SYLLABUS

I Overview of Indian Banking Sector: Structure of Indian Banking Sector Sources of Funds for a Bank Various Deposit Products Types of Bank Financing- Fund Based And Non-fund Based Cash Credit, Bank Overdraft, Term Loan, Demand Loan, Export/Import Financing, Rural/Farm Lending Etc. Import Financing, Rural/Farm Lending Etc Bank Guarantee Introduction To NPAs And Its Management Classification Of NPAs And Recovery Strategy

II- Central Banking-concept , Function And Role Of The RBI

Money Creator Credit Regulator Supervision of Banking Sector Reforms in Indian Banking Narsimhan Committee I & II Fundamentals of Investment Banking: Funds Based on Fee Based Services Innovations in Banking E-banking Introduction to NBFCs- Role and Classification

III- Introduction to insurance

Basic Principles of Insurance Significance of Insurance to Business Reasons for Slow Growth of Insurance Business in India

IV- Types Of Insurance

Life, Fire, Marine, Crop/Agriculture Insurance, Bancassurance Policy Servicing and Claims Settlement Nomination and Assignment Surrender Value And Paid Up Value of Policy Procedure to Take Life Insurance Policy Claim Settlement Under Life Insurance Policy

DEFINITION OF BANK Bank is an establishment for custody of money received from or on behalf of its customers. Its essential duty is to pay their drafts on It. Its profits arises from the use of the money left employed by them Indian Banking Regulation Act, 1949 define Banking company is one Who do banking business. Banking business means to accepting for the Purpose of lending or investment of deposits of money from the public repayable on demand or otherwise and withdrawable by Cheque, Draft order or otherwise.

FUCTIONS OF MODERN BANKS A. Primary or traditional functions 1. Accepting deposits a) Fixed Deposit Account b) Current Account c) Saving Bank Account d) Other Account e) Other Accounts 2. Advancing of loans a) Cash Credit b) Loans & Advances c) Overdraft d) Discounting of Bill Of Exchange

B. Agency or Representative functions a) Collection of cheques, bill of exchange & other credit instruments b) Purchase & sale of security c) Trustee & executor d) Underwriting function e) Other agency functions

A. General Utility Functions 1. Safe custody of valuable goods 2. Financial advisor 3. Publication of statistics 4. Guaranteer of loans 5. Providing consumers loan 6. Foreign exchange transactions D. Financial & managerial arrangement for foreign trade E. Credit Creation

IMPORTANCE OF BANKING AND ECONOMIC DEVELOPMENT 1. Capital formation 2. Creation of money 3. Strengthen the link between organized & unorganized sectors 4. Provision of long-term loans 5. Helping agriculture & small scale industries 6. Entrepreneurial development 7. Cheque system- medium of exchange

INDIAN BANKING SYSTEM

Unorganized Indigenous Banking IDBI Commercial Bank Public Sector Banks Indian EXIM Regional Rural Bank Private Sector Banks Foreign NABARD Development Bank Organized RESERVE BANK OF INDIA NHB SIDBI

Cooperative Bank 1. State Cooperative Banks 2. Central / District 3. Primary Credit Societies

Industry

Land

Housing

Challenges Before Indian Banking Industry

1)Inefficient organizational structure 2)Declining profitability 3)Recovery of advances 4)Technology 5)Declining customer loyalty 6)Risk management 7)Redesigning rural banking system

REGIONAL RURAL BANKS Establishment of RRBs aimed at devising alternative agencies to provide institutional credit to landless laborers, rural artisans, small and marginal farmers and small entrepreneurs in rural areas. FUNCTIONS OF REGIONAL RURAL BANKS 1) To Mobilize Deposits 2) To Provide Credit 3) Banking Facilities 4) Branch Expansion

DIFERENCE BETWEEN COMMERCIAL BANKS & RRBs 1) Establishment 2) Area of operation 3) Loans and advances 4) Beneficiaries 5) Interest on deposits 6) Rate of interest on loans and advances 7) Cash reserve ratio 8) Operational cost 9) Income tax payment

NATURE OF CENTRAL BANKING 1) The central bank does not aim at profits but aims at national welfare 2) The CB does not compete with the member banks 3) The CB has special relationship with government & with commercial banks 4) The CB is generally free from political influence 5) The CB is the apex body of the banking structure of the country 6) The CB should have overall control over the financial system.

FUNCTIONS OF THE CENTRAL BANK 1) Issuing of notes and regulating the volume of currency 2) Acts as banker to the government 3) Acts as banker to the banks 4) Acts as custodian of nations reserves 5) Acts as the lender of last resort 6) Functions as national clearing house 7) Acts as controller of credit 8) Publishes economic statistics and other information 9) Development functions 10)Supervises the activities of financial institutions.

8. Regulation of the flow of national savings 9. Comprehensive infrastructural facilities 10. Maintaining balance of trade 11. Mitigating the effects of trade cycle 12. Sectoral priorities 13. Effective implementation of monetary policy

CLASSIFICATION OF NPAs 1. Standard Assets 2. Sub-standard Assets 3. Doubtful Assets 4. Loss Assets

PRINCIPLES OF LENDING A. BASIC PRINCIPLES 1) Safety 2) Liquidity 3) Profitability B. GENERAL PRINCIPLES 1) Principle of Diversification 2) Principle of purpose 3) Principle of security 4) Principle of national interest and suitability

NON-FUND BASED ACTIVITIES AND SERVICES OF THE BANKS 1) Collection of Cheques, Bills and Promissory Notes 2) Collection of Dividend and Interest 3) Execution of Standing Orders 4) Remittance of Funds a) Bank Drafts b) Mail Transfer c) Telegraphic Transfer 5) Safe Deposit Vault

6) Issue of Letter of Credits 7) Automated Teller Machine (ATM) 8) Tele Banking 9) Internet Banking 10) Credit Cards 11) Merchant Banking

FUND BASED LENDING 1) Lien 2) Pledge 3) Mortgage 4) Hypothecation 5) Assignment

INNOVATIONS IN BANKING 1) Merchant Banking 2) Leasing 3) Mutual Funds 4) Money Transfer 5) Factoring 6) Housing Finance 7) Credit Cards 8) Portfolio Management 9) ATM 10)Tele Banking 11)Internet Banking

MERCHANT BANKING ASSISTANCE PROVIDED BY MERCHANT BANKERS 1) Project counseling 2) Loan syndication 3) Issue management 4) Management of fixed deposits of joint stock companies 5) Portfolio management 6) Corporate counseling 7) Acquisitions and mergers 8) Underwriting of capital issues 9) Venture capital 10)Counseling to SSI and sick

FACTORING SERVICES DEFINITION According to V.A. Avadhani, factoring is a service of financial nature involving Conversion of credit bills into cash. FUNCTIONS OF FACTORING 1) Purchase and collection of debts 2) Sales ledger management 3) Credit investigation and undertaking of credit risk 4) Provision of finance 5) Rendering the consultancy services

TYPES OF FACTORING

1) Full service factoring 2) With resource factoring 3) Maturity factoring 4) Bulk factoring 5) Invoice factoring 6) Agency factoring 7) International factoring

8) Limited Factoring 9) Buyer Based Factoring 10)Seller Based Factoring 11)Suppliers Guarantee Factoring

LEASING DEFINITION: Lease is a contract whereby the owner of an asset (lessor) grants to another party (lessee) the exclusive right to use the assets usually for an Agreed period of time in return for the payment of rent. ____ James C. Van Horn TYPE OF LEASE 1) Financial Lease 2) Operating Lease 3) Sale and Lease Back 4) Leverage Lease 5) Cross Boarder Lease

MUTUAL FUND Meaning: A mutual fund is formed by the coming together a number of investors who hand over their surplus funds to a professional organization to manage it through investments in capital market.

TYPES OF MUTUAL FUNDS

OPEN ENDED SCHEME 1) Regular investment Plan 2) Regular withdrawal plan 3) Instant liquidity 4) Free entry

CLOSE ENDEDSCHEMS 1) pure growth schemes 2) pure income schemes 3) Balanced schemes 4) tax savings schemes 5) Mutual fund industry

CENTRAL BANK AND MONETARY MANAGEMENT INSTRUMENTS OF CREDIT CONTROL QUALITATIVE OR SELECTIVE 1. Margin Requirements 2. Regulation Of Customers Credit 3. Control Through Directives 4. Rationing Of Credit 5. Moral Suasion & Publicity 6. Direct Action

QUANTITATIVE

. Bank Rate Policy

. Open Market Operations

. Variable Reserve Ratios

CREDIT CREATION Methods of Credit Creation 1) Money at call and short notice 2) Discounting bill of exchange 3) Loans and advances 4) Investments

LIMITATIONS OF CREATION OF CREDIT 1. Quantum of money in the bank 2. Ratio of cash reserves 3. Confidence of the public 4. Business conditions 5. Desire to hold cash 6. Banking practices 7. Availability of honest and sound borrowers

NARASIMHAM COMMITTEE Major Recommendations Of The Committee 1. Mergers & acquisitions 2. Prudential norms 3. Capital adequacy 4. Review of major banking laws 5. Assets reconstruction fund 6. Integrate NBFC activities 7. Credit recovery 8. Rationalization of branches and staff 9. Board of financial supervision 10.Public ownership 11.Deregulation of interest rates

FOREIGN EXCHANGE MARKET Participants in the foreign exchange markets 1) Foreign exchange dealers 2) Individuals and firms 3) Central banks and treasuries 4) Foreign exchange brokers 5) Speculators and arbitragers

TYPE OF TRANSACTIONS 1) Spot transaction 2) Forward transaction FOREIGN EXCHANGE RATES 1. Inter-bank Quotation 2. Direct Quotation 3. Indirect Quotation 4. Bid Quotation 5. Ask Quotation

RURAL FINANCING/ FARM LENDING Institutional Structure Of Rural Credit

Cooperative Commercial Banks Credit societies

Regional Rural banks

NABARD

OBJECTIVES OF NATIONAL POLICY ON RURAL CREDIT

1) To ensure timely and increased flow of credit to the farm sector. 2) To eliminate the role of money lenders from the rural credit. 3) To make credit facilities available to all the regions of the country 4) To provide larger credit support to areas covered by special programmes

Institutional Structure Of Rural Credit A.Co-operative Credit Societies

Primary

Agricultural Credit Societies

PACs DCCBs

(PACs) District Co-operative Banks (DCCBs) State Cooperative Banks (SCCBs)

SCCBs

1) Primary Agricultural Credit Societies (PACs) To give loans to members To keep watch on disposal of the loan To supply agricultural inputs To make recovery of loans To make arrangement for storage and sale of agricultural goods To provide loan at low interest rate

Limitations of Primary Agricultural Credit Societies (PACs) Problem of high level of overdue Heavy dependence on outside funds The profitability of PACs has gone down Regional disparities in the distribution of credit. 2) Central co-operative banks Advance loans to PACs in times of need Intermediaries between the state co-operative bank and (PACs). Banks are in the hands of political leaders

3) State-Cooperative Banks Apex of the co-operative credit structure Provide advance loans ot DCCBs Coordinate and regulate the working of DCCBs They also serve as link between NABARD and DCCBs and PACs Obtain working capital

B. COMMERCIAL BANK Term loans for varying periods for agricultural machinery Commercial banks are financing cooperatives Financing marketing and processing of agricultural produce or in ancillary. RBI Guidelines On Farm Credit a) Free interest rates on farm loans b) Scrap 18% target for agricultural lending c) Modify service area approach d) Composite credit package e) Liquid savings packages

C. REGIONAL RURAL BANKS (RRBs) Provide credit and other facilities. Area of RRBs limited to a specific region. RRBs were provided refinance facilities through NABARD. RRBs have low earning capacity.

D. NATIONAL BANK FOR AGRICULTURE AND RURUAL DEVELOPMENT BANK (NABARD) To promote integrated rural development & secure prosperity of rural areas To provide credit to agriculture To provide economic assistance To act as apex bank in rural credit system To provide refinance to co-operative banks, RRBs, commercial banks for rural and agricultural credit To coordinate functions of all other rural banks To control and supervise activities of RRBs and co-operative banks To provide financial support

EXPORT / IMPORT FINANCING Foreign Exchange is the process or system by which the Currency of one country is converted into that of another country Foreign Exchange Transactions arises mainly from trade transactions among residents of different countries. Foreign Exchange Market is the clearing house through which the purchase and sale of foreign exchange are offset against each other.

FOREIGN EXCHANGE MARKET Facilitate international trade and investments Does not have physical place Trading through electronically linked network of banks Foreign exchange brokers and dealers

PARTICIPANTS IN THE FOREIGN EXCHANGE MARKET 1) Foreign Exchange dealers 2) Individuals and firms 3) Central Bank and Treasuries 4) Foreign exchange brokers 5) Speculators and arbitragers

TYPES OF TRANSATIONS

Spot Transaction -Spot Rate -value date

Forward Transactions -Forward rate -SWAP

FOREIGN EXCHAGE QUOTATIONS A statement of willingness to buy or sell at a specified rate and a Specified value date is called foreign exchange quotation. 1) Inter-bank quotation expressing the foreign currency price of one dollar or expressing dollar Price of a unit of foreign currency 2) Direct Quotation The home currency price for a unit of foreign currency is called Direct quotation. For eg 46 / $1

3) Indirect Quotation a foreign currency price of home currency unit is called quotation. For eg. 0.02174 / Re.1 4) Bid quotation quotation at which a dealer can buy another currency. bid price is lower than offer price. 5) Ask Quotation currency at which a dealer can sell another currency. ask price is higher than bid price. indirect

EXPORT / IMPORT FINANCING

Export finance refers to the finance of the goods from the home Country to the importers port. -Finance need for exporter -Finance need for importer

PRE-SHIPMENT FINANCE Pre-shipment finance is defined by the R BI as any, loan to an exporter for Financing the purchase, processing , manufacturing or packaging of goods. Finance at Pre-shipment stage 1) To purchase raw materials, components, machinery equipment. 2) To pay insurance premium on shipment goods. 3) For specialized export packaging of goods. 4) To pay commission to overseas agents. 5) To pay freight for shipment of goods. 6) For working capital need.

EXPORT-IMPORT FINANCING IN INDIA 1. PRE-SHIPMENT FINANCE a) Purpose b) Eligibility c) Form Of Advance d) Amount Of Advance e) Period Of Advance f) Rate Of Interest g) Documents h) Loan Agreement

POST-SHIPMENT FINANCE When the exporter needs an advance after completing the process of Shipment of goods is called as post-shipment finance. Finance at Post-shipment stage 1) To pay freight and other shipment expenses. 2) To participate in the fairs and exhibitions. 3) To pay to various authorities. 4) To pay regular exp0enses between the shipment of goods and realization of export bill.

POST-SHIPMENT FINANCE 1) Purpose 2) Eligibility 3) Form of advance 4) Amount of advance 5) Period of advance 6) Rate of interest 7) Documents 8) Loan agreement

INSURANCE
DEFINITIONS Insurance is a financial arrangement that redistributes the Cost of unexpected losses.

Insurance is a contract between the insurer and the insured under which the insurer undertakes to compensate the insured for the loss arising from the risk insured. In consideration the insured agrees to pay Premium regularly.

FUNCTIONS OF INSURANCE I. Primary Functions 1) Provide protection 2) Collective bearing of risk 3) Evaluation of risk 4) Provide certainty against risk 5) Spreading risks

II. Secondary Functions 1) 2) 3) Prevention of losses Small capital to cover larger risks Contributes towards the development of larger enterprises

III. Other Functions 1) 2) 3) 4) Means of savings and investment Source of earning foreign exchange Promotes exports Provides social security

OBJECTIVES OF INSURANCE 1) Risk Sharing 2) Co- operative device 3) Saving 4) Economic security 5) Economic development 6) Capital formation

PRINCIPLES OF INSURANCE 1) Principles of cooperation 2) Principles of probability 3) Principles of insurable interest 4) Principles of utmost good-faith 5) Principles of warranties

6) Principles of indemnity 7) Principles of subrogation 8) Principles of contribution 9) Principles of causa proxima/ proximate cause 10)Principles of mitigation of loss

REASONS FOR SLOW GROWTH OF INSURANCE BUSINESS

1)Ineffective distribution networks 2)Poor marketing strategies 3)Low consumer awareness 4)Lack of competition 5)Government monopoly

DIFFERENCE BETWEEN LIFE & NON-LIFE INSURANCE 1)Risk 2)Contract 3)Value 4)Indemnity 5)Right to renew 6)Subrogation 7)Event affecting insurance 8)premium

TYPES OF INSURANCE
Life Insurance Non- Life Insurance

General Insurance 1)Marine insurance 2)Fire insurance 3)Personal accident insurance 4)Motor vehicle insurance

Non-Life Insurance 1)Fidelity guarantee 2)Crop insurance 3)Burglary insurance 4)Cattle insurance 5)Cash in transit insurance

LIFE INSURANCE
DEFINITION it is a contract whereby the insurer, in consideration of a premium paid either in lumpsum or in periodical installments, undertakes to pay an annuity or certain sum of money either on death of the insured or on the expiry of a certain number of years whichever is earlier.

ESSENTIAL FEATURES OF LIFE INSURANCE

1)Elements of a valid contract 2)Insurance interest 3)Utmost good faith 4)Warranties 5)Assignment & nomination 6)Cause is certain 7)Premium 8)Term of policy

TYPES OF LIFE INSURANCE

1)The whole life plans 2)Endowment assurance plans 3)Terms assurance plans 4)Children plans 5)Plans for handicapped & dependents 6)Plans for high worth individuals

7) Money back plans 8) Other special plans 9) Group-insurance schemes 10)Social security schemes 11)Pension plans 12)Unit-link

PROCEDURE TO TAKE LIFE INSURANCE POLICY

1)Selection of insurance company 2)Proposal form 3)Payment of premium 4)Processing proposal form 5)Issue of policy document

DISTRIBUTION CHANNEL IN LIFE INSURANCE BUSINESS

1)Agents 2)Brokers 3)Corporate agents 4)Bancassurance

GENERAL INSURANCE NON LIFE

I.Marine Insurance Scope of Marine Insurance a)Subject Matters Cargo Hull / ship or vessel Freight Liability b)Risk Covered Perils of sea Navigation by negligence Risk of theft Risk of war Other incident risk

ESSENTIAL ELEMENTS OF MARINE INSURANCE CONTRACT 1)Essential of void contracts 2)Insurable interest 3)Utmost good faith 4)Warranties 5)Indemnity 6)Application of other insurance principles

RE-INSURANCE
MEANING: It is contract between 2 or more insurance companies by which a portion of risk of loss is transferred by another insurance company. This happens when an insurance company has undertaken more risk-burden on its shoulders than its bearing capacity.

DEFINITION:
According to Federation of Insurance Institutes Mumbai, Reinsurance is an arrangement whereby an insurer who has accepted an insurance , transfers a part of the risk to another insurer so that his liability on any one risk is limited to a figure proportionate to this financial capacity.

CHARACTERISITCS OF RE-INSURANCE
1)It is an insurance contract between two insurance companies 2)The insurer transfers the risk beyond the limits of his capacity 3)Reinsurance is a contract of indemnity 4)Reinsurance does not affect the right of insured 5)The relationship of the assured remains with the original insurer only

DOUBLE INSURANCE The subject matter of double insurance implies that it is insured with two or more insurers and the total sum insured exceeds the actual value of the subject matter.

DIFFERENCE BETWEEN DOUBLE INSURANCE & RE-INSURANCE

1) Basis 2) No. of policies 3) Relationship between parties 4) Contribution 5) Purpose

6) Insured sum 7) Verification 8) Advantage 9) Nomination

FIRE INSURANCE
MEANING: It is a contract to indemnity, to the insured for destruction of or damage to property caused by fire. A contract of fire insurance is essentially a contract of indemnity and not against accident but against loss caused by fire.

SINGNIFICANCE
1)As a sources for minimizing losses 2)Decrease in probabilities of fire losses 3)Increase in production of fire proof materials 4)Decrease in social loss of fire 5)Asset valuation 6)Loss preventing efforts and advice by the insurer 7)Helpful in business progress 8)Benefits for new industries 9)Distribution of risk

MOTOR INSURANCE
Motor vehicle insurance falls under general insurance . In motor insurance, the owners liability to compensate people who were killed or injured through the negligence of motorists or drivers is passed on the insurance company. Motor insurance business is the largest single section of accident insurance, if judged; by premium income, but this related to motor business as a whole.

CROP INSURANCE
A contract of crop insurance is a contract to provide a measure of financial support to farmers in the event of a crop failure due to drought or flood. ADVANTAGES 1)Provide security for agricultural production 2)Provides rights to farmers 3)Certainty of payment 4)Stability to agricultural economy 5)Refund of agricultural credit

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) Objectives of IRDA Act 1)To take care of the policy holders interest to control the activities and working of all private & public insurance company in India. 2)To open the insurance sector for private sector 3)To ensure continued financial soundness and solvency 4)To eliminate dishonesty and unhealthy competition 5)To supervise the activities of intermediaries 6)To amend the Insurance act 1938, LIC act 1956 and General business Nationalization act 1972.

SETTLEMENT OF LIFE INSURANCE CLAIM Claim is the right exercised by the assured from a contract of insurance. It is the return promise against the premiums paid to the insurer. The claim may be made either on the maturity of the policy or in case of death of assure or on voluntary surrender policy. CLASSIFICATION OF CLAIM 1)Maturity claim 2)Death claim

I. MATURITY CLAIM
1) 2) 3) 4) 5) 6) 7) 8) Notice of information by corporation Submission of requisite documents or claim papers Scrutiny of documents Publication of notice Submission of indemnity bond Calculation of claim amount Identification of assured payment of claim

II. DEATH CLAIMS

1) 2) 3) 4) 5) 6) 7) 8) Notice of death to the insurer Submission of claim Submission of essential documents Providing the right of claim Making enquiries by insurance company Calculation of claim money Payment of claim Attestation of claim

SURRENDER VALUE
The term surrender value refers to the amount of money which the insurers agrees to pay, in case the assured decides to surrender his policy before its maturity. It is said that the policyholder wishes to surrender his policy to the insurer and gives up his claim on it. Surrender of policy indicates termination of the contract of insurance.

PAID-UP VALUE
According to insurance act, it is defined as the policy paid up for an amount bearing the same proportion to the amount of original sum assured which the number of premium paid bears to the total no of premium payable under the policy as a whole, the policy which this reduced amount is called paid up policy.

ASSIGNMENT
Assignee- giving right of policy to other person after maturity it can be kept against bank loan as security then bank is assignee. PROCEDURE 1)Endorsement on the policy itself for or by executing a separate instruments 2)It must be signed by the assigner or by his duly authorized agents and attested by at least 1 witness

3) On valid assignment, a written notice must be given to the insurer. 4) Assignment of policy to 1 or more than 1 assignees. 5) Insurer record the fact of such transfer or assignment. 6) Conditional assignment has been held to be valid.

NARASIMHAM COMMITTEE (1997-98)

1)To review the record of financial sector reforms of 1991 2)To suggest remedial measures for strengthening the banking system 3)Covering areas of banking policy, institutional structure, supervision system 4)Legislative and technological changes

Major recommendations of the committee

1) Merge strong banks and close weak unviable banks 2) Strengthen legal framework to accelerate credit recovery 3) Increase capital adequacy to match enhanced banking risk 4) Budgetary support non variable for recapitalization 5) Depoliticize bank boards under RBI supervision 6) No alternative to asset reconstruction fund 7) Review major banking laws 8) Integrate NBFC activities with banks

RECOMMENDATION I.Mergers & Acquisitions Committee made following recommendation 1)Laying down the guidelines to process a merger proposal 2)Economy of self-reduction of cost 3)Economy of scope increase in revenue 4)Growth or diversification 5)Reducing competition 6)Rehabilitation of sick units

OBJECTIVES OF MERGERS & ACQUISITION 1)To limit the competition and prevent over-crowding 2)To gain economies of scale & increase income 3)To revive a loss making bank 4)To overcome the problem of slow pace of growth & probability 5)To utilize untapped resources in the country 6)To achieve diversification of the business 7)To utilize the market power in terms of geographical coverage

II. PRUDENTIAL NORMS 1. NPAs were classified in 4 categories 2. Managing NPAs Debt Recovery Tribunals (DRT) Assets Reconstruction Companies (ARC) The Securitisation Act Corporate Debt Reconstructuring (CDR) Prompt Corrective Action (PCA) Mandatory Action Discretionary Action

III. Capital adequacy IV. Review of major banking laws V. Assets reconstruction funds VI. Integrate NBFC activities VII.Credit recovery VIII.Rationalization of branches and staff IX. Board of financial supervision X. Public ownership XI. Deregulation of interest rates

NON-BANKING FINANCE COMPANY

A non-banking finance company can be defined as an institution, which mobilizes the savings of community and diverts them for financing different activities. eg. Mutual Funds, UTI. NON-BANKING FIANCIAL COMPANIES (NBFC) 1) Hire-Purchase Finance companies 2) Investment Companies 3) Chit fund Companies 4) Nidhis or mutual benefit finance companies

CHIT FUNDS 1)Simple chit 2)Prise chit 3)Business chit RBI guidelines for NBFC 1)Only NBFCs which are registered with and have approval of RBI can accept public deposits. 2)Registration of NBFC with RBI merely authorizes the company to carry on its finance business and not a guarantee for repayment of deposits by NBFCs.

3) NBFCs an unincorporated bodies are not allowed to use the name of RBI in any manner 4) NBFCs deposits are neither insured and not backed by security can not offer more than 12% interest and more than 2% brokerage or incentives 5) NBFCs cannot accept deposits for <12 months and more than 60 months and all depositors must be issued proper receipts for deposits 6) In case of defaults in payment of mature deposits, depositors should approach regional branch of the company

BANK GUARANTEE TYPES OF BANK GUARANTEE 1) Financial Guarantees 2) Performance Guarantees 3) Deferred Payment Guarantees 4) Advance Money Guarantees 5) Tender Money Deposit Guarantees 6) Bid Bond Guarantees 7) Custom/Excise Duty Guarantees