CAIIB-BFM-01

Q1. The rate at which the quoting bank is ready to sell the currency is called

A.      Bid rate

B.      Offer rate

C.      TT buying rate

D.      Swap rate

Q2. Operational rate does not include:

A.      Technical faults

B.      Human errors

C.      Systemic failures

D.      Movement in exchange rate

Q3. Exchange rate expressed in term of home currency quotation is called-

A.      Fixed exchange rate.

B.      Floating exchange rate.

C.      Direct exchange rate.

D.      Indirect exchange rate.  

Q4. Exchange rate expressed in term of foreign currency quotation is called-

A.      Fixed exchange rate.

B.      Floating exchange rate.

C.      Direct exchange rate.

D.      Indirect exchange rate.  

Q5. Foreign Exchange markets are-

A.      Regional market.

B.      Domestic market.

C.      Global markets.

D.      Localized markets.

Q6. Spot dealing in FX market means:

A.      Delivery of fund is on the 30^th working day from date of deal.

B.      Delivery of fund is on the second working day from date of deal.

C.      Delivery of fund is on the next date from date of deal.

D.      Delivery of fund is on the one week after the date of deal.

Q7. The date of settlement of fund is known as

A.      Value date

B.      Bid date

C.      Cross date

D.      Fixed date

Q8. Settlement of fund take place on the same day of the date of deal is called :

A.      Spot

B.      Ready

C.      Tom

D.      Forward

Q9. Settlement of fund take place on the next working day of the date of deal is called :

A.      Spot

B.      Ready

C.      Tom

D.      Forward

Q10. Settlement of fund take place on the second working day of the date of deal is called :

A.      Spot

B.      Ready

C.      Tom

D.      Forward



Answer will be Provide on Next Day.....Thanks

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Non-Performing Asset (NPA)

A Non-Performing Asset (NPA) is defined as a credit facility in respect of which the interest and/or installment of principle has remained ‘past due’ for a specified period of time. In simple terms, an asset is tagged as non performing when it ceases to generate income for the bank.

A non-performing asset (NPA)is a loan or an advance where;

• Interest and/or installment of principal remain overdue for a period of more than 91 days in respect of a term loan,
• The account remains ‘out of order’ for a period of more than 90 days, in respect of an Overdraft/Cash Credit (OD/CC),
• The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
•  The installment of principal or interest thereon remains overdue for two crop seasons for short duration crops.
• The installment of principal or interest thereon remains overdue for one crop season for long duration crops.
• Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.
• Non submission of Stock Statements for 3 Continuous Quarters in case of Cash Credit Facility.
• No active transactions in the account (Cash Credit/Over Draft/EPC/PCFC) for more than 91days

‘Out of Order’ status

An account should be treated as 'out of order' if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'.

 ‘Overdue’

Any amount due to the bank under any credit facility is ‘overdue’ if it is not paid on the due date fixed by the bank

Further classify non-performing assets into the following three categories based on the period for which the asset has remained non-performing and the realisability of the dues:

1.   Sub-standard assets: a sub standard asset is one which has been classified as NPA for a period not exceeding 12 months.

2.   Doubtful Assets: a doubtful asset is one which has remained NPA for a period exceeding 12 months.

3.   Loss assets: where loss has been identified by the bank, internal or external auditor or central bank inspectors. But the amount has not been written off, wholly or partly.

Sub-standard asset is the asset in which bank have to maintain 15% of its reserves. All those assets which are considered as non-performing for period of more than 12 months are called as Doubtful Assets. All those assets which cannot be recovered are called as Loss Assets.

Reasons For NPA

NPAs result from what are termed “Bad Loans” or defaults. Default, in the financial parlance, is the failure to meet financial obligations, say non-payment of a loan installment. These loans can occur due to the following reasons:

·         Usual banking operations /Bad lending practices

·         A banking crisis (as happened in South Asia and Japan)

·         Overhang component (due to environmental reasons, natural calamities, business cycle, Disease Occurrence.

·         Incremental component (due to internal bank management, like credit policy, terms of credit, etc...)

Effect of NPA

NPAs do not just reflect badly in a bank’s account books, they adversely impact the national economy. Following are some of the repercussions of NPAs:

·         Depositors do not get rightful returns and many times may lose uninsured deposits. Banks may begin charging higher interest rates on some products to compensate NPA losses

·         Bank shareholders are adversely affected

·         Bad loans imply redirecting of funds from good projects to bad ones. Hence, the economy suffers due to loss of good projects and failure of bad investments.

Ref: Master circular RBI, Wikipedia

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Electronic mode of Transdaction/Payment gateway

There are many type of payment gateway through which we payment and transfers fund from one bank to another, one country to another.

1.       SWIFT

Ø  It is a society, stands for Society for Worldwide Interbank Financial Telecommunications.

Ø  Owned by member banks and financial institutions

Ø  Built in security system with an automatic authentication of financial message, through Bilateral Key Exchange (BKE) , 24 hour & 365 day.

Ø  Authentication key exchange between themselves through RMA ( Relationship Management Application) or BIC ( Bank Identification Code)

Ø  Comprised of 8 or 11 alphanumeric character  

2.       CHIPS

Ø  Stands for Clearing House Interbank Payment System.

Ø  The system uses CHIP participant code to identify the participants and UID numbers to identify the beneficiary account.

Ø  It is operative only in New York and mainly used for foreign exchange Interbank settlement and Euro dollar settlement.

3.       FEDWIRE

Ø  Another US payment system operated by Federal Reserve Bank

Ø  All US banks maintain account with Federal Reserve Bank and allotted an “ABA number” to identify and receivers of payments

4.       CHAPS

Ø  Clearing House Automated Payment System (CHAPS) , is a British equivalent to CHIPS.

Ø  Payment in London with 16 member bank

5.       TARGET

Ø  Trans-European Automated Real-time Gross Settlement Express Transfer system is an EURO payment system comprising 15 national RTGS system working in EUROPE.

6.       RTGS-plus and EBA

Ø  Euro clearing system with RTGS plus

7.       RTGS/NEFT in India

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Correspondent Banking

Correspondent Banking is the relationship between two banks which have mutual accounts with each other, or one of them having account with the other.

In other word, Correspondent Banking is a practice, where a bank is able to handle business in another city or country, through local bank (that is present at that city or county, which act as an agent of former and charging fees for the services.

Function of correspondent Banking:-

A.      Account Services

1.        To handling of outward payment, receipts of inward payments and collections, through the account maintained with it.

2.       As agent for collection of export/import bills as well as checks in their country

3.       Handle and executes all payment instruction of the client bank, by debiting to the account maintained with it.

4.       Also grant overdraft for temporary needs, say overnight o fill up short-term funding gaps.

5.       Offers services to investment of overnight surplus balance, investment of funds in short-term deposits, cash management services

B.      Other Services

1.       Letter of credit advising

2.       LC confirmations

3.       Bankers Acceptances

4.       Issuance of Guarantees

5.       Foreign exchange services

6.       Custodial services

BANK ACCOUNT

1.       NOSTRO account – “Our account with You”

2.       VOSTRO account – “Your account with Us”

3.       LORO account – “His account with Them”

4.       MIRROR account – Shadow of Nostro account . It is maintained in two currencies, one of which is the foreign currency and the other one is the home currency.

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Pradhan Mantri Suraksha Bima Yojana

Pradhan Mantri Suraksha Bima Yojana is a government-backed accident insurance scheme in India. It was originally mentioned in the 2015 Budget speech by Finance Minister Arun Jaitely in February 2015.  It was formally launched by Prime Minister Narendra Modi on 9 May in Kolkata. As of May 2015, only 20% of India's population has any kind of insurance, this scheme aims to increase the number

DETAILS OF THE SCHEME

Ø The scheme will be a one year cover, renewable from year to year, Accident Insurance Scheme offering accidental death and disability cover for death or disability on account of an accident.

Ø The scheme would be offered / administered through Public Sector General Insurance Companies (PSGICs) and other General Insurance companies willing to offer the product on similar terms with necessary approvals and tie up with Banks for this purpose.

Ø Participating banks will be free to engage any such insurance company for implementing the scheme for their subscribers.

ELIGIBILITY

Ø All savings bank account holders in the age 18 years (completed) and 70 years (age nearer birthday) years in participating banks will be entitled to join & give their consent to join / enable auto-debit.

Ø In case of multiple saving bank accounts held by an individual in one or different banks, the person would be eligible to join the scheme through one savings bank account only.

Ø Aadhar would be the primary KYC for the bank account.

ENROLLMENT PERIOD

Ø The cover shall be for the one year period stretching from 1st June to 31st May for which option to join / pay by auto-debit from the designated savings bank account on the prescribed forms will be required to be given by 31st May of every year, extendable up to 31st August 2015 in the initial year.

Ø Initially on launch, the period for joining may be extended by Govt. of India for another three months, i.e. up to 30th of November, 2015.

Ø Joining subsequently on payment of full annual premium may be possible on specified terms. However, applicants may give an indefinite / longer option for enrolment / auto-debit, subject to continuation of the scheme with terms as may be revised on the basis of past experience.

Ø Individuals who exit the scheme at any point may re-join the scheme in future years.

Ø New entrants into the eligible category from year to year or currently eligible individuals who did not join earlier shall be able to join in future years while the scheme is continuing.

BENEFITS

	Type of Accident	Sum Assured
1	Death	Rs.  2,00,000/-
2	Total and irrecoverable loss of both eyes or loss of use of both hands or feet or loss of sight of one eye and loss of use of hand or foot	Rs.  2,00,000-
3	Total and irrecoverable loss of sight of one eye or loss of use of one hand or foot	Rs.  1,00,000/-

 PREMIUM

Ø Rs.12/- per annum per member. The premium will be deducted from the account holder’s savings bank account through ‘auto debit’ facility in one installment on or before 1 st June of each annual coverage period under the scheme.

Ø However, in cases where auto debit takes place after 1st June, the cover shall commence from the first day of the month following the auto debit.

Ø The premium would be reviewed based on annual claims experience. However, barring unforeseen adverse outcomes of extreme nature, efforts would be made to ensure that there is no upward revision of premium in the first three years.

MASTER POLICY HOLDER

 Participating Bank will be the Master policy holder on behalf of the participating subscribers. A simple and subscriber friendly administration & claim settlement process shall be finalized by the respective general insurance company in consultation with the participating Banks.

TERMINATION

 The accident cover for the member shall terminate on any of the following events and no benefit will be payable there under:

Ø On attaining age 70 years (age nearest birth day).

Ø Closure of account with the Bank or insufficiency of balance to keep the insurance in force.

Ø In case a member is covered through more than one account and premium is received by the Insurance Company inadvertently, insurance cover will be restricted to one only and the premium shall be liable to be forfeited.

Ø If the insurance cover is ceased due to any technical reasons such as insufficient balance on due date or due to any administrative issues, the same can be reinstated on receipt of full annual premium, subject to conditions that may be laid down. During this period, the risk cover will be suspended and reinstatement of risk cover will be at the sole discretion of Insurance Company.

Ø Participating banks will deduct the premium amount in the same month when the auto debit option is given, preferably in May of every year, and remit the amount due to the Insurance Company in that month itself.

APPROPIATION OF PREMIUM

Ø Insurance Premium to Insurance Company:  Rs.10/- per annum per member

Ø Reimbursement of Expenses to BC/Micro/Corporate/Agent : Rs.1/- per annum per member

Ø Reimbursement of Administrative expenses to participating Bank: Rs.1/- per annum per member

 The proposed date of commencement of the scheme will be 1st June 2015.The next Annual renewal date shall be each successive 1 st of June in subsequent years. The scheme is liable to be discontinued prior to commencement of a new future renewal date if circumstances so require.

CLAIM PROCESS

PMSBY claim process is like claiming other insurance from either private or governmental bank. You need to be prepare with each supporting document and must inform bank. Below steps can be summarized as claim process of Pradhan mantri suraksha Yojana.

Ø Need to inform the bank ( There are more than 25 banks) regarding accident.

Ø Claim should be submitted to the Bank from which PMSBY has been bought.

Ø Claim Form should be submitted within 30 days after incidence.

Ø Submit claim supporting document like FIR, death certificate, report of post mortem, disability certificate (if any) and the discharge certificate.

Ø After Verification Bank will provide insurance amount to nominee or legal heir.

NATIONAL TOLL FREE NUMBER - 1800 110 001 / 1800 180 1111

Source - wikipedia

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