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Raghuram govind Rajan NewGoverner Dy
Governers ,Mr Urjrit Patel,R.Gandhi, Harun Rashid
Khan , S.S.Mundra to join as fourth Dy.gov.
Security Exchange Board of India
Insurance Regulatory Development Authority
Small Industries Development Bank of India
State Bank of India, 1st July1955 Arundhati
Bhattacharya chairman there are 4 MDs
Opened on 19th Nov2013 With one thousand capital.

Modified on25th August2014

Hilton young commission
Established on 1/4/1935

B Prasad Rao

Reverse Repo
Bank Rate
CD Ratio

Bahrat Heavy Electrical Ltd. Recommended for

Competition commission of India, approves merger of
companies, and keep check on cartel of prices
Oil & Natural Gas Corporation Ltd., steel authority of
India, Indian oil corporation Maharatna , Company
having worth of 10000 and turnover of 20000cr and
profit of 5000 cr
Bombay Stock Exchange1875 Ashish kumar
chauhan MD CEO
National Stock Exchange 1992 Mr S.B.Mathur
Started on 9th Feb2013 listed 1154 companies index
of 40 shares base value Rs.10000
NSE Certification for Financial Markets
Association of Mutual Fund of India
Index future of NSE, Which contains combination of
Index of BSE, Which contains combination of 30
Statutory Liquidity Ratio
Cash Reserve Ratio
Rates on which RBI Allows Temporary Finance to
Interest Paid by RBI to Banks on their surplus funds
held by RBI
Rate of Discounting/Lending to banks by RBI
Marginal standing facility 0.5% of deposits for one day
Credit Deposit Ratio
Electronic Fund Transfer


Real Time Gross Settlement started in

National Electronic Fund Transfer


Electronic Clearing Service

Magnetic Ink Character Recognition
Electronic Cheque
Electronic Commerce
Core Banking Solution, all branches of the bank
connected (centralized online real time environment )
Automated Teller Machine Mini Bank Functions, first
ATM in India by HSBC bank
Card Link to Account
Credit Allowed with in Limit sectioned without interest
for a cycle of billing
Visa International Service Association
Used by ICICI
Used by SBI group
Issued By NPCIL
Society for World Wide Interbank Financial
Foreign Exchange Regulation Act
Foreign Exchange Management Act

Mahila bank
Repo Rate

Dr. Card
Cr. Card
Master Card
Maestro Card

U.K Sinha
Shri A. Krishna Kumar, Shri P. Pradeep
Kumar, Shri.B.Sriram,, Shri.V.G.Kannan

Usha Anatha subramaniam

Ashok Chawala
Bhel, Gail and Coal India too
granted Maharatan
Mr. S. Ramadorai
Non-Executive Chairman

Ms. Chitra Ramakrisha MD

and CEO
CEO -H.N.Sinor
Base year 1995 base price
Base year 1978-79 base price
22% of deposits
Now converted in to RTGS
and NEFT
Over2 Lac. Real Time
Hourly settlement without any
Dr./Cr. Both
Business through Website
invented by John Shepherd

16 Digit
16 Digit
19 Digit
16 digit
Mode of International Payment


Purchase of Goods from Abroad

Sale of Goods to Abroad
Export Import Bank of India 1982
Director General of Foreign Trade


Import Export Code

Bill of Lading

Dollar $
Pakistani Rs.

American Currency
European Countries Currency
Great Britain Currency
Japan Currency
Indian Currency
Bangladesh Currency
Pakistan Currency
Shri Lanka Currency rupee
China Currency
South Africa
current account and savings account
deposit of fixed amount in monthly installment
Fixed deposit receipt

simple interest

amount calculate on principal *i*T

interest becomes part of principal after application

Quick ratio

Current asset stocks and prepaid expenses/Current

Debt equity ratio


Debt service coverage ration

cost of

value of asset reduced for account purpose

average cost of interest in %


non performing asset


return on assets
return on equity
capital to risk weighted asset ratio tier I now
proposed to 9% as per Basel III
BASEL committee is named after a place in
Switzerland for recommending international standard
for banking . Basel III will start from 1st April 2013
world trade organization for framing rules for trade
between nations,Roberto Azevdo director general
free trade agreement/arrangement
International bank for Reconstruction and
development , IBRD and IDA are part of it
International monitory fund
brazil Russia, India, china south Africa, setting up$
100 Bn Development Bank in Shanghai

world bank
per capita

break even point

current ratio

average interest income %

net interest margin

gross domestic production of Service and

Manufacturing and service sector
per person average income

Yaduvendra Mathur

Pravir Kumar (w.e.f.

Documents issued by Shipping

Also Remibi
Earlier real
Low cost deposit
Recurring deposit
Minimum7 days and maximum
10 years

stage of no profit no loss ,

current asset / current liability
should be more than 1.33
debt/equity should be less
cash surplus/ installment of
RDW and straight line method
total interest paid /average
Net interest received up on
total loan *100
installment due but not paid
with in 90 days
Net profit /Total asset
Net profit/total equity
should be o 12 % as per basel
III from 1/4/13
Capital to risk weighted asset
ratio now tier 1 is 9% plus
buffer capital 2.50%
Geneva on 1Jnan 1995
Jim Yong Kim
Cristina Legarde
High growth emerging
64.8 ervice,22 %

Biometric ATM
Direct tax
Red harry
Pink slip
ICICI bank
Stale cheque
Post dated
Fiscal deficit
Trade deficit
Junk bond

Rs 74920 as per current price

Below poverty line new concept of spending less
than Rs47/- in urban and Rs.33 per day in
rural areas are below the poverty line.
National bank for agriculture and rural development
Portugal, Ire land ,Italy, Greece and spain Ciprus also
American depository receipt
Global depository receipt
Indian depository receipt
Indian bank association CEO M.V.Taksale
Foreign institutional investors fast movement of
money through stock market
Domestic institutional investors
Foreign direct investment though principal
companies as per policy of DIPP. Movement is not fast
Strength weakness opportunities and threats
Kisan credit card Limit sanctioned by banks for crop
loan it was introduced in 1998
ATM with photo recognition and thumb impression
Unique identity authority of India 21 cr th card was
given in DUDU Rajasthan on 19th Oct12.it has 12 digit
All schedule commercial banks
Goods service tax
Value added tax
Income tax, corporate tax, wealth tax
Mahatma Gandhi national rural employment
guarantee act
Generally accepted accounting procedure
International financial reporting standard There are 35
Draft prospectus with red making filed to SEBI by
companies for a IPO
A notice of termination by employer( American term)
( Industrial credit and Investment corporation of India)
Net asset value
The cheque dated 3 months past
Cheque with advance date

As per C Rangrajan
Harsh Kumar Bhanwala
Economically trouble d and
Poorly managed countries
In place stocks
First IDR by stan chart bank
Hot money

Asper KC Chakraborty
committee 2012 now linked to
Bill presented in parliament
Started 2nd Feb. 2006,M
started in 2009

International Accounting
Standards Board (IASB
It has black clause of value
Chanda Kochar
Related to mutual fund
Its required revalidation
Can not be paid before

Pledging of immovable property by document of

property as security as loan
A mortgage in which a lender offers a favorable
interest rate in exchange for a portion of the
profits when the borrower sells the home.
Short fall in revenue of budget raised by public debt/
Deficit in foreign trade where import is more than
export Export312.35bn and import 450.94bn dollar
Total plan Of Rs lac cr17.63 lac crore

In bank it is Equitable

Green hunt operation

Against naxalites in west

Now Bank Mitra

Business representatives for extending banking

facilities to rural persons
Business facilitator
Bond with low rating giving high yield , high risk of
default, speculative bonds
Turnkey is a product or service that is designed,
supplied, built, or installed fully complete and
ready to operate. The term implies that the end
user just has to turn a key and start using the

Target4.8 % budget 2014

GDP TARGET 2015 IS 4.1%
Trade deficit 138.59bn dollar in
Exccise10% servicetax12%

Work as moving agent

Green energy
3 G Spectrum
Sweet equity

Dumping and
anti dumping


Tax heaven
Chief justice
Wiki pedia file




product or service.
Natural resources of energy Hydro, solar ,
Credit Analysis & Research Ltd, Credit Rating
Information Services of India Limited., investment
information and credit rating agency of india limited.
IN RBI LOKPAL Act 2006 maximum penalty
Rs10lac in banking services and Rs1lac in
credit card
Know your customer , introduced E- KYC linked
to Adhar
Third generation band width in which video
conferencing is available
For national programme use of natural resources
of energy . SBI has used wind mills
The shares issued to any person in
consideration of any services other than cash

Looks after of banks customer

RBI guidelines 2005


The foreign good dumped at port to crash

local market , to charge extra taxes against
this is anti dumping
European union 27 member countries + one
Croatia new member and ECB central bank of
Euro zone "Mario Draghi is president
Organization of petroleum Exporting
South Asian association of regional conference

18 countries use EURO +

Luthania will joinm from
Jan2015 total will be 19

Counties with no or less tax rate on income ,

Bermuda Mauritius

New chief justice will be R.M. Lodha

Minimum alternate tax on Operating profit ,or book profit
its net of import and export and income
from abroad to remain30 bn

4.8% in 2013 about 2% in


8countries..India,Sri lanka,
and Maldives

Wikipedia is an online free-content

encyclopedia that anyone can edit and
contribute to. Wikipedia co-founder Jimmy
Wales has described Wikipedia as "an effort to
create and distribute a multilingual free
encyclopedia of the highest quality to every
single person on the planet in his or her own
language." Wikipedia exists to bring knowledge
to everyone who seeks
sMicro enterprise 10 lacs to 25 lacs (Business
enterprise 10 lacs and Manufacturing 25 lacs) small
industry 2 cr for business enterprises and 5 cr for
Minimum Rs1.lac , 60 days notice , appeal in DRT
after payment 0f 50 % dues
Department of industrial policy promotion
Corporate social responsibility

Amitabh Kant
Company should spend some
share of profit on social cause

Letter of credit , commitment letter issued by the

bank on behalf of the customer ( buyer ) for
payment of the bill on sight or usance



Bank guarantee , commitment given by the bank to

compensate losses ( financial and performance )
Public interest litigation
National Intelligence grid to house data base
intelligence report to counter terrorism
United stock Exchange fo trading of currency future
Inter services intelligence
Research and analysis wing


Central intelligence agency

Nat grid


AT j&k fight terrorism

Lt Gen Zahir-ul-Islam
Alok Joshi



The mortgage is done to take loan in monthly installment

as pension which is settled from the property or by
survivors .

BIHAR, MP. RAJASTHAN UP emerging state
Fiat money
money that the government declares to be legal
tender although it cannot be converted into standard

Chairman k.v.Choudhary
Central board for direct taxes


Pradeep Kumar
Central vigilance commission


Rajeev Mathur
Chief Information Commissioner

Finance Sec
Arvind Maya Ram

Banking as per Islamic Law (sharia) no interest paid

or charged

Blood money
Money paid to family of murdered person as per
Islamic law for acquittal
Ru pay
Now RBI has permitted to national payment
corporation of India to issue ATM cards in India with
this name ,completely dedicated on 14th March2014
by president

General Anti Avoidance Rule wef 1st April2016

The RuPay card was

launched on 23 MAY
To check black moneny

Supervisory review and evaluation process

Internal capital adequacy assessment process

Financial service commission on Basel
Deferred lending rate
There are 21 countries for economic cooperation
Earth hour

Last Saturday of March

One hour switch of light as per World wide Life FUND


Ashok Gulati
Commission for agriculture cost and price

Comprehensive economic cooperation agreement
between India and Singapore
Comprehensive Economic Partnership Agreement

Financial stability and development council

Voice over Internet protocol
IIP data
Index of Industrial production
Bear / bull
Foreign sec
Green field
Attorney Gen
Solicitor Gen
Home Sec
Sec Financial
G20 countries

Who things negative about the market are bear and

bull things market will go up
Equated monthly installment
Banking all financial products under one roof

Share market / stocks market

Indian space research organization, father of Space

programme was Dr Vikram Sarabhai
Central board for exercise and custom

DR.Radhakrishanan present
chair man ,

Credit information of India ltd

Sujata Singh
Anup Raha
New Project


Mukul nRohatgi
Ranjit Kumar
Income tax return
Institute of Charted Accountant Of India
Anil Goswami
G.S. Sandhu
Limited Liability partnership Act 2008
Central registry for home loan
Financial sectror legal reforms committee
Group of Twenty) is a group of finance
ministers and central bank governors from 20
major economies: 19 countries plus the
European Union

Ms. J.M. Shanti Sundharam

as Chairperson

Sahaj Sugam

Started by RBI in March2011

Justice B.N.Krishna


of OBC
ST commi
SC commi

On customer service in banks

On HR issues in banks
The Committee to Review Arrangements for
Institutional Credit for Agriculture and Rural
Development (CRAFICARD) set up by the RBI
under the Chairmanship of B Shiv raman
Forward market commission
Industrial finance corporation of india

Recommended Nabard

Ramesh Abhisek
P.G.Murlidharan cmd and Atul
kumar Rai MD

Mr Chattar singh
Rmeswar otrav
An Offshore Banking Unit (OBU) of a bank is a
deemed foreign branch of the parent bank
situated within India, and shall undertake
International Banking business involving
foreign currency denominated assets and

Nominal effective exchange rate
Real effective exchange rate
P5 ountries

P5+1 Germany
Permanent members having veto power in UNO

Prime lending rate
Base rate
Minimum lending rate

Who takes deposits and invest in govt Bonds

Certificate of deposits issued by banks in round of Rs1lac

In round of Rs5.00 lac

Commercial paper issued by companies which has 4 crore
net worth , and has rating , A

Assets reconstruction companies

The Nobel Prize in Physics 2013Franois Englert

and Peter W. Higgs
"for the theoretical discovery of a mechanism that
contributes to our understanding of the origin of
mass of subatomic particles, and which recently was
confirmed through the discovery of the predicted
fundamental particle, by the ATLAS and CMS
experiments at CERN's Large Hadron Collider"
In Chemistry 2013Martin Karplus, Michael Levitt
and Arieh Warshel"for the development of

chemistry shall be awarded by the
Swedish Academy of Sciences; that
for physiology or medical works by
Stockholm; that for literature by the
Academy in Stockholm, and that for
champions of peace by a committee
of five persons to be elected by the
Norwegian Storting.

multiscale models for complex chemical systems"

In Physiology or Medicine 2013James E. Rothman,
Randy W. Schekman and Thomas C. Sdhof"for
their discoveries of machinery regulating vesicle
traffic, a major transport system in our cells
In Literature 2013Alice Munro"master of the
contemporary short story"
For Peace Organization for the Prohibition of
Chemical Weapons (OPCW) "for its extensive
efforts to eliminate chemical weapons
In Economic Sciences -Eugene F. Fama, Lars
Peter Hansen and Robert J. Shiller"for their
empirical analysis of asset prices"


Eleanor Catton was awarded the Man Booker

Prize on Tuesday for The Luminaries, an
immersive tale set in 19th-century New Zealand
that explores identity, greed and human frailty.
At 28, Ms. Catton is the youngest winner of the
Booker. She was born in Canada and raised in
Christchurch, New Zealand.

the Booker Prize

Foundation announced that
in 2014 the prize would be
open to all novels written in
English and published in

The Booker is Britains most prestigious literary

prize, awarded annually to a novelist from
Britain, Ireland or a Commonwealth country. The
winner receives 50,000, or about $80,000.

Market Cap

White level
Dow jone
Nikki 225

Mega-cap: Over $200 billion

Large-cap: Over $5 billion

Mid-cap: $1 billion$5 billion

Small-cap: $250 million$1 billion

Micro-cap: Below $250 million

Nano-cap: Below $50 million
The difference of authorized and paid up capital
Intelligence Bureau of India
Central bureau of investigation
Department of industrial policy promotion
Foreign investment promotion board
Direct benefit transfer
Defence Research and Development
These are out source ATM installed by NBFC

Tata Communications Payment Solutions

Limited (TCPSL)
Banking codes and standard board of India
Very small aperture terminal
Federation of Indian chamber of commerce and

Associated Chambers of Commerce and

Index of 100 companies listed on London
stock exchange
USA index of industrial average
USA index of 500
Japan index
French stock market of 40 shares

Syed Asif Ibrahim

Ranjeet Sinha
Secretary- Industries
Secretary Industries deptt
Cash subsidy
Avinash Chander

launches IndicashA.C.Mahajan
Sidharth K Birla
Rana kappor

Army chief

German stock exchange 30 share

Of Pakistan is Mr Raheel Sharif
Pakistan names new Chief Justice Tassaduq
Hussain Jillani


The Institute for Development and Research in

Banking Technology (IDRBT), an autonomous
body to provide

RBI's PKI enabled applications

such as PDO-NDS, SFMS, RTGS,

Questions on banking

1. What is a Payment System?

A Payment System is a mechanism that facilitates transfer of value between a payer and a beneficiary by
which the payer discharges the payment obligations to the beneficiary. Payment system enables two-way flow
of payments in exchange of goods and services in the economy.
2. What are the components of any payment system?
Payment systems comprises of instruments through which payments can be made, rules, regulations and
procedures that guide these payments, institutions which facilitate payment mechanisms and legal systems
etc. that are established to facilitate transfer of funds between different participant institutions.
3. Who can use payment systems to make payments?
Payment systems are used by individuals, banks, companies, governments, etc. to make payments to one
another. In other words, any body who has to make a payment to any one else can use one or the other form
of payment system to make such a payment.
4. What are the ways in which a customer can make payments through banks?
Customer can make payments by issuing paper based instruments like cheques, demand drafts, payment
orders etc or by advising bank to debit his account and originate an electronic payment eg. ECS, NEFT/EFT,
RTGS, etc.
Another mode of making payments is by having a letter of credit transmitted to the beneficiary's banker who
releases payments on fulfillment of certain conditions laid down in the LC.
5. How is the payment made when a payer issues a cheque to the payee?
The process of cheque payment starts when a payer gives his personal cheque to the beneficiary. In order to
get the actual payment of funds, the receiver of the cheque has to present the cheque to the issuing bank. If
the cheque is not crossed and is payable to bearer he can receive payment at the issuing bank counters,
otherwise he has to deposit the cheque in his bank account. If the beneficiary has an account in the same
bank in the same city then the funds are credited into his account through internal arrangement of the bank. If
the beneficiary has an account with any other bank in the same or in any other city, then his banker would
ensure that funds are collected from the payers banker through the means of a clearing house.
6. What is a Clearing House?
A clearing house is a place for exchange of cheques by banks; it facilitates transfer of funds from one bank to
another, which represents the proceeds of cheques. It is as a central meeting place for bankers to exchange
the cheques drawn on one another and claim funds for the same. Such operations are called as clearing
operations. Generally one bank is appointed as in-charge of the clearing operations. In the four metros and a
few other major cities, the Reserve Bank of India is looking after the operations of the clearing house. Each
clearing house has uniform regulations and rules for the conduct of its operations as prescribed by RBI. There
are more than 1000 clearing houses operating all over the country facilitating cheque payments. These are
managed by the RBI, State Bank of India and other public sector banks.

7. What is the time taken for this clearing process?

Generally, if a cheque is to be paid within the same city (local cheque), it would take 2-3 days. In some large
cities, there is a system called High Value Clearing which facilitates completion of cheque clearing cycle on
the same day and the customer depositing the cheque is permitted to utilise the proceeds next day morning.
However, coverage of this High Value Clearing is very limited and usually available at the branches in the
main business area; say Fort and Nariman Point area in Mumbai and Connaught Place in New Delhi.
In the case of outstation cheques, the time taken would vary from three to ten days. Banks generally publicise
their cheque collection policy so that customers have an idea as to when the proceeds would be available for
utilisation by the customer. For delay beyond the pre-announced period, the banks are required to
compensate the customer (even without customer asking for the same).
Interestingly, there was a complaint filed by Shri Atul Nanda and Another in 2006 before the National
Consumer Disputes Redressal Commission, New Delhi. It was alleged in the complaint (C.C. No. 82 of 2006)
that there was loss to the consumers because of 'floating fund' in the cheque clearing mechanism. The
National Consumer Disputes Redressal Commission, New Delhi issued a show cause notice to the Reserve
Bank of India in response to which the Reserve Bank of India filed a reply affidavit on November 09, 2006. In
its reply affidavit the Reserve Bank of India explained the steps it had taken in the recent times to minimise the
alleged loss to the consumers because of 'floating fund'. As directed by the National Consumer Disputes
Redressal Commission, New Delhi the full text of the reply affidavit filed by the Reserve Bank of India is
placed here.
8. Would a bank customer incur any charges by using cheques for payments?
The person receiving payment by means of cheques would incur some charges to realise the funds through
his/her bank. In case of local cheques, no charges are levied. In case of outstation cheques, the bank would
take some processing / collection charges depending upon the amount of the cheque and the place from
where it has to be realised. The charges levied by the banks are generally decided by the banks themselves.
Banks are also required to publicise the schedule of service charges.
9. How can payments be made without use of cheques and cash?
Payments can be made between two or more parties by means of electronic instructions without the use of
cheques. Retail payment mechanisms available to facilitate such payments are the Electronic Funds Transfer,
Electronic Clearing Service, credit / debit cards etc.
10. Can a customer of a bank use the ATM of some other bank?
Yes, if the customers bank has an arrangement with the bank owning the ATM. Presently, stand alone ATMs
are very few and usually such stand alone ATMs are installed at the branch premises. In case ATM of another
bank is used, normally a service charge called 'inter-change fee' is levied on the customer.
11. Are ATMs used only for cash withdrawal?
In addition to cash withdrawal, ATMs can be used for payment of utility bills, funds transfer between accounts,
deposit of cheques and cash into accounts, balance enquiry and several other banking transactions which the
bank/s owning the ATM's might want to offer.
12. What is the role of credit / debit cards in payment systems?
Credit / Debit cards are being widely used in the country as they provide a convenient form of making
payments for goods and services without the use of cheques and cash. Banks issue credit cards to their
customers. The merchant establishment who accepts credit / debit card payments will claim the amount from
the customers bank through his own bank.
13. How is a Debit Card different from Credit Card?
Debit Card is a direct account access card. (Amount transacted gets debited immediately). The amount
permitted to be transacted in debit card will be to the extent of the balance standing to the credit of the card
users account. On the other hand, a credit card involves provision of credit to the card user. The card user
settles the bills on receipt either in full or partially in installments.


14. What is NEFT/EFT?

National Electronic Funds Transfer/Electronic Funds Transfer (NEFT/EFT) is a system whereby anyone who
wants to make payment to another person / company etc. can approach his bank and give instructions /
authorisation to transfer funds directly from his account to the bank account of the receiver / beneficiary.
Complete details such as the receivers name, bank account number, account type (savings or current
account), bank name, city, branch name, etc., should be furnished to the bank at the time of requesting for
such transfers so that the amount reaches the beneficiaries account correctly and faster.
15. Can I use NEFT/EFT to transfer funds anywhere in India?
As of now, NEFT/EFT facility is available for transfer of funds electronically between more than 18500 bank
branches. The details of the cities and branches can be had from the respective banks as also from the RBI
16. How long does it take to transfer funds through NEFT/EFT?
Funds transfer normally takes place on the same day or at the most the next working day depending upon the
time of requesting / effecting such funds transfers. The customer should confirm this aspect from his bank at
the time of requesting the funds transfer.
17. Are there any charges for transferring funds through NEFT/EFT?
The banks generally charge some processing charges for NEFT/EFT just as in the case of other services like
demand drafts, pay orders, etc. The actual charges depend upon the amount and the banker-customer
relationship. However, for the present, the RBI has waived all its processing charges on NEFT/EFT that were
being recovered from the banks for processing such funds transfer transactions at the clearing houses run by
RBI. This has certainly reduced the processing cost for the banks also.
18. How can I make use of Electronic Clearing Service for receiving funds / making payments?
Electronic Clearing Service (ECS) is a retail payment system that can be used to make bulk payments /
receipts of a similar nature especially where each individual payment is of a repetitive nature and of relatively
smaller amount. This facility is meant for companies and government departments to make/receive large
volumes of payments rather than for funds transfers by individuals. The ECS facility is available in 64 centres
across India operated by RBI at places where it manages the clearing houses and by SBI and other public
sector banks in other centres. The ECS is further divided into two types ECS (Credit) to make bulk
payments to individuals/vendors and ECS (Debit) to receive bulk utility payments from individuals.
19. What is ECS (Credit)?
Under ECS (Credit) one entity / company would make payments from its bank account to a number of
recipients by direct credit to their bank accounts. For instance, companies make use of ECS (Credit) to make
periodic dividend / interest payments to their investors. Similarly, employers like banks, government
departments, etc make monthly salary payments to their employees through ECS (Credit).Payments of
repetitive nature to be made to vendors can also be made through this mode. For this purpose, the company
or entity making the payment has to have the bank account details of the individual beneficiaries. The
payments are affected through a sponsor bank of the Company making the payment and such bank has to
ensure that there are enough funds in its accounts on the settlement day to offset the total amount for which
the payment is being made for that particular settlement. Sponsor bank is generally the bank with whom the
company maintains its account.
20. What is ECS (Debit)?
ECS (Debit) is mostly used by utility companies like telephone companies, electricity companies etc. to
receive the bill payments directly from the bank account of their customers. Instead of making electricity bill
payment through cash or by means of cheque, a consumer (individuals as well as companies) can opt to
make bill payments directly into the account of the electricity provider / company / board from his own bank
account. For this purpose, the consumer has to give an application to the utility company (provided the
company has opted for the ECS (Debit) scheme), providing details of bank account from which the monthly /
bi-monthly bill amount can be directly deducted. Such details have to be authenticated by the bank of the
customer who opts for making payments through this mode. Once this option is given, the utility company
would advise the consumers bank to debit the bill amount to his account on the due date of the bill and


transfer the amount to the companys own account. This is done by crediting the account of the sponsor bank
which again is generally the bank with which the company receiving the payments maintains the account. The
actual bill would be sent to the consumer as usual at his address as before.
21. Are there any charges for using the ECS?
Reserve Bank of India has exempted levy o fall charges for processing ECS at the clearing houses. The
banks, however, are free to charge a fee from their corporate customers for use of this facility.
22. How can an NRI remit money into India?
As an NRI, an individual can remit funds into India through normal banking channels using the facilities
provided by the overseas bank. Alternately, an NRI can also remit funds through authorised, Money Transfer
Agents (MTA). Of late, a good number of banks have launched their inward remittance products which
facilitate funds transfer in matter of hours.
23. How do banks make payments for their own transactions?
Ordinarily, the transactions among banks (not pertaining to customer transactions) would be for large
values .Hence such transactions are called as large-value funds transfers. The actual transfer of funds will
take place through the accounts which the banks maintain with the RBI. For this purpose, banks can give
cheques drawn on their account maintained with RBI to one another, which will then be processed through the
clearing house. Alternatively, they can also make use of large value payment system called as Real Time
Gross Settlement System where funds transfer takes place instantaneously, based on electronic instructions
just like NEFT/EFT in the case of individuals and companies.
24. What is Real Time Gross Settlement System?
Real Time Gross Settlement (RTGS) system, introduced in India since March 2004, is a system through which
electronic instructions can be given by banks to transfer funds from their account to the account of another
bank. The RTGS system is maintained and operated by the RBI and provides a means of efficient and faster
funds transfer among banks facilitating their financial operations. As the name suggests, funds transfer
between banks takes place on a real time basis. Therefore, money can reach the beneficiary instantaneously
and the beneficiarys bank has the responsibility to credit the beneficiarys account within two hours.
25. Can individuals make payments through RTGS system?
Yes, individuals can transfer funds through RTGS system through their banks. Though the system is primarily
designed for large value payments, bank customers have the choice of availing of the RTGS facility for their
time critical low value payments as well. A customer who desires to use this facility should approach his bank
to find out whether his own bank branch as well as the beneficiarys bank branch is enabled to transfer funds
through RTGS system. Banks may levy charges for such funds transfers at their discretion and based on the
customer-bank relationship. However, RBI has decided that small value customer transaction of up to Rs. 1
lakh would be migrated to NEFT/EFT.
26. What is Cheque Truncation?
Cheque Truncation is a system of cheque clearing and settlement between banks based on electronic
data/images or both without physical exchange of instrument.
27. How would Cheque Truncation benefit the bank customers?
The bank customers would get their cheques realised faster as same day (for local cheques) or next day (for
outstation cheques) clearing is possible in Cheque Truncation System (CTS). As straight through processing
and automated payment processing are enabled by CTS faster realisation is accompanied by a reduction in
costs for the customers and the banks. It is also possible for banks to offer innovative products and services
based on CTS. The banks have additional advantage of reduced reconciliation and clearing frauds.
28. What is the role of RBI in payment systems?
The RBI, apart from the role of regulator and supervisor of payment systems, plays the role of a Settlement
Bank apart from being a catalyst, an operator and a user. The RBI has been taking initiatives in introducing
new modes of more efficient and safe means of effecting payments in the country on a continuous basis. The


RBI introduced the system of Magnetic Ink Character Recognition (MICR) based cheque clearing during late
80's for four metropolitan cities (Mumbai, New Delhi, Chennai and Kolkata). During mid 90s, electronic
payment systems like ECS and NEFT/EFT were introduced. During 2004-05, RTGS was introduced. Besides
introducing these newer mechanisms or systems, the RBI has also been constantly ensuring that the existing
systems are upgraded / refined to increase their efficiency and to meet the requirements of customers. Taking
advantage of advancements in technology, the RBI has brought in additional safety measures in these
systems to make them secure and also to maintain the integrity of such transactions.
Besides operating the various components of payments systems, RBI also participates in these systems as a
user. RBI also acts as a service provider. RBI has the role of regulating and supervising the various payment
29. How does RBI regulate payment systems?
The Board for regulation and supervision of Payment and Settlement Systems (BPSS) is a sub-committee of
the Central Board of the RBI and is the highest policy making body on payment system. The Board as well as
the council are assisted by a recently created department the Department of Payment and settlement
Systems (DPSS). The Board has been entrusted with the responsibility to authorise, prescribe policies and set
standards for all existing and future payment systems in the country. The Board also has the powers to
determine membership criteria to these systems and related policies.
30. Whom should I approach in case of any complaints relating to customer services under payment
The customer may approach the bank concerned to redress the complaint. In case of lack of response /
satisfactory redressal by the bank, the customer may approach the Grievance Redressal Cell in the local RBI
office. The customer may also approach the office of the Banking Ombudsman for redressal of his complaint.
Terms and Words used in Payments




Cash payment is the most common payment system which is well known.

Cheque, demand
draft, payment order,
bankers cheque

Paper based payments are in the form of cheques, demand drafts, payment
orders, bankers cheques, refund orders, warrants etc. These are also referred to
as negotiable instruments. For simplicity, they are generally referred to as
i. Cheques are simply a payment instruction from the account holder to his/her
banker directing that a certain sum of money should be paid to a specific
individual or to the bearer of the instrument. On receipt of cheques, the
beneficiary will deposit it with his banker who will collect the money through
clearing house system, where banks in a city exchange cheques with one another
and settle the payments by arriving at a net amount of payables and receivables.
After exchange of cheque, the account of the issuer of the cheque is debited and
the credit is passed on to the banker of the beneficiary. An account holder should
ensure that a cheque is issued only when there is sufficient balance of funds in
his/her account. Cheques drawn on any bank in the country can be cleared
through various mechanisms available in the clearing system. The process usually
takes 2 to 4 days depending on the local clearing house procedures.
In India, cheques are valid for three years from the date of issue. However,
cheques are treated as stale, by practice, by banks after since months from the
date of issue, but they can be revalidated by the issuer. Dividend warrants and
interest warrants issued by companies are also treated as cheques which are
usually valid for three months from the date of issue. In case of a cheque, the
beneficiary is entitled to receive the money due only if the balance is available to
clear the cheque. However, there are some pre-paid negotiable instruments eg.
Demand drafts / payment order / banker's cheques.


ii. Demand drafts are used when one person wants to send or transfer money
(remit) to another person who is in another city. The person wanting to send
money, deposits cash in a bank or issue a cheque in favour of the issuing bank,
which issues him a demand draft. The demand draft is sent to the person who is
to receive the money. The receiver gives it to the branch/bank where he holds an
account and receives the payment. They are valid for 6 months. Banks normally
charge a commission for issuing demand drafts.
iii. Payment orders or Bankers Cheques are similar to demand drafts but are
usually issued for payments within a city. These are usually valid for 3 months.
Banks may charge a commission for issuing Payment Orders and Bankers
Credit cards, ATM
Card based payments are made by using a credit card or a debit card
cards, debit cards,
smart cards and other i. Credit card system is a credit facility extended to a user who is issued a plastic
card which can be used in place of cash for making any type of
payment/purchase. The institution which issues the card has a tie up with the
concerned merchant establishment and the card issuing organization, if different,
to facilitate this arrangement. The amounts charged to the customer are paid by
card issuer to the merchant and subsequently billed to the customer. A credit card
holder may not be an account holder in the bank which issues the credit card.


Debit cards can be of two types - One which is issued by banks to

account holders only and the other in which a pre-loaded amount is stored
and operates in collaboration with a service provider/seller. Generally,
debit cards are also ATM cards.

The mode of using debit cards and credit cards is generally the same.
Comparison between Credit and Debit Card:
Debit Card

Credit Card
Transaction amounts restricted to credit limit offered on
the credit card

Transaction amounts limited to permissible

withdrawal out of the balance in the card
holders bank account / cash limit / store val

Grace period of one month to 45 days is offered after

which interest/penalty may be charged.

Amount is debited to the customers accoun

There is no interest / penalty involved.

iii. Special types of credit cards:

Kisan Credit Cards can be issued up to a limit of Rs.50,000 out of which

Rs.25,000 has to be used for agricultural and allied purposes.
General Credit Cards are issued up to a value of Rs.25,000.


Electronic Clearing
Service, Electronic
Funds Transfer, Real
Time Gross
Settlement System,
Internet banking.

Electronic Payments and Remittances:

i. Electronic Clearing Services (ECS) are available for receiving or making
payments. ECS for receipt is ECS (Credit). ECS for payment is ECS is ECS
(Debit). The scheme is operational in 64 cities.
a. ECS (Credit): Electronic Clearing Service for credit is a mode of payment by an
institution and receipt by individuals for interest, dividend, salary, pension, etc. A
large number of investors, share holders, employees, ex-employees can receive
their dues electronically directly into their accounts on due dates without using
paper cheques/instruments.
b. ECS (Debit): Electronic Clearing Service for debit has been introduced so that
bank customers can make small value repetitive payments such as electricity bills,
telephone bills, loan installments, insurance premia, club fees, etc. The process
operates on the basis of large number of small debits and one consolidated
credit from users to the service provider. The system provides the convenience of
paperless payment on due dates by direct debit to the customers account.
ii. NEFT/EFT (National Electronic Funds Transfer/Electronic Funds Transfer): This
electronic mode of remittance of funds is available with over 18500 bank
branches. The amount sent from the senders bank branch is credited to the
receivers bank branch on the same day or at the most the next day. This facility
saves the effort of sending a demand draft through post and the inherent delay in
reaching the money to the receiver. Banks may charge commission for using
iii RTGS (Real Time Gross Settlement) System: The RTGS system facilitates
instant transfer of money from one account to other across cities. This is basically
a large value remittance system where funds are required to be transferred
quickly. While all the above payment and remittance systems are settled between
banks on a net basis, RTGS is settled on a gross basis which means that each
transaction is settled independently. This facility is useful to banks for their funds
management, for companies to transfer large amounts for individuals who require
urgent payments.

President of India on 8 May 2014 launched Rupay, Indigenous Card payment System at Rashtrapati Bhawan in Delhi. RuPay is
the coinage of two terms Rupee and Payment. Reserve Bank of India (RBI) envisioned the need for such an indigenously
managed service in 2005. National Payments Corporation of India (NPCL) developed the Rupay platform. Rupay is the seventh
card payment system in the world after Visa, MasterCard, American Express, Discover, Diners Club, and JCB.
Features of RuPay

It can be used at ATMs, Points of sale and also for online purchases.

Rupay card will be use with a PIN. It is possible to withdraw 25000 rupees using the card. Up to 50000 rupees can be spent at
Point of sale terminals.The variant of Rupay card is Kisan Card which is issued by 43 Public Sector Banks (PSBs).
RuPay Scheme provide flexibility to card issuing banks to issue special purpose cards like Kisan Cards, Milk Procurement Cards,
Grain Procurement Cards and Financial Inclusion Cards.The user of Rupay will need to pay at atleast 40 percent fewer charges
for each transaction clearing and settlements when compared to other international platforms.
Expansion of RuPay The total number of banks issuing RuPay cards is now more than 250 and the card base as on April 2014
was at 20 million plus. More than 150 cooperative banks and the regional rural banks (RRBs) have also issued RuPay ATM card.


Government sector banks already set up 25331 ATMs in which Rupay can be used. In the present financial year 2014-15,
another 9000 ATMs will be set up. These cards can be used in more than 1.6 lakh ATMs and 95% of POS terminals and almost
all e-com merchants.Currently, over 12 per cent of GDP worth cash and coins are in circulation which is quiet high.
Benefits of RuPay Card
The benefits of RuPay debit card are the flexibility of the product platform, high levels of acceptance and the strength of the
RuPay brand-all of which will contribute to an increased product experience.Lower cost and affordability
Customized product offering Protection of information related to Indian consumers
Transaction and customer data related to RuPay card transactions will reside in India
Provide electronic product options to untapped/unexplored consumer segment
Inter-operability between payment channels and products Rupay card also offer facilities such as personal accident insurance
and permanent disability cover to the card holder.Soon, it will be possible to use Rupay in foreign countries as the company is
looking ahead with Discover Financial Services of US for Western world and JCB of Japan for Eastern worl