WBCHSE HS Vocational Banking, Financial Services and Insurance cheat sheet

A bank accepts demand deposits repayable on demand and lends them out; the gap between deposit and lending rates is the spread, a core source of bank income.

RBI classifies banks into scheduled (listed in the Second Schedule of the RBI Act, 1934) and non-scheduled banks; scheduled banks must keep CRR with RBI and satisfy minimum capital and paid-up requirements.

CRR (Cash Reserve Ratio) is the share of net demand and time liabilities held as cash with RBI and earns no interest; SLR is held in approved securities such as government bonds.

Bank rate is the rate at which RBI lends long-term against eligible securities; repo rate is the rate for short-term lending against government securities; reverse repo absorbs liquidity.

NBFCs lend and invest but cannot accept demand deposits and are not part of the payment system as principal; they differ from banks in deposit-taking and cheque-issuance rights.

Types of financial institutions: commercial banks, cooperative banks, regional rural banks (RRBs), development finance institutions, insurance companies, mutual funds and pension funds.

Financial inclusion schemes: Pradhan Mantri Jan Dhan Yojana (basic savings account with RuPay card and overdraft), Atal Pension Yojana, PMJJBY (life cover) and PMSBY (accident cover).

A bank's liabilities are deposits (money owed to customers); its assets are loans, investments and cash reserves; capital adequacy is measured as capital divided by risk-weighted assets.

Savings account: interest-bearing deposit for individuals, with withdrawal limits; current account: no interest, meant for businesses, unlimited transactions; fixed deposit: lump sum for a fixed term at a fixed rate.

Recurring deposit: fixed monthly instalments for a fixed term; maturity value uses the future value of an annuity formula on monthly instalments.

KYC documents for opening an account: proof of identity (Aadhaar, PAN, passport, voter ID) and proof of address (utility bill, Aadhaar, rent agreement); PAN is mandatory for deposits above the threshold set by Income Tax rules.

A cheque is a bill of exchange drawn on a specified banker payable on demand; crossing (two parallel lines) restricts it to collection through a bank account.

Endorsement transfers a negotiable instrument; a bearer cheque is payable to whoever holds it, an order cheque requires identification and endorsement.

The paying banker must verify signature, date, amount in words and figures, endorsements and sufficient balance; a post-dated cheque is paid only on or after its date.

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

Interest on savings accounts is calculated on the daily closing balance using the product method: sum of daily balances multiplied by rate and divided by days in the year.

Insurance transfers risk from the insured to the insurer in exchange for a premium; it operates on the principle of pooling of risks and the law of large numbers.

Core principles: insurable interest, utmost good faith (uberrimae fidei), indemnity, subrogation, contribution, proximate cause and mitigation of loss.

Life insurance pays a sum assured on death or maturity; it is not a contract of indemnity because a human life cannot be valued in money.

General insurance covers property and liability; fire, marine and motor policies are contracts of indemnity, limited to the actual loss suffered.

Premium components: risk premium (mortality or expected loss), expense loading, contingency margin and, in life policies, a savings component.

IRDAI (Insurance Regulatory and Development Authority of India) licenses insurers, agents and intermediaries and sets solvency and consumer-protection norms.

Nomination names a person to receive policy benefits on the policyholder's death; assignment transfers policy rights, and a will can override nomination on succession.

Bancassurance is the sale of insurance products through bank branches, using the bank's customer base and distribution network.

Primary market issues new securities through an IPO, FPO or rights issue; the secondary market (stock exchanges) trades already-issued securities.

Money market instruments have maturities up to one year: treasury bills, commercial paper, certificates of deposit and call money; capital market instruments are longer-term.

Treasury bills are zero-coupon; they are issued at a discount and redeemed at face value, so the return is the difference between issue price and face value.

Shares give ownership and voting rights with dividends; debentures are debt with a fixed coupon and no ownership rights; preference shares rank before equity for dividends.

Bond price moves inversely with market interest rates; yield to maturity equates the present value of future coupons and principal to the current price.

SEBI regulates the securities market; its functions include investor protection, registration of intermediaries and regulation of stock exchanges and mutual funds.

Mutual fund NAV per unit equals (total assets minus total liabilities) divided by the number of units outstanding.

Derivatives such as futures and options derive value from an underlying asset; options give a right, futures create an obligation.

Service quality dimensions (SERVQUAL): reliability, responsiveness, assurance, empathy and tangibles; reliability is the strongest predictor of customer satisfaction.

Communication process: sender, encoding, channel, message, decoding, receiver, feedback and noise; feedback confirms that the message was understood.

The banking ombudsman handles complaints against banks after the customer has first approached the bank and received no response or an unsatisfactory one within the prescribed period.

Active listening techniques: paraphrasing, asking clarifying questions, summarising and avoiding interruption; reflective responses confirm understanding.

Telephone etiquette in BFSI: identify yourself and the bank, verify the customer's identity before disclosing account data, and never share OTPs or PINs.

Handling an angry customer: listen without arguing, acknowledge the problem, apologise for the inconvenience, offer options and confirm resolution.

Grievance escalation ladder: branch manager, nodal officer, banking ombudsman; complaints must be acknowledged and tracked with a reference number.

Cross-selling is offering a relevant additional product to an existing customer; mis-selling is selling without disclosing terms and is a compliance violation.

RBI regulates banks and payment systems under the RBI Act, 1934 and the Banking Regulation Act, 1949; SEBI regulates securities, IRDAI regulates insurance and PFRDA regulates pensions.

KYC norms require customer identification, verification and ongoing monitoring; the Prevention of Money Laundering Act (PMLA) obliges reporting entities to file suspicious transaction reports.

Priority sector lending targets require banks to direct a specified share of credit to agriculture, MSMEs, education, housing and weaker sections.

Basel III framework sets minimum capital: Common Equity Tier 1, Tier 1 and total capital ratios plus leverage and liquidity coverage ratios.

Deposit insurance under DICGC covers deposits up to the notified limit per depositor per bank, for both principal and interest.

Banking Regulation Act, 1949 restricts banks from trading goods, holding immovable property beyond stated limits and paying unapproved commissions.

Fair practices code covers transparent interest rates, no hidden charges, grievance redressal and a stated period for loan-application disposal.

Wilful default and fraud reporting: banks report frauds to RBI and file complaints with police; the Central Fraud Registry tracks fraud cases.

UPI (Unified Payments Interface) is a real-time, 24x7 payment system operated by NPCI; a virtual payment address (VPA) such as name@bank replaces account details.

Card components: EMV chip stores data securely, magnetic stripe is legacy, CVV is a security code, and 3-D Secure adds an OTP step for online payments.

Two-factor authentication combines something you know (PIN or password) with something you have (OTP on a registered device or card).

Phishing uses fake emails or messages to steal credentials; vishing uses phone calls; smishing uses SMS; never share OTPs, PINs or passwords.

AEPS (Aadhaar Enabled Payment System) allows basic transactions using Aadhaar and biometric authentication at banking correspondent points.

NPCI operates UPI, RuPay, IMPS, NACH, AePS and Bharat BillPay; RuPay is India's domestic card scheme.

Payment Banks accept deposits up to the notified limit per customer but cannot lend or issue credit cards; Small Finance Banks can lend.

Digital lending guidelines require disclosure of the all-inclusive cost of credit, direct disbursal to the borrower's account and no unauthorised access to phone data.

A project report structure: title, objectives, methodology, data collection, analysis, findings, conclusion and references; each section must state its purpose.

Data sources: primary (surveys, interviews, observation) and secondary (RBI reports, annual reports, websites); cite the source and collection date.

Cheque-filling practice: write the amount in words and figures identically, sign in the designated box, use the correct date format and never overwrite corrections.

Practical drills: filling a deposit slip, reading a passbook entry, calculating simple and compound interest, and computing an EMI using the reducing-balance formula.

A spreadsheet can compute EMI with the PMT function: PMT(rate, number of periods, loan amount); the rate is the monthly rate and periods are months.

Survey design: define the objective, choose a sample, avoid leading questions, pilot-test the questionnaire and record responses accurately.

A customer-service role play should demonstrate greeting, identity verification, need identification, clear explanation and confirmation of action.

Evaluation criteria for a vocational project: clarity of objective, accuracy of data, quality of analysis, presentation, originality and practical relevance.

A bank accepts demand deposits repayable on demand and lends them out; the gap between deposit and lending rates is the spread, a core source of bank income.

RBI classifies banks into scheduled (listed in the Second Schedule of the RBI Act, 1934) and non-scheduled banks; scheduled banks must keep CRR with RBI and satisfy minimum capital and paid-up requirements.

CRR (Cash Reserve Ratio) is the share of net demand and time liabilities held as cash with RBI and earns no interest; SLR is held in approved securities such as government bonds.

Bank rate is the rate at which RBI lends long-term against eligible securities; repo rate is the rate for short-term lending against government securities; reverse repo absorbs liquidity.

NBFCs lend and invest but cannot accept demand deposits and are not part of the payment system as principal; they differ from banks in deposit-taking and cheque-issuance rights.

Types of financial institutions: commercial banks, cooperative banks, regional rural banks (RRBs), development finance institutions, insurance companies, mutual funds and pension funds.

Financial inclusion schemes: Pradhan Mantri Jan Dhan Yojana (basic savings account with RuPay card and overdraft), Atal Pension Yojana, PMJJBY (life cover) and PMSBY (accident cover).

A bank's liabilities are deposits (money owed to customers); its assets are loans, investments and cash reserves; capital adequacy is measured as capital divided by risk-weighted assets.

Savings account: interest-bearing deposit for individuals, with withdrawal limits; current account: no interest, meant for businesses, unlimited transactions; fixed deposit: lump sum for a fixed term at a fixed rate.

Recurring deposit: fixed monthly instalments for a fixed term; maturity value uses the future value of an annuity formula on monthly instalments.

KYC documents for opening an account: proof of identity (Aadhaar, PAN, passport, voter ID) and proof of address (utility bill, Aadhaar, rent agreement); PAN is mandatory for deposits above the threshold set by Income Tax rules.

A cheque is a bill of exchange drawn on a specified banker payable on demand; crossing (two parallel lines) restricts it to collection through a bank account.

Endorsement transfers a negotiable instrument; a bearer cheque is payable to whoever holds it, an order cheque requires identification and endorsement.

The paying banker must verify signature, date, amount in words and figures, endorsements and sufficient balance; a post-dated cheque is paid only on or after its date.

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

Interest on savings accounts is calculated on the daily closing balance using the product method: sum of daily balances multiplied by rate and divided by days in the year.

Insurance transfers risk from the insured to the insurer in exchange for a premium; it operates on the principle of pooling of risks and the law of large numbers.

Core principles: insurable interest, utmost good faith (uberrimae fidei), indemnity, subrogation, contribution, proximate cause and mitigation of loss.

Life insurance pays a sum assured on death or maturity; it is not a contract of indemnity because a human life cannot be valued in money.

General insurance covers property and liability; fire, marine and motor policies are contracts of indemnity, limited to the actual loss suffered.

Premium components: risk premium (mortality or expected loss), expense loading, contingency margin and, in life policies, a savings component.

IRDAI (Insurance Regulatory and Development Authority of India) licenses insurers, agents and intermediaries and sets solvency and consumer-protection norms.

Nomination names a person to receive policy benefits on the policyholder's death; assignment transfers policy rights, and a will can override nomination on succession.

Bancassurance is the sale of insurance products through bank branches, using the bank's customer base and distribution network.

Primary market issues new securities through an IPO, FPO or rights issue; the secondary market (stock exchanges) trades already-issued securities.

Money market instruments have maturities up to one year: treasury bills, commercial paper, certificates of deposit and call money; capital market instruments are longer-term.

Treasury bills are zero-coupon; they are issued at a discount and redeemed at face value, so the return is the difference between issue price and face value.

Shares give ownership and voting rights with dividends; debentures are debt with a fixed coupon and no ownership rights; preference shares rank before equity for dividends.

Bond price moves inversely with market interest rates; yield to maturity equates the present value of future coupons and principal to the current price.

SEBI regulates the securities market; its functions include investor protection, registration of intermediaries and regulation of stock exchanges and mutual funds.

Mutual fund NAV per unit equals (total assets minus total liabilities) divided by the number of units outstanding.

Derivatives such as futures and options derive value from an underlying asset; options give a right, futures create an obligation.

Service quality dimensions (SERVQUAL): reliability, responsiveness, assurance, empathy and tangibles; reliability is the strongest predictor of customer satisfaction.

Communication process: sender, encoding, channel, message, decoding, receiver, feedback and noise; feedback confirms that the message was understood.

The banking ombudsman handles complaints against banks after the customer has first approached the bank and received no response or an unsatisfactory one within the prescribed period.

Active listening techniques: paraphrasing, asking clarifying questions, summarising and avoiding interruption; reflective responses confirm understanding.

Telephone etiquette in BFSI: identify yourself and the bank, verify the customer's identity before disclosing account data, and never share OTPs or PINs.

Handling an angry customer: listen without arguing, acknowledge the problem, apologise for the inconvenience, offer options and confirm resolution.

Grievance escalation ladder: branch manager, nodal officer, banking ombudsman; complaints must be acknowledged and tracked with a reference number.

Cross-selling is offering a relevant additional product to an existing customer; mis-selling is selling without disclosing terms and is a compliance violation.

RBI regulates banks and payment systems under the RBI Act, 1934 and the Banking Regulation Act, 1949; SEBI regulates securities, IRDAI regulates insurance and PFRDA regulates pensions.

KYC norms require customer identification, verification and ongoing monitoring; the Prevention of Money Laundering Act (PMLA) obliges reporting entities to file suspicious transaction reports.

Priority sector lending targets require banks to direct a specified share of credit to agriculture, MSMEs, education, housing and weaker sections.

Basel III framework sets minimum capital: Common Equity Tier 1, Tier 1 and total capital ratios plus leverage and liquidity coverage ratios.

Deposit insurance under DICGC covers deposits up to the notified limit per depositor per bank, for both principal and interest.

Banking Regulation Act, 1949 restricts banks from trading goods, holding immovable property beyond stated limits and paying unapproved commissions.

Fair practices code covers transparent interest rates, no hidden charges, grievance redressal and a stated period for loan-application disposal.

Wilful default and fraud reporting: banks report frauds to RBI and file complaints with police; the Central Fraud Registry tracks fraud cases.

UPI (Unified Payments Interface) is a real-time, 24x7 payment system operated by NPCI; a virtual payment address (VPA) such as name@bank replaces account details.

Card components: EMV chip stores data securely, magnetic stripe is legacy, CVV is a security code, and 3-D Secure adds an OTP step for online payments.

Two-factor authentication combines something you know (PIN or password) with something you have (OTP on a registered device or card).

Phishing uses fake emails or messages to steal credentials; vishing uses phone calls; smishing uses SMS; never share OTPs, PINs or passwords.

AEPS (Aadhaar Enabled Payment System) allows basic transactions using Aadhaar and biometric authentication at banking correspondent points.

NPCI operates UPI, RuPay, IMPS, NACH, AePS and Bharat BillPay; RuPay is India's domestic card scheme.

Payment Banks accept deposits up to the notified limit per customer but cannot lend or issue credit cards; Small Finance Banks can lend.

Digital lending guidelines require disclosure of the all-inclusive cost of credit, direct disbursal to the borrower's account and no unauthorised access to phone data.

A project report structure: title, objectives, methodology, data collection, analysis, findings, conclusion and references; each section must state its purpose.

Data sources: primary (surveys, interviews, observation) and secondary (RBI reports, annual reports, websites); cite the source and collection date.

Cheque-filling practice: write the amount in words and figures identically, sign in the designated box, use the correct date format and never overwrite corrections.

Practical drills: filling a deposit slip, reading a passbook entry, calculating simple and compound interest, and computing an EMI using the reducing-balance formula.

A spreadsheet can compute EMI with the PMT function: PMT(rate, number of periods, loan amount); the rate is the monthly rate and periods are months.

Survey design: define the objective, choose a sample, avoid leading questions, pilot-test the questionnaire and record responses accurately.

A customer-service role play should demonstrate greeting, identity verification, need identification, clear explanation and confirmation of action.

Evaluation criteria for a vocational project: clarity of objective, accuracy of data, quality of analysis, presentation, originality and practical relevance.