Forex basics

Foreign Exchange basic numerical

1)  TOD rate or Cash Rate Same day (it is also called ready rate)

TOM Rate Next working day

Spot Rate 2nd working day (48 hours)

Forward Rate After few days/months

 If Next day or 2nd day is holiday in either of the two countries, the

settlement will take place on next day. For example Spot deal is

stuck on 23rd Dec. 25th is Christmas Day and 26th is Sunday. Under

such circumstances, value date will be 27th i.e. Monday.

 There are two types of rates- Fixed and Floating. Floating rates are

determined by market forces of Demand and Supply. India

switched to Floating exchange rates regime in 1993.

2) Buy Low Sell High (Direct Quotations)

Buy rate is also called Bid Rate and Sell Rate is called Offer Rate.

Buy High Sell Low (Indirect Quotations)

 When Local Currency is fixed, bank will like to have more foreign

currency while buying and give less foreign currency while selling.

3) Direct Rates Indirect Rates

1 US $ = Rs.49.40 Rs.100 = US $ 2.51

DIRECT QUOTATION

In a direct quotation, there is a variable unit of the home currency and fixed unit of the foreign currency.

When it is quoted that 1 US = Rs.49.10, it is a direct quotation.With a view tomake profit, the rule

followed for quotation is buy low and sell high. For instance, if the US $ is purchased at Rs.48.90 and

sold at Rs.49.10, there will be gain to the dealer. By buying low, the dealer will be required to pay

lesser units of home currency and by selling high, he would receivemore units of home currency.

INDIRECT QUOTATION

In an indirect quote, there is fixed unit of home currency and a variable unit of foreign currency.When

Rs.100 = US $ 2.04 is quoted, it is a case of indirect quotation. The principle followed in indirect

quotation to earn profit is to buy high and sell low. By buying high, the dealer will getmore US $ per

Rs.100 and by selling low he would have to part with lesser US $.

4) TWO WAY QUOTATIONS : Banks quote two rates in foreign exchange quotation out of which one is for

buying and the other for selling. For instance, when the quotation is US $ 1 = Rs.48.90 - 49.10, the buying

rate on the basis of principle of buy low and sell high, would be Rs.48.90 and the selling rate Rs.49.10.

The buying rate is also called a 'bid rate' and the selling rate as 'offer rate'.



5)CROSS RATES OR CHAIN RULE : When rate between two currencies is not directly available, it has

to be calculated through a 3rd currency which is called cross rate. This is done by using chain rule.

For example, US $ 1 = Rs.50.00 and US $ 1 = Euro 0.7500. Euro 1 = 50 / 0.75 = Rs.66.67

A bank is offered to purchase an export bill of Pound 100000 and the inter-bank rates are US $

1 = Rs.50.00/10 and Pound 1 = US $ 1.5000/10.

In this case, the bank will purchase pounds at given US $ rate of Rs.50 and deliver rupees to exporter.

Bank will sell pounds in London in inter-bank market at US $ 1.50. The amount will be worked with chain

rule. Pound 1 = 1.50 x 50 = Rs.75.



6) Date of Contract Delivery

   Date / settlement

date

                                       Rate to be used

Oct 12, 2008 Oct 12, 2008 Cash/ Ready Rate

Oct 12, 2008 Oct 13, 2008 Tom Rate

Oct 12, 2008 Oct 14, 2008 TT or Spot Rate

Exchangemargin—While selling or buying foreign exchange banks retain sufficientmargin to cover the

administrative cost, cover the exchange fluctuation and also tomake some profit on the transaction. This is

done by adding or reducing themargin fromthe prevailingmarket rate.



7) Forward Rates (Premium is  always added and Discount is always deducted from Spot Rate to

arrive at Forward Rate)

It is required when currency is exchanged after few months/days.

Buy Transactions :

Spot Rate (+ ) premium OR ( - ) Discount

( Lower premium is added OR Higher discount is deducted )

Sale Transactions:

Spot Rate (+ )Higher premium OR (-) Lower discount

(So that currency may become cheaper while buying and dearer while

selling

In India, Forward Contracts are available for Maximum period

of 12 Months.


Examples of

Forward rates

Euro 1 = USD$1.3180/3190

Forward differentials:

1M = 15/18, 2M= 30/37, 3M=41/49

Calculate 2M Bid rate and 3M Offer rate

2M Bid rate = 1.3180+.0030 = 1.3210

3M Offer rate = 1.3190+.0049=1.3239



8) ExchangeMargin::

Exchange margin is deducted while buying and added while selling.

9) Direct, Indirect &Cross Rates

Direct Rates

Foreign Currency is fixed ---say 1USD = INR 55.70

Indirect Rates

Local currency remains fixed---say Rs. 100 = 1.93 USD

At present, following 4 currencies are quoted in Indirect mode:

EURO, GBP, AUD and NZ$

Cross Rates

Cross rate is price of currency pair which is not directly quoted. It is arrived

at from price of two other currency equations.

1. Suppose bank hasto Quote GBP against INR, but in India, GBP is

not quoted directly. In India,

1USD =48.10 and GBP/USD is quoted as 1GBP= USD1.6000.

Therefore 1 GBP = 48.10X1.6 = 76.96

2. An Import bill of GBP 100000 has to be retired. Rates are:

1 GBP=1.5975/85 USD

1USD = 48.14/15 INR

TT margin =.20%

Here Cross selling rate of both currencies will apply.

Bank has to remit GBP. GBP/USD Quote (Indirect) will be available in

International market whereas USD/Rupee Quote (Direct) is available in

local market. Bank will sell USD to buy GBP.

While buying GBP, bank would like to quote higher rate as Buy high Sell

Low maxim will apply. 1GBP = 1.5985

While selling USD, bank will opt to quote higher rate as Buy Low Sell High

maxim will apply.

1GBP=1.5985*48.15 = 76.9675 + Margin@.20% = 77.1214 (say

77.1225)



10) Per Unit and 100

Unit Quotes

All currencies are quoted as per unit of currency whereas the following

currencies are quoted as 100 units of Foreign currency:

1. Japanese Yen

2. Indonesian Rupiahs

3. Kenyan Schilling.

4. Belgian Francs

5. Spanish Peseta

Intervening Currencies in India

1. US Dollar

2. British Pond

Cross Rates

where two

markets are

involved and

one of them is

international

market

Suppose, In India, 1USD=42.8450/545 and in UK, 1USD=.7587/.7590

EURO. The customer intends to remit Euro and he desires to know 1 Euro

= ? INR. We will buy Euro against sale of USD. (One is domestic market

and other is International market)

Calculation

Sell rate of 1USD = .42.8545 and Buy Rate of Euro is 1USD=.7587

.7587Euro = 1USD = INR 42.8545

1 EURO = 42.8545/.7587 = 56.48

In India, there is Full Convertibility of Current Account transactions.

Example Where one currency is bought and another currency is sold

A wants to remit JPY 100.00 million at TT spot with margin @.15%. Given

USD/INR at 48.2500/2600 and in Japan USD/JPY = 90.50/60

Solution:

We will buy Japanese Yen and sell USD and the rate to be applied is:

48.2600/90.50 = .533260 per JPY

Rate per 100 JPY = 53.3260 + Margin @.15%(.0799) = 53.4059 (say

53.4050)

Following 4 types of buying and selling rates are important:

1.    TT Buying rate

2.    Bill Buying rate

3.    TT Selling rate

4.    Bill Selling rate



In Interbank market, exchange rate is quoted up to 4 decimals in multiples of 0.0025. e.g. 1USD=53.5625/5650



For customers the exchange rate is quoted in two decimal places i.e. Rupees and paisa. e.g. 1 USD =Rs. 55.54.



Amount being paid or received will be rounded off to nearest Rupee.



TT Buying Rate


It is required to calculate when our Nostro account is already credited or being credited without delay e.g. Receipt of DD, MT, TT or collection of Foreign bills. This rate is used for cancellation of Forward Sales Contract.

Calculation



Spot Rate –  Exchange Margin



Bill Buying Rate     Bill Buying rate is applied when bank gives INR to the customer before receipt of Foreign Exchange in the Nostro account i.e. Nostro account is credited after the purchase transaction. In such cases.



Examples are:

·         Export Bills Purchased/Discounted/Negotiated.

·         Cheques/DDs purchased by the bank.

Calculation



Spot Rate + Forward Premium (or deduct forward discount) – Exchange margin.



TT Selling RateAny sale transaction where no delay is involved is quoted at TT selling rate. It is desired in issue of TT, MT or Draft. It is also desired in crystallization of Export bills and Cancellation of Forward purchase contract.



Calculation



Spot Rate + Exchange Margin



Bill Selling Rate     It is applied where handling of documents is involved e.g.  Payment against



Import transactions:

Calculation



Spot Rate + Exchange Margin for TT selling + Exchange margin for Bill Selling





Examples

Q. 1

Bank received MT of USD 5000 on 15th Sep. The Nostro account was already credited. What amount will be paid to the customer: Spot Rate 34.25/30. Oct Forward Differential is 22/24. Exchange margin is .80%



Solution



TT buying Rate will be applied

34.25 - .274 = 33.976 Ans.

Q. 2

On 15th July, Customer presented a sight bill for USD 100000 for Purchase under LC. How much amount will be credited to the account of the Exporter. Transit period is 20 days and Exchange margin is 0.15%. The spot rate is 34.75/85. Forward differentials:


Aug: .60/.57

Sep:1.00/.97

Oct: 1.40/1.37

Solution


Bill Buying rate of August will be applied.



Spot Rate----34.75

Less discount .60

= 34.15

Less Exchange Margin O.15% i.e. .0512

=34.0988 Ans.


( Transit period is rounded to next month since currency will be cheaper as it is buy transaction)

Q. 3
Issue of DD on New York for USD 25000. The spot Rate is  IUSD = 34.3575/3825   IM forwardrate is 34.7825/8250

Exchange margin: 0.15%

Solution:

TT Selling Rate will Apply

Spot Rate = 34.3825                Add Exchange margin (.15%) i.e. 0.0516

TT Selling Rate = Spot Rate + Exchange Margin = 34.4341 Ans.



Q. 4On 12th Feb, received Import Bill of USD-10000. The bill has to retired to debit the account of the customer. Inter-bank spot rate =34.6500/7200. The spot rate for March is 5000/4500. The exchange margin for TT selling is .15% and Exchange margin for Bill selling is .20%. Quote rate to be applied.


Solution

Bill Selling Rate will be applied.


Spot Rate + Exchange margin for TT Selling + Exchange margin for Bill selling = 34.7200+.0520+.0695 = 34.8415 Ans.



Forward Contract – Due date and Transit period (Bill Buying Rates and Bill Selling Rates)

If due date after adding transit period and forward period falls in a particular month



Buy Transactions



Quote rates applicable to lower month (if currency is at premium) and same month (if currency is at discount) due to the reason that currency becomes cheaper and Buy low and Sell High



Sale Transactions



Quote rates applicable to Same month (if currency is at premium) and lower month (if currency is at discount) due to the reason that currency becomes dearer and Buy low and Sell High Forward contracts can be booked by Resident Individuals up to USD1lac.



Buy



Spot Rate on 16.07.2012 is 1 USD = 34.6850/7275



Transactions-



Spot August = 4000/4200,

Spot Sep = 7500/7700,  Spot Oct = 1.05/1.07

Currency at



Spot Nov =1.40/1.42





Premium



Transit Period = 25 days ,

Exchange Margin = 0.15%



Transit Period is



Calculate Forward Buying Rate of 3 M Usance bill.



rounded off to lower month in



Due date of realization of Bill = 16.7.2012 + 3M + 25 days = 9.11.2012

which due date



By Rounding Transit period to lower month, Oct Rate will be as under:

falls



34.6850+1.05 - .0536 (exchange margin) = 35.6814



Buy



On 22.7.2013,





Transactions-



Spot Rate is 35.6000/6500

Forward 1M=3500/3000

2M=5500/5000

Currency at



3M=8500/8000





Discount



Transit Period ----20 days

Exchange Margin = 0.15%.







Find Bill Buying Rate & 2 M Forward Buying Rate



Transit Period is rounded off to 
Solution


same month in



Bill Buying Rate (Ready) : Bill Date +20 days = 11.8.2013



which due date


Spot Rate = 35.6000 Less Forward Discount 1M (0.3500) Less Exchange

falls



Margin 0.15% (0.529)



i.e. 35.6000-.3500-.0529(0.15% of 35.2500) = 35.1971


2 M Forward Buying Rate:  = Transaction date +2M +20 days =11.10.13

3 Month Forward Buying Rate will be applied.



Spot Rate = 35.6000 Less Forward Discount of 3M (.8500) Less Exchange Margin (.0521)

i.e. 35.6000-.8500-.0521(0.15% of 34.7500) = 34.6979 Ans.



Cancellation of



Deal                         Cancellation of Buy contract is done at TT selling rate and cancellation of Sale contract is done at TT buying rate.



Example



A bank purchased export bill of USD 50000 at Rs. 42.66, which was dishonored for non-payment. How much amount will be recovered from exporter, if Spot rate is 42.2000/3000. Exchange margin is 0.15%.



Solution



TT  selling rate will be applied to recover the amount TT Selling rate= Spot rate +Exchange margin



=42.3000+0.06345 = 42.36345= 42.3625 (Rounding off to nearest .0025)

Amount to be debited to customers‟ account =50000*42.3625=2118125 --------------Ans.



Value Date



It is date on which payment of funds or entry to an account becomes effective. Under TT transaction, value date is same. In other spot and forward contracts, Value Date is the date when Nostro Account is actually credited.




Arbitrage



It consists of purchase of one currency in one center accompanied by


immediate resale against same currency at other center.

Per Cent and Per



1% is on part of 100 whereas per mille is 1 part of thousand

Mille

AuthorizedDealers



Authorized dealers are called Authorized Persons. The categories are as


under:

AP category 1 -----AD banks, FIs dealing in Forex transactions.


AP  category  2-----Money  changers  authorized  to  sell  and  purchase


Foreign currency notes, TCs and Handle remittances.


AP  category  3----Only  purchase  of  Foreign  currency  and  Travelers



Cheques. These were earlier called “Restricted Money Changers.”



Forward Point

Spot Rate


Calculation



Euro 1 = US$1.3180

3 Month Forward Rate

Euro 1 = US$1.3330


Forward Point = 1.3330 – 1.3180 = 150 points


Arbitrage &;



It consists of purchase of one currency in one center accompanied by

Forward Point



immediate resale against same currency at other center.

Calculation



Example:


Let us borrow from one center and lend at other center at higher rate. In

USA, rate of interest is 6% whereas in Germany, rate of interest is 3% for EURO. We will borrow from Germany and lend in USA where 1EURO =1.5 USD



Forward Point Calculation for 3 Months



Spot Rate x Interest rate difference x Forward Period 100 x Nos. of days in a year



= 1.5 x 3 x 90

100*360

=0.01125



3 month swap rate = 1.5 + 0.01125 = 1.5112

Calculation of Interest Differential



Forward Points x Nos. of Days x 100

Forward Period x Spot Rate



=  0.01125 x 360 x 100

=3%

1.5 x 90


Some additional examples
Ex.1

Calculate TT selling rate for GBP/INR, if USD/INR is 43.85/87 & GBP/USD is 1.9345/49. A

margin of 0.15% is to be loaded.

Solution ; TT selling rate of GBP/INR



1 GBP = 1.9349 USD

= (1.9349 *43.87)+Margin 0.15%

=84.8841+.1273=85.0114 INR 85.0114-------------------------Ans.



Ex.2



A foreign correspondent intends to fund his Vostro Account maintained with Mumbai branch of SBI. What rate will be quoted if 1 USD = 44.23/27 and margin is 0.08% Solution : TT buying rate will quoted



44.23-.035 = 44.195 ---------------------------------------Ans.



Ex.3



If Swiss Franc is quoted as USD = CHF 1.2550/54 and in India, USD =INR43.50/52, how much INR will exporter get for his export bill of CHF 50000.

Solution :



Swiss Franc will be sold for USD in overseas market and USD will be bought in local market i.e. Sell Rate of CHF and Buy rate of USD.(Buy Low Sell High in both quotations)



1 USD = 1.2554 CHF           and  1USD=INR 43.50



1CHF=43.50/1.2554 = 34.6503

Amount as paid to exporter = 34.6503*50000=17,32,515/- ----------------Ans.



(Both are direct quotations and Maxim Buy Low Sell High will apply in both)

Ex.4



If Swiss Franc is quoted as USD = CHF 1.2550/54 and USD =INR43.50/52, how much INR will Importer pay for his import bill of CHF 50000.

Solution :



Swiss Franc will be bought against USD in overseas market and USD will be sold in local market i.e. Buy rate of CHF and Sell rate of USD.



1 USD = 1.2550 CHF and 1USD=INR 43.52 1CHF=43.52/1.2550 = 34.6773



Amount to be received from Importer = 34.6773*50000 =17,33,865/- ----Ans.



(Both are direct quotations and Maxim Buy Low Sell High will apply in both)





Q. 5



Exporter received Advance remittance by way of TT French Franc 100000.



The spot rates are in India IUSD = 35.85/35.92               1M forward =.50/.60



The spot rates in Singapore are 1USD = 6.0220/6.0340 1M forward =.0040/.0045 Exchange margin = 0.8%



Solution



Cross Rate will apply

USD will be bought in the local market at TT Buying rate and sold at Spot Selling Rates in

Singapore for French Francs:



TT  Buying Rates USD/INR = Spot rate – Exchange margin = 35.8500-.0287 = 35.8213 Spot Selling Rate for USD/Francs = 6.0340



Inference:



6.0340 Franc = 1USD

= INR 35.8213

1 franc = 35.8213/6.0340 = INR 5.9366 Ans.



(Both are direct quotations and Maxim Buy Low Sell High will apply in both)



Q.6 What rate will be quoted for repatriation of FCNR deposit (spot rate or TT rate) Ans. No rate as the amount is to be paid in Foreign currency itself.

What is priority lending certificate?

What is priority lending certificate?
The priority sector lending certificates are certificates issued by banks that have over reached their priority sector
lending targets. PSLCs thus can be issued only up to the extent of their over lending to the stipulated sectors. Buyers of
PSLCs are usually those banks who could not meet their priority sector lending targets. The price of PSLCs will be
determined on the basis of demand and supply that will be reflected in the auction under the RBI‟s e-Kuber training
platform.
As per RBI guidelines, Banks can issue four types of PSLCS including three subsector PSLCs – agriculture, small and
marginal farmers, micor enterprises and one PSLC for general.

CRILC : Central Repository of Information on Large credits

CRILC : Central Repository of Information on Large credits
In a bank or financial institution, performing asset do not get converted to non-performing, overnight. There are some early signs of
distress which if ignored, can lead to delinquency. With strong systems in place, warning signs can be recognized well in advance to
prevent problems and also alert other players within the system, to curb the negative effects. Hence, monitoring NPA is of immense
importance for a Lender and the regulator. To help overcome some of the challenges, RBI, introduced in 2014, u/s 27(2) of BR Act
1949 the "Central Repository of Large Common Exposures-Across Banks” by subsuming the erstwhile quarterly Form A return on
Large Borrowers (Rs 100 million and above).
Objective of creation of CRILC: To collect, store and share information with Lenders w.e.f. 01.04.2014.
What do Financial Institutions have to Report under CRILC? Banks and financial institutions have to separately send CRILCMain
and CRILC-SMA2.
I. CRILC-Main, is a monthly submission w.e.f. 1.4.2018 (earlier quarterly) that comprises four sections namely:
a. Section 1: Exposure to large borrowers (Rs.5 cr or above)
b. Section 2: Reporting of technically/prudentially written-off accounts,
c. Section 3: Reporting of balance in current account (Rs.1 cr or more)
d. Section 4: Reporting of non-cooperative borrowers.
II. CRILC-SMA 2 : Apart from above regular monthly submissions, banks are to submit this report on an ‘as and when’ basis, i.e.
whenever a large borrower’s account becomes overdue for 61 days (SMA2).
RAF Accounts : In addition banks are to send report on loan accounts markeed Red Flagged or classified as Fraud Account with a
threshold exposure of Rs.500 million or more at the level of a bank irrespective of the lending arrangement (whether solo banking,
multiple banking or consortium), together with the dates on which the accounts were classified as such.
Filing Dates for CRILC Submissions?
1. The CRILC-Main Report is required to be submitted on a monthly basis effective April 1, 2018.
2. In addition, the lenders shall report to CRILC, all borrower entities in default (with aggregate exposure of Rs. 50 million and
above), on a weekly basis, at the close of business on every Friday, or the preceding working day if Friday happens to be a
holiday. The first such weekly report shall be submitted for the week ending February 23, 2018.
How Can Banks Benefit with CRILC Data?
i) RBI shares the CRILC data with all lending institutions which help lenders to look at and tackle their NPA.
ii) Lending banks can also search whether their borrower customers are having current account with other banks, with large
balances.
Banks opening a current account of a large corporate, can use the data available in the CRILC platform to know whether the
customer is availing credit facility from another banks.

Important Forex

NOSTRO Account of a domestic bank outside the country. Say, a/c of SBI with Citibank in New York in $. h,50
called our account with you.
VOSTRO Account of a foreign bank in domestic area. Say Citibank a/c with SBI in New Delhi in Indian Rupee. Also
called your account with us.
LORO NOSTRO & VOSTRO account of other banks are LORO account for a bank. Also called their account with
them. SBI a/c or Citibank a/c in above example are LORO account for PNB.
Categorisation of branches for forex business


A Branch that maintains NOSTRO & VOSTRO accounts
B Branch that does not maintain NOSTRO & VOSTRO accounts but could operate such accounts maintained
by A category branch
C Branch that conducts its business through A or B class branches
Gain or loss to parties in exchange rate movem n
Party FC rate appreciation FC rate depreciation
Exporter (who has forex) Gains Loses
Importer (who need forex) Loses Gains
Bank with overbought position Gains Loses
Bank with oversold position Loses Gain


Positions in Foreign Currency

Where no balance is receivable or payable (sale = purchase) Closed position
Balance is either receivable or payable (i.e. sale > purchase or purchase > sale) Open position
Where sale > purchase (oversold) Short position
Where purchase > sale (over bought) Long position

Oversold (Short) position is squared by Purchase of foreign currency
If rates are appreciating Bank incurs loss
If rates are declining Bank gains
Overbought or Iong Position is squared by
If rates are increasing Bank gains
If rates are declining Bank incurs loss
Balance in hand during day time (it is more than balance at close of a day) Day light position
Balance in hand at close of the day Overnight position

#Some_Important_Acts

#Some_Important_Acts

�NEGOTIABLE INSTRUMENTACTS -1881

⚫Section 4 :- Promissory Notes

⚫Section 5 :-Bill of Exchange

⚫Section 6 :- Cheque

⚫Section 13 :- Negotiable instrument

⚫Section 123 :- Cheque Crossed Generally

⚫Section 124,126 : -Cheque Crossed Specially

⚫Section 130 : -Cheque bearing Not Negotiable

⚫Section 118 :- Presumption as to Negotiable instrument

�RESERVE BANK ACT (RBI ACT 1934)

⚫Section 17 :- Define Banking Business

⚫Section 18 :-Deals With Emergency Loan To Bank

⚫Section 22 :-Exclusive Rights To Issue Currency Notes In India

⚫Section 24 :-Maximum Denomination a Note Can Be Rs 10,000

⚫Section 26 :- Describe The Legal Tender Character of Indian Bank Notes

⚫Section 28 :-Form Rule Regarding The Exchange Of Damaged and imperfect Notes

⚫Section 31 :-In India only RBI or the central government issue and accept promissory notes that are payable on demand

⚫Section 42 :-Every schedule bank must have an average daily balance with RBI

�BANKING REGULATION ACT -1949

⚫Section 10 :-Power of RBI to appoint chairman of banking company

⚫Section 11 :-Recruitment as to minimum capital and reserve.

⚫Section 12 : -Regulation of Paid of capital, authorized capital,voting rights of shareholder

⚫Section 21 :-To control advances by banking company

⚫Section 21(A) : - Rate of interest charged by banking company

⚫Section 22 :- license of banking company

⚫Section 23 :-Restriction on opening transfer of business

⚫Section 29 :-Account and balance sheet

⚫Section 36 :-Power of central government to acquire banking company in a certain case

⚫Section 44 :-Amalgamation of banking company

⚫Section 47 :-Power of RBI to impose penalty

�Some Other Important Acts Related To Banking -

⚫SBI ACT: -1955

⚫SBI SUBSIDIARY ACT: - 1959

⚫DICGC ACT :- 1961

⚫EXIM ACT: - 1981

⚫NABARD ACT: - 1981

⚫RRB ACT: - 1976

⚫NHB ACT: - 1987

⚫SIDBI ACT :- 1989

⚫SARFASI ACT :- 2002

⚫FEMA ACT: - 1999

⚫CREDIT INFORMATION CORP :- 2005

⚫PMLA ACT: -2002

JAIIB today's exam recollected 04 November 2018 ...Link will be continuously updated

JAIIB today's exam recollected 04 November 2018 ... Link will be continuously updated

1.Two questions on Basel 2 and 3 ... each 2 marks question

2.NEFT and RTGS details for 4questions

3.Can you accept it with as NEFT or RTGS or vice versa

4. Sections are asked from NI Act  around 6 questions
5.PMDJY - 3Qtns
6.A has dream cheque at Delhi, and sent for clearing to bank Y where he has his AC, it was returned due to insufficient funds 
Which Court A can approach
A resident location
Delhi
Y Bank
7.Mandate holder features in two questions
8.Can Two minors open a Joint AC?
9.LC issued for 10 lakh, at the time payment it was found in the bills mentioned as 10.90.. can it be acceptable or not   Answer Accept
10.Use of DRS system to CBS
11.Matching of 
Lien
Set off
Pledge
Appropriation 
with 

Rights of Physical property FD created before maturity of loan
12.Where as ASBA can be used
13.One qtsn Selective Credit Control.
Asked to find out which is not a feature of SCC
14.No of Cycle of a Product
15.Stages of Product   ..4
16.What's your reason while accept/not to accept to provide an acknowledgement for Loan request
17.Electronics chq is defined under sec...
18.Sec 6 ni act
19.Which asset cannot assign for loan?
Book Dept
LIC
Share certificate
Copy rights**
20.Minimum credit rating of company for issue CP should be _ 
A1
AAA
Aa1
A3**
21.Asset of mutual fund are held by 
Custodian**
Registar
Trusstee
Amc
22.Corporate security dealt with  __market    money market
23.Codes which are withdrawn by RBI?

24.Question related to bcsbi was there..
25.Which one is stamp duty
Lc
Bill purchase
Bank guarantee**
Bill discounting

26.A partner acts as agent of firm is called______
27.In call money what% can commercial bank take an advance?125
28.Electronic cheque is defined in section 6

29.Under LRS resident can remit______
30.. Servuction means what, 
31. Pull strategy pull means demand, supply, price, quality. 
32. Who introduces NEFT. 
34. in joint account nominee is their A expired in that what you will do. 
35. Kotler  marketing defination.
36.Forfiating,factoring
37.BG

                                            

                                             

                                            

MSME todays recollected questions 03.11.2018

MSME todays recollected questions 03.11.2018
*Fiwe headquarters?
*Sarfaesi act in the year?
*Mudra is being regulated by?
*Qns from shishu,kishore,tarun limits?
*WTO in the year?
*One time settlement is under the control of?
*Loss asset?
*Penal measures for wilful defaulters?
*Potentialy viable?
*Symptoms of incipient sickness?
*Qns.from internal and external causes of sickness?
*When an enterprise is considered as sick ?
*Rehabilitation package within 6 months?
*SEEDA as an enterprise hub network party to assist in n/w ing btwn firms?
*ITCOT in ..tamilnadu?
*Number of stages of credit process?
*A problem from clcss subsidy calculation?
*TUF sponsored by ministry of textiles?
*Diffusion effect?
*Credit rating for small industries being provided by?
*Qns from debt equity ratio and debt service coverage ratio?
*Impact of lower break even point... adequate margin of safety?
*Working capital gap?
Important C in 5C's of management appraisal?
*Back to back LC?
*Red clause LC ....extending an unsecured credit to the seller?
*Preshipment advance?
*Qns from bank guarantee types?
*Composite loan limit?
*Mahila vikas nidhi?
*Alternative sources of capital...angel,venture etc?
*Iso 9000 reimbursement?
*Disposal of loan application time limit with amount?

PPB- BANK SPECIAL RELATIONSHIP

PPB- BANK SPECIAL RELATIONSHIP

✅1. A mandate (an unstamped agreement) is an authority given by the account holder in favour of a third person to do certain acts on his behalf.

✅2. Institutions cannot issue mandate, instead they issue a power of attorney.

✅3. Power of Attorney is a legal document (as it is a stamped document and is executed in the presence of a notary public/magistrate of a court/authorized government official) executed by one person called donor (principal) in favor of another person called donee agent to act on behalf of the former, as per the authority given in the document.

✅4. Donee means the person who issues Power of Attorney and donor means the person to whom Power of Attorney is given.

✅5. General/universal power of attorney is issued for acting in more than one transaction while special/limited Power of Attorney is issued for only one transaction.

✅6. Garnishee order is an order of the court obtained by a judgement creditor attaching the funds belonging to a judgement debtor (customer) in the hands of his debtors, including a bank, who is called a garnishee, advising not to release the money until directed by the court to do so.

✅7. Cheques presented after service of the garnishee order should be returned with the ?refer to drawer? remark.

✅8. Preliminary proceedings of a court are called garnishee order nisi.

✅9. Subsequent proceedings of a court are called garnishee absolute.

✅10. When a bank has a prior right to set-off, the bank is not bound by the garnishee order.

✅11. When a lien is marked on fixed deposit receipts, it cannot be attached by a garnishee order.

✅12. Any excess over the lien is attachable by the garnishee order.

✅13. Orders received from the court for recovery of certain debts are called garnishee order.

✅14. Orders received from the revenue authorities (income tax/sale tax authority) are called attachment order.

✅15. Credits received after garnishee orders are not attachable because debts due or accruing at the time of receipt of order are only attachable.

✅16. In ""Joint Accounts"" with ""Either or Survivor"" clause, ""Garnishee Order"" if in a single name, cannot be attached.

✅17. In ""Joint Accounts"" with ""Former or Survivor"" clause, ""Garnishee Order"" if in a single name, can be attached.

✅18. The personal accounts of a partner can be attached with garnishee order for the firm?s debt.

✅19. The trust?s account cannot be attached garnishee order.

✅20. When a customer has more than 1 account and one is in credit and other is in debit, then the garnishee order can be attached only if the net result is in credit.

✅21. A lien is a right of the banker to retain possession of the goods and securities owned by the debtor until the debt due from the latter is paid.

✅22. The banker?s lien is an implied (understood) pledge (promise/guarantee).

✅23. In case of lien, the bank can sell the goods and securities in case the debt is not paid under section 171 of the Indian Contract Act 1872.

✅24. Lien cannot apply in safe deposit locker.

✅25. Set-off means adjusting debit balance in one account with an account having credit balance of the same customer.

✅26. A deceased credit account and a customer debit account cannot be combined.

Current Affairs on 03.11.2018

Today's Headlines from www:

*Economic Times*

📝 Loan in 59 minutes: Modi launches portal to ease credit for MSMEs

📝 CIL's supplies to power plants up 22 million tonnes in April-October

📝 BSE posts 4% rise in Q2 standalone total income at Rs 152.47 crore

📝 SBI to raise Rs 4,116 crore via Basel III bonds

📝 HAL to roll out more Tejas fighters from new facility

📝 India's Petronet, ONGC Videsh eye stake in Tellurian project

📝 Microfinance companies plan to create common pool of assets for securtisation

📝 L&T Construction bags Rs 138-cr order from Bengaluru Metro

*Business Standard*

📝 Apple posts flat growth in India in September quarter over weakening rupee

📝 Amazon's India marketplace unit posts nearly $1 billion loss in FY18

📝 Govt extends implementation of tracking system for export of drugs

📝 Tea producers, exporters cheer as India exempted from Iran sanctions

📝 Bharat Forge Q2 profit jumps 11.6% to Rs 2.28 bn; total income up 32%

📝 Satyam scam: Sebi asks Raju, three others to return Rs 8.13 billion

📝 Fresh H1-B hiring to get tougher, US introduces more stringent provisions

*Financial Express*

📝 Reliance Jio adds 1.3 crore users in September; Airtel, Vodafone, Idea lose over 1 crore customers

📝 Forex reserves down by USD 1.444 bn to USD 392.078 billion

📝 SAIL posts Rs 554-crore profit as earnings jump

📝 PFC profit rises 12% to Rs 1,325 crore in Q2, firm raises borrowing limit

📝 City Union Bank Q2 profit up 16%

📝 Pune civic body to raise Rs 1,000 crore via Muni Bonds

📝 Domestic turmoil may see ECB draw-downs sniffing at $35-40 billion by March: Icra

*Mint*

📝 No end to PNB woes as Q2 loss hits ₹4,532 crore

📝 Axis Bank’s profit up 83% at ₹790 crore in September quarter

📝 RBI allows banks to provide partial credit enhancement of NBFC bonds

📝 Adani Gas plans to invest ₹8,000 crore in next 5 years: Pranav Adani

📝 Indian Oil Q2 profit drops on higher forex, raw material costs

📝 Hindalco to invest $180 million in Brazil, close Aleris deal by April

📝 NTPC Q2 profit falls marginally, misses estimates

📝 Rural market presents $10-12 bn opportunity for e-commerce firms.

General banking JAIIB

1.Mutual Funds are controlled by: SEBI.
2.Duplicate DD should be issued within: 14 days from date of request.
3.Public Debt Office (PDO) is an ______: Autonomous body and Investment Banker to Central Govt.
4.What is the rate of TDS in case of Savings Bank deposit account as per Income Tax Act Section 80TTA : TDS is not applicable in
savings bank interest.
5.What is the rate of TDS in case the customer does not submit PAN card and 15G/ 15H : @ 20%.
6. Complaints under Consumer forum should be dealt with within (Where no testing of commodities is required) : 90 days
7.Locker Operation to be categorised under High and Low risk. In case of non-operation of such accounts for ____ and ______: 1
year and 3 years respectively.
8.Maximum deposit for allotting a locker: 3 year advance rent plus locker breaking charges.
9.What is the latest RBI directives for issuing DD for amount of Rs. 20,000 and above: It should Account Payee only.
10. RBI can issue bank note with highest denomination : Upto Rs. 10,000
11. Govt. of India can issue currency note in denomination of : Rs. 1
12. In FDR if the principal and interest is Rs. 20,000 or above it is not to be paid in cash as per: Section 269T of Income Tax Act.
13. SB /CD to be treated as inoperative if there are no transaction for over a period of: 2 years
14. If counterfeit notes up to _______ are detected in a single cash transaction in the bank branch, the bank should send a
consolidated report to the Police at the end of the month?: Less than 5.
15. Letter of Administration is issued by court when: A person dies without leaving a Will ( Intestate).
16. When is letter of administration issued:When a person dies intestate.
17. Differential rate of interest can be paid on fixed deposit if deposit is for: Rs.1.00 crore and above.
18. What is Hybrid debt instrument? a) Debenture b) Bond c) Preference shares d) Convertible Bonds*
19. Implied authority of a partner does not allow ______ singly? Settle a dispute relating to the business of the firm thru
arbitration.
20. If ____ number of counterfeit notes are detected in single transaction, a consolidated report sent to police station: Less than
5.
21. Under Ombudsman, on receiving the award both the bank and the complainant can appeal to the appellate authority in how
many days: 30 days.

22. TDS deducted for interest amount: If interest amount is above Rs 10,000/-.
23. Minimum subscription in PPF cannot be less than: Rs.500/-.
24. The single portal initiated by Ministry of Corporate Affairs for one stop solution for all Companies: MCA21.
25. The RBI is using _____ index of inflation for policy making: Consumer Price Index.
26. BCSBI is affiliated or regulated by? An independent body.
27. Certificate of Incorporation is: Not required in case of Pvt Ltd Co’s.
28. What is full form of IFRS: International Financial Reporting Standards.
29. General Insurance works on principle of: Spread of Risk.
30. Contract of Insurance is a contract of: Indemnity.
31. FIR to be filed if number of Counterfeit notes in a single deposit is: 5 or above.
32. Under RBI KYC directives, CFT stands for: Combating Financing of Terrorism
33. Full KYC is required at least once in __ yr in case of high risk customer: 2 years
34. Govt. of India issue which note : Re. 1
35. Letter of administration is issued by court when: there is no Will and there is estate to manage.
36. Time limit for preservation of record under KYC: 5 years from close of account in respect of records relating to opening of
account and 5 years from date of transaction in respect of transactions reported to FIU.
37. If Locker rent is Rs.7400/- per year, locker breaking charge:Rs.2000/-, how much Maximum deposit can be taken from the
lessee while allotting a locker?: Rs.24200/-
38. ALCO does not decide: Budgets and Targets
39. The focus of Asset Liability Management is: To protect Net InterestMargin.
40. A customer deposited huge amount in cash several times. When Branch manager enquired about the same, the customer did
not give the details. What should be done?: Report to FIU as part of Suspicious Transaction Repot.
41. When the letter of Administration is issued by court?: When the customer expired without writing will.
42. R Gandhi commitee related to: Urban Co-operative Banks (UCBs); to strengthen co operative banking structure.
43. Headquarter of world economic forum: Cologny, Switzerland
44. What payment bank cannot do: Lending
45. SLR w.e.f. 2016-17: 20.50%
46. Under Sovereign Gold Bond scheme maximum units acquired up to: 500 unit (i.e. 500 gm gold).
47. SCORES is related to - a)SEBI; b)IRDAI; C)PFRDA: SEBI. SCORES is Sebi's online platform that provides a centralised database of
all complaints.
48. In case of Fixed Deposits premature payment option is must for the deposit up to : Rs.15 lac
49. Scoring is related to which of the following - a.RBI. b.NSE c.PFRDA d. None of these:
50. Maximum foreign investment in Public sector bank: 20%
51. For Payment bank, Reliance Industries tie up with: SBI
52. Gold Monetisation Scheme: MTGD interest rate: 2.25%
53. Committee on Bankruptcy Law: T.K.Vishwanathan
54. Money market mutual fund regulated by? Earlier by RBI and now by SEBI
55. What is the target for CPI based inflation in Jan 2016?: 6%
56. Bhartiya Mahila Bank is a) Nationalized bank, b) Gramin bank, c) Public sector bank, d) Private bank: Public Sector Bank
57. Indian Currency Rupee is in circulation in two more countries. One is Nepal, the other is _______: Bhutan.
58. Why International Financial Reporting System (IFRS) should be implemented: For comparison of financials of companies
operating in two different international jurisdictions.
59. The value of a gift that can be given by banks to its customers cannot exceed rupees: Rs. 250
60. Which is not the function of ALCO: Achieving Budget target.
61. Maximum age under PMSBY: 70 Years.
62. Monthly consolidated report to Police in case of how many counterfeit notes: Detected upto 5 and above pieces in a
63. What is incorrect about RTI: Reason to be mentioned in RTI application.
64. Which of the following is not a case of bailment?: When cash is deposited with bank.
65. Full form of P-notes in financial jargon? Participatory Notes
66. International Financial Reporting System (IFRS) should be implemented: For comparison of financials of companies operating in
two different international jurisdictions.
67. After issuing a Garnishee Order by court, Bank is referred is _______: Garnishee.
68. What is Regressive Taxation: As the tax base increases or income increases, the taxation rate decreases.
69. The coins of which denomination have been released as part of the 125th birth anniversary year celebrations of Dr. B.R.
Ambedkar? (10 rupee and 125 rupee)
70. According to report of the Global Financial Integrity’s (GFI’s), India has been placed at which position in black money outflows

among the developing and emerging economies? (Fourth)
71. Who is the CEO of NITI Aayog? (Amitabh Kant)
72. Name the Central bank of U.S. (Federal Reserve System)
73. Who has been appointed as an Executive Director on the board of International Monetary Fund (IMF). (Former RBI Deputy
Governor Subir Gokaran)
74. Which bank has recently been pulled up by the CBI for disbursing Rs. 950 crore to KFA despite it having an unfavourable rating?
(IDBI Bank)
75. Name the New Finance Secretary: Ratan Watal.
76. NABARD undertakes supervision on which type of Bank: RRBs.
77. Hindi day is celebrated on: 14th Sept.
78. Annual Inspection of large loans is carried out by RBI inspectors. What is this audit is called? Statutory Audit.
79. What is minimum amount of DD which should be issued by bank with account payee crossing: Rs. 20,000.
80. Aggregate Capital Market exposure of a bank should not be more than: 40% of net worth of bank
81. Minimum capital required for Small Finance Bank and Payment Banks is Rs. _______: Rs.100 cr.
82. Service Tax increased to 14.50% with effect from : 15.11.2015 and 0.5% wef 01.06.2016 (KISAAN CESS)
83. What should be the Promoter contribution in Small Bank: 40%
84. What is the interest rate in case of Sovereign Gold Bond scheme: 2.50%.