UPMSP Vocational Banking cheat sheet

Bank = financial intermediary that accepts deposits, pools idle savings, and channels them into loans; profit comes from the spread between lending rate and deposit rate.

RBI is India's central bank (est. 1 April 1935, nationalised 1949); it issues currency, holds banker's-bank role, manages forex under FEMA and sets monetary policy.

Monetary policy tools: repo rate, reverse repo, CRR, SLR, open market operations and MSF; repo cut tends to lower lending rates, repo hike tends to raise them.

CRR = share of net demand and time liabilities kept as cash with RBI, earns no interest; SLR = share held in cash, gold or approved securities, earns interest.

Banking Regulation Act, 1949 governs banking companies; RBI Act, 1934 governs the central bank and currency; RRB Act, 1976 covers regional rural banks.

Bank types by structure: scheduled commercial (public, private, foreign), RRB, cooperative, small finance and payments banks; payments banks accept deposits up to a prescribed cap and cannot lend.

Financial system participants: savers, borrowers, banks, NBFCs, insurance companies, mutual funds, capital market (SEBI) and money market (RBI).

Financial inclusion means access to a basic bank account, credit, insurance and pension at affordable cost; measured through branch and account penetration.

KYC is mandatory before opening any deposit account; PAN or Form 60, proof of identity and proof of address are collected and re-verified periodically.

Savings account: interest-bearing, transaction limits apply, no cheque-bounce penalty for individuals; current account: meant for business, no interest paid, unlimited transactions.

Fixed deposit: lump sum for a fixed term at a fixed rate; premature withdrawal is allowed with a rate penalty; loan can be raised against the FD.

Recurring deposit: fixed monthly instalment for an agreed term; maturity value uses the recurring deposit formula on each instalment.

Joint accounts: 'either or survivor' allows any holder to operate; 'former or survivor' gives the first holder sole operation while alive; 'latter or survivor' reverses it.

Dormant or inoperative account: no customer-induced transaction for the period fixed by RBI; reactivation requires fresh KYC and written request.

Nomination under the Banking Regulation Act, 1949 (Section 45ZA) lets a depositor name a nominee who receives the balance on death.

Basic Savings Bank Deposit Account (BSBDA): no minimum balance, limited free transactions, and can be converted to a regular account on request.

Simple interest = P × r × t; compound interest = P(1 + r/n)^(nt) − P, where n is compounding per year and t is in years.

EMI = P × i × (1+i)^n / ((1+i)^n − 1), with i = annual rate ÷ 12 ÷ 100 and n = tenure in months.

Credit appraisal checks the 5 Cs: character, capacity, capital, collateral and conditions; CIBIL or bureau score is a key input.

Types of advances: cash credit (working capital, drawing power based on stock), overdraft, demand loan, term loan, bill discounting and letter of credit.

Secured loan = backed by hypothecation, pledge, mortgage or assignment; unsecured loan has no security and carries a higher rate.

Priority sector lending targets include agriculture, MSME, education, housing and weaker sections; shortfall is parked in RIDF.

NPA classification: substandard, doubtful and loss assets; provisioning rises with the age of the NPA and recovery follows SARFAESI or DRT routes.

Base rate or MCLR is the floor for lending rates; the effective rate adds a spread based on borrower risk.

NEFT settles in batches, RTGS is real-time for high-value transactions with a prescribed minimum, and IMPS is instant 24x7 through mobile banking.

UPI uses a virtual payment address and is operated by NPCI; it links multiple bank accounts to one app and settles instantly.

Cheque clearing runs through CTS (cheque truncation system) with a scanned image; a cheque is valid for three months from its date.

Crossed cheque (two parallel lines) must be deposited into an account; an open cheque can be paid across the counter; 'A/c payee' restricts further endorsement.

Payment modes: debit card debits the account immediately, credit card gives a billing cycle and interest-free period, prepaid card is loaded in advance.

AEPS allows Aadhaar-based cash withdrawal and balance enquiry at micro ATMs; USSD *99# gives basic banking without internet.

POS, QR code, Bharat BillPay and NACH (for ECS mandate and direct benefit transfer) are part of the digital payment ecosystem.

Security rules: never share OTP, PIN or CVV; report a lost card at once; phishing links and vishing calls are the main fraud vectors.

Double-entry rule: every transaction has equal debit and credit; assets and expenses debit on increase, liabilities, capital and income credit on increase.

Golden rules: debit the receiver, credit the giver (personal); debit what comes in, credit what goes out (real); debit expenses and losses, credit incomes and gains (nominal).

Journal → ledger → trial balance → trading and profit & loss account → balance sheet is the accounting cycle.

Bank's balance sheet: liabilities = capital, reserves, deposits and borrowings; assets = cash, balances with RBI, investments, advances and fixed assets.

Trial balance totals must agree; a difference is posted to a suspense account pending investigation.

Bank Reconciliation Statement explains the gap between cash book and passbook balance: unpresented cheques, uncredited cheques, bank charges, interest and errors.

Accounting equation: Assets = Liabilities + Capital; a transaction always keeps this equation balanced.

Depreciation is a non-cash expense charged on fixed assets; provision for NPA and standard assets is a charge against profit.

A bank letter follows a formal structure: reference number, date, addressee, subject line, salutation, body, closing and authorised signatory.

Service standards: acknowledge a complaint at once, resolve within the bank's stated turnaround time, and escalate to the nodal officer if unresolved.

RBI's Integrated Ombudsman Scheme (2021) allows a complaint after 30 days of no response or unsatisfactory response, filed online or by post.

Fair practice code requires transparency in charges, no hidden fees, and clear disclosure of interest and penal charges in the loan agreement.

Drafting a reply to a customer: state the facts, quote the relevant account or reference, give the action taken, and offer the escalation route.

Confidentiality: customer data is shared only with consent or under legal or regulatory obligation; staff must not disclose balances to third parties.

Accessibility and language: provide information in the local language where required, and offer doorstep banking for senior citizens and differently abled customers.

Grievance records must be maintained; repeated complaints on the same issue are analysed to fix the root cause.

Budget rule: income − savings = expenditure, not income − expenditure = savings; pay yourself first.

Rule of 72: years to double money ≈ 72 ÷ annual interest rate; at 8% money doubles in about 9 years.

Emergency fund target is typically 3 to 6 months of essential expenses, held in a liquid and safe instrument.

Compound growth favours early starters: the same monthly saving invested longer earns disproportionately more.

Insurance is protection, not investment; term life and health cover should be bought before investment products.

Diversification spreads risk across asset classes: equity for growth, debt for stability, gold and real estate for hedge.

Borrowing rule: total EMI should stay within about 40% of monthly income; a high credit utilisation ratio hurts the credit score.

Avoid Ponzi and unregistered deposit schemes; verify an entity's registration with RBI or SEBI before investing.

Life insurance pays the sum assured on death or maturity; general insurance covers fire, marine, motor, health and crop risks.

Insurance principle of indemnity applies to general insurance only; life insurance is a benefit policy and pays the sum assured regardless of actual loss.

PMJDY gives a basic savings account with RuPay card, overdraft facility and accidental insurance cover to eligible holders.

PMJJBY: renewable one-year life cover at a low annual premium for bank account holders in the eligible age band.

PMSBY: renewable one-year personal accident cover at a low annual premium, with cover for death or disability.

APY (Atal Pension Yojana): subscribers in the unorganised sector get a fixed monthly pension after 60, with government co-contribution for eligible subscribers.

PMFBY (crop insurance): covers yield loss from natural calamities, pests and disease for notified crops and farmers.

Stand-Up India and MUDRA (Shishu, Kishore, Tarun) support small and micro enterprises with collateral-light loans.

Banking Regulation Act, 1949: Section 5(b) defines banking as accepting deposits of money repayable on demand or otherwise, for lending or investment.

Negotiable Instruments Act, 1881: cheque, promissory note and bill of exchange are negotiable instruments; Section 138 covers cheque dishonour for insufficiency of funds.

RBI Act, 1934: Section 22 gives RBI the sole right to issue bank notes; Section 42 covers CRR.

SARFAESI Act, 2002 lets secured creditors enforce security without court intervention after a default; DRT handles recovery of debts above the prescribed threshold.

Prevention of Money Laundering Act, 2002 requires banks to file STR and CTR and follow KYC and record-keeping norms.

Banking Secrecy: customer information is confidential; disclosure is allowed under legal obligation, consent, or public interest as laid down.

Ethics for bank staff: avoid conflict of interest, no acceptance of gifts that influence decisions, no misuse of insider information, and honest reporting.

Limitation Act applies to debt recovery; a written acknowledgement of debt before the limitation period ends restarts the clock.

Account opening project: collect filled form, KYC documents, photograph, nomination and initial deposit, then verify and issue the account number.

Cheque project: verify date, payee, amount in words and figures, signature, crossing and endorsement before passing the cheque.

Cash handling: count notes, check for counterfeit features, enter in the cash book, balance the till at close, and report excess or shortage.

Loan file project: application, KYC, income proof, credit bureau report, valuation, sanction letter, agreement and disbursement record.

Passbook and statement: record date, particulars, debit, credit and balance; reconcile with the cash book and BRS.

Digital banking demo: register for mobile banking, set UPI PIN, make a test transfer, and log the transaction reference.

Customer survey project: design questions on service quality, sample customers, tabulate responses and present findings with charts.

Report format: title, objective, methodology, observations, analysis, conclusion and annexures with supporting documents.