per cent.

Simple interest formula

Simple interest equals principal multiplied by rate multiplied by time, divided by 100, with time expressed in years, months divided by 12, or days divided by 365.

Compound interest formula

Amount equals principal multiplied by one plus the rate divided by 100, raised to the number of periods; compound interest is the amount minus the principal.

Rule of 72

The approximate number of years needed for an amount to double equals 72 divided by the annual rate of interest; it is a quick mental approximation.

RTGS threshold and finality

Real Time Gross Settlement handles transactions of Rs. 2 lakh and above individually and in real time, with immediate final settlement and no netting across transactions.

UPI and NPCI

The Unified Payments Interface is a real-time system run by the National Payments Corporation of India, using a virtual payment address to route transactions generally up to Rs. 1 lakh.

Positive Pay System

For cheques of Rs. 5 lakh and above, the issuer must register cheque details such as number, amount and payee; unregistered cheques may be refused at presentation.

Business correspondent model

A bank agent permitted under RBI guidelines to provide small deposits, withdrawals and loan disbursal at locations away from the branch, bringing basic banking to unbanked areas.

Priority sector target

Scheduled commercial banks must lend 40 per cent of adjusted net bank credit to priority sectors, including 18 per cent to agriculture and 7.5 per cent to micro enterprises.

Integrated Ombudsman Scheme

The 2021 scheme covers banks, NBFCs and payment system operators; a complainant must first approach the regulated entity and may go to the ombudsman after 30 days.

Basic Savings Bank Deposit Account

A no-frills account with no minimum balance requirement that allows four free withdrawals per month, including ATM and transfer transactions, under RBI guidelines.

Small account limits

A simplified KYC account allows a maximum balance of Rs. 50,000, annual credits up to Rs. 1 lakh, and remains valid for 12 months, extendable by another 12 months.