Msme recollected

MSME FOR BANKERS (EXAM DATED 27.04.2019)

1. MSME represent ------- policies of Government of India which emphasized to use foreign exchange for imports etc (Ans: Socio Economic)

2. Objectives of MSME identification which among is not an objective (Page 4 of Text Book)

3. Limitations of MSME. Identify which among is correct (Page 4 of Text Book)

4. The MSME is made important subject in development in (Ans: Worldwide including countries like USA, Japan)

5. The classification of industries is based on different factors. Which among the following is wrong (Ans: Loan Amount)

6. Explanation of export oriented Unit (Ans: Industry that undertakes to export 30% of annual production at the end of third year)

7. Which among the following is not falls in Small Business (Ans: Wholesale Trade)

8. For the transport operator is categorized as MSE, if total vehicle owned does not exceed (Ans: 10)

9. The de reservation of items as per Sec 29 B of Industries act 1951. Find out wrong features (Page 10 of Text Book)

10. Micro Enterprises Manufacturing & service investment criteria (Ans. 25 Lacs & 10 lacs)

11. Which among the following is the example of indirect finance (Ans: MFI lending to co-operatives of producers)

12. Which among the following is not a feature of Sole Proprietary firm (Ans: Income is distinguished for taxation)

13. Mr. Ram a minor turned major on 01.02.2016, who was admitted to a partnership firm during his minority. What is the maximum time before which he can repudiate his liability (Ans: 6 months from date )

14. Which among the following is not a feature of partnership firm (Ans: A partnership firm can be a partner in another firm)

15. Which among the following is a feature of partnership firm (Ans: A partnership firm not require compulsory registration of deed)

16. The usage of common seal is explained in which document. (Ans: Articles of Association)

17. Maximum number of share holders in Private Limited Company is (Ans: 200)

18. Which among the following is not a feature of Public Limited Company (Ans: The shares are freely not transferrable)

19. For getting environmental clearance for the setting up of an enterprises one must (Ans: Obtain clearance from the pollution board)

20. If the ownership of any enterprise is individually or jointly hold by women above 51%, the same is termed as (Ans: Woman Enterprises)

21. The gender discrimination in Market is by (Ans: Differential wage for the same work)

22. Which among the following is not a classification of categories of Women Entrepreneurs (Ans: Literate and illiterate women)

23. Exclusive scheme to provide equity support to women entrepreneurs (Ans: Mahila Udhyam Nidhi)

24. Which among the following is not a supportive measures for Women’s economic activities (Ans: Refer Page ; 24 in text book)

25. MSME DO is earlier known as (Ans; Small industries Development Organization)

26. The development of MSME is a (Ans: State Subject )

27. An industrial undertaking, a company with interests in industry can invest up to _____ in a MSE unit (Ans; 24%)

28. Similarity features identification between LLP & a Private Limited Company (Ans: Refer Page ; 45 in text book)

29. TReDS full form (Ans: Trade Receivables Discounting system )

30. Which among the features pertains to Priority Sector Lending Certificates

31. CERSAI is formed as per the (Ans: SARFAESIA act of 2002)

32. Calculation for maximum CGTMSE coverage available for unit with Rs 30.00 Lacs fund based & 15 Lacs non fund based limit.

33. The current liability is 50000. The current ratio is 2.5. calculate Current asset

34. The CLSS scheme gives subsidy of ( 15% or 0.15)

35. Which among the given option is not a rating agency (Ans; NSIC)

36. Which among the following is give overall guidelines of SIDO (Ans; Directorate of industries)

37. Features of HUDCO. Select the one wrongly explained (Ans: Refer Page ; 61 in text book)

38. Activities of TCO. Which among is correct combination (Ans: Refer Page ; 62 in text book)

39. Which among the following is features of KVIC (Ans: Refer Page ; 63 in text book)

40. The credit limit up to 5 Lacs to be disposed in maximum of (Ans; 2 Weeks)

41. Which among the following is wrongly stated regarding the functions of SIDBI (Ans: Refer Page ; 70 in text book)

42. Major problems faced by MSME in the given option (Ans: Refer Page ; 92 in text book)

43. Which among the following is not a feature for commercial banks or promoting the MSE advance portfolio (Ans: Low NPA)

44. Identify which are the following is bill financing

45. Which among the following is example of post shipment finance (Ans: Refer Page ; 109 in text book)

46. RED Clause LC Feature (Ans: Refer Page ; 111 in text book)

47. Specialized MSME branch (Ans: if advance is 60% MSE portfolio)

48. BCSBI guidelines for MSE regarding acknowledgement of application & issuance of rejection letter with reason

49. Which among the given option is not associated with 5 Cs of the borrower (Ans: CIBIL score )

50. Identify and add the total assets from the given balance sheet component

51. What is the implication and effect in increase of Sundry Debtors or creditors (Ans; Refer Page ; 124 in text book)

52. Maximum Limit of loan that can be sanctioned under Turnover method (Ans: Rs 500.00 Lacs)

53. Factors affecting/determine the working capital limit (Ans: Refer Page ; 138 in text book)

54. Calculation using II method of lending (Ans; Refer Page ; 143 in text book)

55. Overview of Risk features , by way of match the following (Ans: Refer Page ; 145 in text book)

56. Features and requirement of credit rating (Ans: Refer Page ; 148 in text book)

57. Economic benefits of MSME. Identify the features (Ans: Refer Page ; 165 in text book)

58. The common parlance and practices of BDS is (Ans: Operational)

59. Identify the support by BDS (Ans: Refer Page ; 170 in text book)

60. Nature of deficiencies and remedial measures in cluster development (Ans; Refer Page ; 198 in text book)

61. Growth phase of MSE cluster features

62. Role of CDE in the cluster (Ans; Refer Page ; 209 in text book)

63. Why agricultural land is not taken as collateral security for securing the loan

64. Delayed payment of the bill raised by the MSE entrepreneur is compensated by (Ans: 3 times of bank rate announced by RBI)

65. RBI definition of Sick unit

66. Identify which among the following is external cause of sickness (Ans: Power Shortage)

67. When long term source is used for short term uses, the same is amounts to (Ans; Diversion of funds)

68. Feature of an enterprises tending towards sickness (Ans: Refer Page ; 242 in text book)

69. Symptoms of incipient sickness in activity (Ans; Refer Page ; 243 in text book)

70. Explanation of SICK GREY AREA

71. Hand holding stage features (Ans: Refer Page ; 253 in text book)

72. The account of NPA with dues of Rs 2.00 lacs, who will finalize the viability (Ans: Branch manager)

73. Viability criteria (Ans: Refer Page ; 256 in text book)

74. Primary purpose of secured creditors with NPA asset is (Ans; To sell off for the purpose of loan)

75. The 13(2) notice to be given as per SARFAESIA for how many days (Ans: 60 days )

76. Asset Reconstruction companies are registered with (Ans: RBI)

77. The reason for the existence of MFI (Ans: Refer Page ; 273 in text book)

78. Multiple lending and over indebtedness of MFI (Ans: Refer Page ; 276 in text book)

79. Primary Objectives of Mudra Bank (Ans: Refer Page ; 279 in text book)

80. Primary security & Collateral security features

81. Customer DNA means

82. Insolvency & Bankruptcy difference between two

83. Features of Bank’s Board Bureau

84. Impact of WTO agreements in domestic industry (Ans: Refer Page ; 305 in text book)

85. Which sector among the given option is contributing to exports (Ans: Textile)

86. Calculation of Plant & machineries value from given options (Ans: Not to include Jigs, generator sets etc)

87. Which among the following is not a participant of importance/much role in an LC? (Ans: Beneficiaries’ Bank)

88. Explanation of LC, which among the given options is correct

89. Which among is pre shipment finance?

90. Which among the following is not correct for loan sanction in MSME segment (Ans: Compulsory to give collateral free loan till 100 lacs)

FATF recommendations

FATF RECOMMENDATIONS. ::

Money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction are serious threats to security and the integrity of the financial system.

The FATF Standards have been revised to strengthen global safeguards and further protect the integrity of the financial system by providing governments with stronger tools to take action against financial crime. At the same time, these new standards will address new priority areas such as corruption and tax crimes.

The revision of the Recommendations aims at achieving a balance:

On the one hand, the requirements have been specifically strengthened in areas which are higher risk or where implementation could be enhanced. They have been expanded to deal with new threats such as the financing of proliferation of weapons of mass destruction, and to be clearer on transparency and tougher on corruption.

On the other, they are also better targeted – there is more flexibility for simplified measures to be applied in low risk areas. This risk-based approach will allow financial institutions and other designated sectors to apply their resources to higher risk areas.

The FATF Recommendations are the basis on which all countries should meet the shared objective of tackling money laundering, terrorist financing and the financing of proliferation. The FATF calls upon all countries to effectively implement these measures in their national systems.

FATF Recommendations 2012

A – AML/CFT POLICIES AND COORDINATION

1 - Assessing risks & applying a risk-based approach

2 - National cooperation and coordination

B – MONEY LAUNDERING AND CONFISCATION

3.Moneylaundering offence

4 - Confiscation and provisional measures

C – TERRORIST FINANCING AND FINANCING OF PROLIFERATION

5 - SRII Terrorist financing offence

6 - SRIII Targeted financial sanctions related to terrorism & terrorist financing

7 - Targeted financial sanctions related to proliferation

8 - Non-profit organisations

D – PREVENTIVE MEASURES

9 - Financial institution secrecy laws

Customer due diligence and record keeping

10 - Customer due diligence

11 - Record keeping

Additional measures for specific customers and activities

12 - Politically exposed persons

13 - Correspondent banking

14 - Money or value transfer services

15 - New technologies

16 - Wire transfers

Reliance, Controls and Financial Groups

17 - Reliance on third parties

18 - Internal controls and foreign branches and subsidiaries

19 - Higher-risk countries

Reporting of suspicious transactions

20 - Reporting of suspicious transactions

21 - Tipping-off and confidentiality

Designated non-financial Businesses and Professions (DNFBPs)

22 - DNFBPs: Customer due diligence

23 - DNFBPs: Other measures

E – TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS

24 - Transparency and beneficial ownership of legal persons

25 - Transparency and beneficial ownership of legal arrangements

F – POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURES

Regulation and Supervision

26 - Regulation and supervision of financial institutions

27 - Powers of supervisors

28 - Regulation and supervision of DNFBPs

Operational and Law Enforcement

29 - Financial intelligence units

30 - Responsibilities of law enforcement and investigative authorities

31 - Powers of law enforcement and investigative authorities

32 - Cash couriers

General Requirements

33 - Statistics

34 - Guidance and feedback

Sanctions

35 - Sanctions

G – INTERNATIONAL COOPERATION

36 - International instruments

37 - Mutual legal assistance

38 - Mutual legal assistance: freezing and confiscation

39 - Extradition

40 - Other forms of international cooperation

Forex important

FOREX
1. In LRS how much amount can be remitted for travel abroad: USD 2,50,000
2. How much amount of Foreign Currency coins be kept with us : No ceiling
3. On FCNR (B), how much amount of loan can be given : No ceiling, subject to normal margin requirements
4. How much Indian currency a person can take while travelling abroad other than Nepal and Bhutan: Ans: Rs.25,000/-
5. Crystallization of Import Bill: With in 10 days of date of receipt
6. FACTA signed with which country:USA
7. In FCNR B, how many days is considered as a year for interest calculation: Ans: 360 days
8. WHICH IS LATEST UCP- : UCP 600 (wef 01.07.2007 )
9. AMT ACCEPTED IN CASH BY AUTH DEALERS AGAINST SALE OF FOREIGN EXCH – UPTO Rs. 50,000
10.UNDER LRS AMT PERMITTED – USD 2.5 LAC
11.MAX TERM PERIOD FOR NRE DEPOSITS – 10 YRS
12.INT PAID FOR PREMATURE WITHDRAWAL OR PREMATURE EXTENSION OF NRE DEPOSITS : 1% Penalty ( upto one crore – Ref cir 108-
2015 )
13.FCNR (B) A/C HELD ONLY IN THE FORM OF – TERM DEPOSITS
14.IN EEFC A/C JOINT HOLDER CAN BE IN THE FORM OF – FORMER OR SURVIVOR with Close Relatives
15.R RETURNWHEN SUBMITTED TO RBI? : FORTNIGHTLY BASIS – 15th & Last day of the month
16.WHAT IS CONVERSION: FOREIGN CURRENCY INTO LOCAL CURRENCY ( SAY - INR )
17.RELEASE OF FOREIGN EXCHANGE NOT EXCEEDING IN 1 FINANCIALYR FOR ONE OR MORE PRIVATE VISITS (EXCEPT NEPAL N BHUTAN)?:
USD 10,000.00
18.RELEASE OF FOREIGN EXCHANGE NOT EXCEEDING FOR BUSINEES TRAVEL?: USD 25,000.00
19.CRYSTALLISATION MEANS?: CONVERTING FOREIGN LIABILITY INTO RUPEE LIABILITY ( DELINKING FOREIGN ELEMENTS FROM BILL &
CONVERTING TO INR )
20.LIMIT FOR SENDING REMITTANCES TO NEPAL BY NEFT...Rs. 50000/
21.MAXIMUM INDIAN CURRENCY THAT CAN BE TAKEN ABROAD BY RESIDENTS-Rs.25000 (export & import of INR)
22.WHAT ACCOUNTS FCNR B CAN BE OPENED AND INWHAT CURRENCIES....FREELY CONVERTIBLE CURRENCY
23.NRE DEPOSITS CAN BE OPENED FOR A MAXIMUM PERIOD OF...10 YEARS.
24.Interest Rate on FCNR(B) deposits should not exceed: Ans: LIBOR for concerned currency for corresponding maturity plus
200bps(Upto 3 year) and LIBOR +300bps (3-5 years).
25.Which of the following apex body and Regulator has asked banks to swap customer-related information so that the frauds and
defaults may be prevented in future? a)Bombay Stock Exchange (BSE) b)Indian Banks, Association (IBA) c)Securities & Exchange
Board of India (SEBI) d) Reserve Bank of India (RBI): Ans: d, (RBI)
26.Under UCPDC 600 what is maximum number of days allowed for examination of documents by issuing bank and negotiating bank?: 5
banking days each.
27.In FCNR (B) Exchange risk is borne by : Ans: Banks
28.As per Liberalised Remittance Scheme, Resident Individuals can remit upto USD 250000.00per financial year for any permitted Current
or Capital Transactions or both. Ans: $75,000
29.Unspent Foreign Exchange brought back by Resident is to be surrendered to Authorised Dealer with in ____ days: Ans: 180 days
30.FCNR(B) is opened in _____ currencies: Ans: 5 (USD,GBP,EURO,AUD,CAD)
31.Export Bills should be realized with in a period of_____ from the date of export. Ans: 9 months
32.What is the rate of Interest payable on EEFC account: Ans: No Interest. Only Current Account
33.Upto what percentage of export proceeds can be credited to EEFC account : Ans: 100%
34.An account of Foreign Correspondant Bank with a Bank in India in Indian Rupees is called as: ans: Vostro Account
35.Latest version of Exports & Imports guidelines. Ans: UCP 600
36.Import, Export rules governed by: Ans: FEMA
37.HOW MUCH REMITTANCE FOR MEDICAL TREATMENT ABROAD...UPTO USD 100000/
38.A RESIDENT CAN KEEP UPTO HOW MUCH USD WITH HIM --- USD 2000 & no limits for Coins
39.IF FOREIGN CURRENCY MORE THAN USD5000 OR F C AND TRAV CHQS MORE THAN USD 10000. : CURRENCY DECLARATION FUND IS
REQUIRED
40.Max time period of FCNR term deposit: Ans: 3 years (AUD, CAD)and 5 years (USD, GBP,Euro)
41.Why Selling rate of Foreign Currency is higher than Traveler Cheque : Ans: Holding cost of currency is high
42.What is Nostro Account: Ans: Account of an Indian Bank with Foreign Bank

Beautiful Mind

BEAUTIFUL MIND

How to have a beautiful mind comprises of topics such as:

· How To Agree

· How To Disagree

· How To Differ

· How To Be Interesting

· How To Respond

· How To Listen

· Questions

· Parallel Thinking

· Concepts

· Alternatives

· Emotions And Feelings

· Values

· Diversions And Off-Course

· Information And Knowledge

· Opinion

· Interruption

· Attitude

· Starting and Topics

· ConclusionWhat is beauty? Beauty is something that can be appreciated by others. The

beautiful mind described in this book is a mind that can be appreciated by others.

It is not the mind of a person who sits in a corner and solves very complex

puzzles. It is a mind that can be appreciated by others, usually through

conversation.

The beauty of your mind shows in our conversation. Just as people can look at

our physical beauty they can listen to the beauty of our mind. If we want to make

our mind more beautiful we can. It is only by how we use our mind.

How To Agree

Agree or not agree are one of the most important aspects of any discussion. One

should genuinely seek to find points of agreement in what the other person is

saying. There is no contribution if you simply agree with everything.

There are times when we disagree at every point, which is irritating and boring.

One should remove the ego from discussion and should focus on subject matter.

We should take a genuine delight in discovering point of agreement-even when

there is small disagreement. By changing the perception to look at things in a

different way is an important step in reaching possible agreement.

How to Disagree

There are different ways to disagree, one should not disagree for the sake of

disagreeing. We should not disagree just to show how clever we are or to boost our

ego. When we disagree, we should do so politely and gently rather than rudely and

aggressively.

One may need to point out errors of logic or to show that a conclusion does not

necessarily follow from what went before. Where emotions, prejudices and

stereotypes appear to be used, one should indicate these also.

It is important to challenge ‘certainty’ and to suggest ‘possibility’ instead.

Distinguishing between having a different opinion and disagreeing with an opinion

is very important.

How to Differ

There are times when only one of a different set of opinions can be right. This is

where ‘truth’ can be checked out. More often different opinions can all have their

own validity. Difference may arise from personal preference, taste or choice.

Difference may arise from different set of values, views and perspective.

Difference may arise from different perception even if from same point of view.

Difference may arise from different personal experience or differing knowledge. We

should seek to lay out as clearly as possible the nature of the difference and lay one

opinion alongside the different one.We should seek to explore and explain the reasons for the difference, and should

reconcile the differences and then agree to differ on what cannot be reconciled.

How to be Interesting

It is always important to get to the truth, but being interesting is more important than

winning an argument. You owe it to yourself and to others to be interesting. Interest

can also arise from how you conduct a conversation.

Looking out for possibilities and alternatives enriches the conversation.

By using a formal tool ‘Now that is interesting’. Be ready to apply this to anything

we hear. When someone else opens up an interesting line of thought, go along with

it and help to develop the interest further.

How To Respond

The overall objective in any conversation might be to agree, to disagree, to agree on

the difference- and to have an enjoyable and interesting discussion.

If we are in any doubt about what has been said, it is important to ask for

clarification. Misunderstanding and arguing at cross-purposes are a waste of time

and energy.

One may want to modify an idea to make it more acceptable to himself, stronger or

more practical. Once an idea has emerged it is no longer a matter of ‘your idea’ or

‘my idea’ but an idea to be improved and assessed. Instead of the usual ‘battle’ of

argument there should be joint effort to explore the subject.

How to Listen

The ability to listen and the enjoyment of listening is a key part of developing a

beautiful mind. A good listener pays attention and seeks to get the maximum value

from what is being said. There may be new insights and realizations that are

triggered by the speaker.

We may realize other alternative perceptions and learn the reasoning’s behind a

point of view.

One should use questions to check on facts and to ask for more details around point

of interest.

Questions

Questions are a key means of interaction in any conversation or discussion. A

listener should seek to mask questions. A question is a way of ‘direct attention’ to

some matter. A question is a polite way of demanding something.

Parallel ThinkingIn traditional argument each side prepares a case and then seeks to defend that case

and to attack the other case. Actual exploration of the subject is limited. Parallel

thinking replaces the battle of argument with a joint exploration of the subject as all

parties think in parallel at any moment.

Concepts

Concepts are a very important part of thinking and a key component of a beautiful

mind. Concepts are important in generating ideas and designing ways forward.

Where there is no routine available, concepts are essential.

Alternatives

Looking for alternatives is a very important activity of a beautiful mind. Without

alternatives we have rigidity and complacency. There can be alternative perceptions

or ways of looking at something. These can lead to different judgments or actions.

Thee can be alternative set of values determined by experience, culture and

personality.

Emotion and Feeling

Emotions and feelings are a very important part of thinking. Ultimately, choices and

decisions are based on emotions and feelings. In a very serious discussion you may

want to listen first, and ask questions, before showing your feeling. In a controversy

one should show his true position: one side or the other, or above it all.

Values

Values determine what we like or do not like, value determine our choices and

decisions. Fundamental (core) values are not changed by the circumstances. The

priority of other values is determined by the circumstances. There are different types

of values such as Ecology value, quality value, innovation value, negative values

etc.

Diversions and Off-Course

Humor is a very important ingredient and a key feature of the beautiful the mind.

Humor allows speculation and enables things to be put forward as half serious and

half humorous. Humor permits exaggeration and absurdity to make a serious point.

Conversation and discussion should be as enjoyable for the mind as sport is for the

body.

Information and KnowledgeWe do not need full and complete information about a subject in order to discuss

that subject. If the other person has more information than you do, listen

intelligently and ask questions. One can also pick out some point of interest and

have a two-way conversation around that particular point.

Opinion

An opinion arises from information, values, feelings and experiences put together in

a local culture. Opinions are based on a point of view, which is the set of

circumstances in which one is placed. An opinion may be changed by new

information. A beautiful mind is always ready to change opinions. This is a

characteristic of a beautiful mind.

Interruption

Interruptions are generally rude and break the flow of what is being said. So there

needs to be a very good reason for the interruption. One can interrupt to express

doubt. Interruptions are often ‘ego-driven’. Someone wants to be noticed or feel

important. Someone wants to show he or she is smarter than the speaker.

Attitude

Attitude is very much related to self- image. There is the ‘clever’ person who has to

be right and more clever than anyone else. There is the battle attitude of win-lose.

There is the ego power game where domination is the intention. The fun attitude

sees conversation as entertainment.

Starting and Topics

Greetings, the exchanges of personal news and social chitchat in general have a very

important role in themselves. When this has been done there is a need to move on

with a conversation. There may be current local topics known to everyone in the

community. A really skilled conversationalist can create interest from any topic

whatsoever.

Conclusion

Beautiful mind is one of the qualities that make us successful in every sphere of life.

A beautiful body and a beautiful face without a beautiful mind can be boring. A

beautiful mind without a beautiful body or a beautiful face can still be attractive.

Hence we should try to develop skills and sincerely work to make our mind

beautiful. As sports are enjoyable we should also enjoy each discussion and

conversation, and that is possible only through a Beautiful Mind.

Target Jaiib and it's Strategy

Target JAIIB and Its strategy

If you have just joined the banking Industry, you must have applied for JAIIB or if not yet, you’ll be applying soon. And one thing everyone wants to know is how to pass JAIIB in first attempt. The obvious reason for clearing JAIIB i.e., Junior Associate of Indian Institute of Bankers is to get an extra increment. So sooner you pass the JAIIB exam, earlier you get an extra increment. If you have joined as Scale – I Officer (P.O.), your initial basic salary would be Rs.23700 and if you clear JAIIB, you get one increment and your basic salary increase by Rs.970. So, if you miss it first time, your increment gets delayed by 6 months. That means loss of Rs.5820+DA. So it becomes important to clear the JAIIB in first attempt itself.

JAIIB exam is held twice a year (June and December) and around 1.50 lacs candidates appear for the exam. Only 22-25% candidates are able to clear the exam each time. So, does it mean that JAIIB is difficult to crack? What should be the strategy to clear the JAIIB in first attempt itself? How one should prepare for JAIIB.

Passing marks for JAIIB are 50% aggregate and 45% in each subject. If aggregate marks are less than 50% or marks in a particular paper are less than 45% but you score 50% or more in any subject, you do not qualify the exam but you need not give that particular paper in next attempt, in which you score 50% or more.  The best part of JAIIB exam is that result of each paper is shown to you immediately after you submit your online exam.

Simple steps to prepare for the JAIIB exam

Take off the burden from your mind, you are required to score only 50%, which is not very difficult. And the good thing is that there is no negative marking.

Here is a simple step by step guide which will help the bankers to be prepared for JAIIB.

If you come from finance or commerce background and have studied B.Com, MBA (Finance) etc., it is relatively easy to crack the JAIIB. Because you would have studied atleast 60% of the topics covered in JAIIB. If you are not from commerce or finance background, you need to make little extra efforts

Preparation strategy for JAIIB examination:

JAIIB exam needs some dedicated preparation to crack the exam, especially for the non commerce graduates. Many young bankers prepare for the exam only during the last week; Then they write one paper after getting low marks, they simply give up the attempt. Some take two days leave before the exam and prepare for it eventually they fail because of shortage of four or five marks. These strategies may work for few talent bankers but not for all.  After our busy working hours, daily we have to spend some time for preparation of the exam. Since most of us are very new to the banking industry and its concepts, we need regular revisions to familiarise with the concepts.So all it needs a self disciplined and determined mind to prepare for the exam.

Allocation of Study time:

Daily we need to spend at least 1 1/2 to 2 hours a day for preparation of the JAIIB exam. Cramming before the exam night or before two days won’t help for understanding the information. It may help for few direct questions but it won’t be useful for complex questions. Also we wont have enough time to complete the sy1llabus and will lead to anxiety & stress. Sacrificing our sleep before the exam night will also make us counterproductive so it better to study every day.

Importance of Studying daily:

Studying daily and revising regularly helps to familiarise with concepts. It also helps us to understand the information. Having a study routine is not only helpful for exam but also improves our reading habit which every banker needs, as our industry is very dynamic. In our hectic banking hours finding time for continuously 2 hrs a day is very hard. But having small sessions of 30 to 40 minutes thrice in a day is easy to find. In the era of smart phones, we can study anything at anywhere so when you find a spare time please use it.

Study Material:

For preparation, I strictly recommend the three comprehensive courseware developed by IIBF, published by MacMillan for each paper. These books are not only helpful for the exam but also for our Banking career. If you really want to pursue your career as banker then these books are must and fundamental. They act like a reference manual for us. So my humble request to all, please don’t prepare only for clearing the exam; Kindly prepare with the motive of improving knowledge in the banking field. Because the knowledge gathered during our JAIIB exam will also aid us during our day-to-day banking life.

Apart from the MacMillan books, the books and work books prepared by JAIIB coaching centres such as N S Noor, Deewan Banking Academy etc,. are also available in the market. Mostly they are good but not comprehensive and may not have clear explanation for some topics. All the books are about same cost, so I recommend the Macmillan books

They are many free study material is available in the facebook groups and in websites also. If possible get that too for your reference but my best suggestion is to buy Macmillan books. The amount spent is more than worthy, the book will be useful for our banking career.

For Latest developments & Current affairs related to Banking Industry:

Apart from the above syllabus we need to refer the following for full preparation of the JAIIB exam.

1. Current developments in Master Circulars/ Master revisions issued by RBI

2. Websites of RBI,  SEBI, BIS, IRDAI, FEDAI for reference and development in concerned subjects

3. IIBF Vision and Bank Quest published by IIBF for the members it is free and sent to email id.

4. Financial newspapers/publication can also be referred for current affairs.

5. New Government Schemes related to banking sector.

Nature of Questions:

Depending upon the complexity of the question, the marks of the question varies.

0.50 mark – Direct question which requires one word answers. Answer this questions with 100% accuracy. Most of these questions are from definitions, types or classification, abbreviation, simple explanations etc,. So at least read and go through all the topics in Macmillan Book twice.

Planning a study schedule:

Now we have allocated our time and purchased  & collected the necessary materials for preparation of JAIIB exam. Now, “What is next??;” Having a strategy/plan/routine schedule for preparation of JAIIB Exam. Strategic planning is important for any activity because it provides a sense of direction and evaluation of progress in our efforts towards goal. A goal without a plan is just a wish, so please make a plan and try to stick to it.

We have already seen the JAIIB syllabus here. In order to pass the JAIIB exam all we need to do is to get 50% of marks in each paper within four consecutive attempts. So we don’t need to study all modules deeper and do research on each topic. If we cover 75% of the syllabus for each paper is enough to get more than 50%.

The strategy and study plan I discuss below are just an example for understanding, viewers and readers are instructed to prepare their own schedule based on their level of knowledge and skills in each subjects.

Overlapped Topics:

Some topics of a paper is also a covered in other papers and questions can be asked in any of the paper. For example AML/KYC is also common for Accounting & Finance and Legal & Regulatory aspects of Banking. Since questions can be asked in any of three exams from this topics, prepare for the paper which has most topics & sub-topics in that particular subject. Also revise the same when you need to prepare for the overlapped topic.

Study Plan: Principles & Practices of Banking:

In my view this is the easiest subject to pass when compared to other papers. Because in this paper, all the topic are conceptual and mostly related to our day-to-day banking activities. Hence most of the topics (not all) are already familiar to us.

Module A: Indian Financial System

Read and understand all the topics and sub topics without any omission.

If possible take notes in the form of snippets this will help for revision of the topic. Since we all new to banking terms repeated revisions are required for this module.

We can expect 20 to 25 marks in this unit.

Question from current development is asked from this unit.

Prepare to score all the marks from this module.

Module B: Functions of Banks

This unit is also important and all the topics should be thoroughly studied.

We can expect 20 to 25 marks from this unit.

This unit is also needed repeated revision so taking notes while studying is recommended.

Question from current development is asked from this unit.

This is also the our scoring section, prepare in a way to get all the marks from this module.

Module C: Banking Technology

If your are techie, take full 6 hrs and study thoroughly.

For techies, this unit helps to surpass the minimum marks comfortably.

Others prepare in a way to answer the direct question from this module.

From this unit we can expect 15 to 20 marks.

We can expect question from latest development in Banking related to IT.

Module D: Support Services & Marketing of Banking Services/Products

If you are BBA or MBA and studied marketing related concepts in your graduation then take full 6 hrs and thoroughly study the unit.

Others prepare to answer for direct questions.

We can expect 10 to 15 marks from this unit.

Study Plan: Accounting & Finance for Bankers:

Many bankers treat the Accounting & Finance paper as tough. The main reason is cramming of information won’t work here like other papers. Since here we have to study, understand and apply the concepts, we need to study regularly and practice. So a good study routine is must and here all the modules are important for exam purpose as well as for our knowledge. So there is no skipping of modules in this paper and give importance to all topics.

Module A: Business Mathematics and Finance

This is a must read and must know module for all bankers. So don’t even skip a small topic.

Since these module is mathematical in nature, write down all the formulas and go thorough it daily.

Practice yourself with formulas by assuming different values from the exercise and solved examples.

Don’t ever fail to take notes and snippets for formula’s explanation & applicability.

We can expect 25 or more marks in this unit.

Understanding of calculation and concepts is must so that we can answer confidently if the questions are twisted.

Module B: Principles of Book Keeping and Accountancy

This unit is also important and all the topics should be thoroughly studied because if we are in bank we should know the accountancy.

We can expect 20 to 25 marks from this unit.

Understand the concept is key for this paper. Don’t mug-up; if you cannot understand a topic just ask your B.Com friend. Or ask him to simply explain the basics of accountancy.

This unit is also needed repeated revision so taking notes while studying is highly recommended.

This is also the our scoring section, prepare in a way to get all the marks from this module.

Module C: Final Accounts

This unit is the most important and very useful for our day-to-day activities.

This unit is conceptual as well mathematical.

So take notes for formulas and revise it.

B.Com friend is the best mentor for this module.

From this unit we can expect 20 to 25 marks.

Module D: Banking Operations and Accounting Functions

This unit is comparatively less important but good preparation of this unit will help to score the pass mark.

This unit will have many overlapped topics

Prepare to answer for direct questions.

We can expect 15 to 20 marks from this unit.

Question from latest development can be asked in this module.

Study Plan: Legal & Regulatory Aspects of Banking:

Many people underestimate the legal paper and say this exam is very easy to clear. This is purely a law oriented paper, so many of the legal terms used in the topics are new to us. In order to familiarise and to understand those topics, we have to spend more time for this paper. Also good memorization skill is required to remember the numbers & data. All the modules are about equally important, hence don’t skip a topic.

Module A: Regulation and Compliance

This is a less important but easier module compared to other modules of the paper.

This module is full of theory related to Banking Regulation and its compliance.

Don’t ever fail to take notes and snippets for explanation & applicability.

We can expect 15 to 20 marks in this unit.

Question from latest development can be asked in this unit.

Module B: Legal aspects of Banking Operations

This module is a foundation and must study.

Understand the concepts and definitions for legal terms

Take notes, Take notes, Take notes and revise it until having a clear picture about the topic.

This is a scoring module so prepare well.

20-30 marks can be expected from this unit.

Module C: Banking related laws

A toughest module and it is a must study for all

Repeated revision is required to remember the numbers & data.

This unit will consume more time and make us feel bore. So study the topics in different sessions of 30 mins.

We can expect 25 to 30 marks from this unit, so it is a mark scoring unit.

Question can be asked from current developments or amendments so update accordingly.

Module D: Commercial Laws with reference to banking operations

This module is conceptual and also requires memorization too.

Some of the topics are common with Module D of Paper 2: Accounting & Finance.

This also a scoring module we can expect 20 – 25 marks from this unit.

On the actual test day

Choose the easy questions first as they will give you an estimate of the score. Then come back to the questions which were missed. Also, there is no negative marking, so attempt all questions. If you stuck in a question, leave that by marking and go ahead.

We hope this will help you out to pass the JAIIB in first attempt. If you have any queries/ suggestions, please write in comment box below.

Conclusion:

The time period mentioned above are for studying those topics at least one time and indicative for understanding. It will vary depending upon personal capacity, skill and knowledge in the subjects. So prepare your own study schedule and stick with it. Remember a determined and self disciplined mind is key to the success. So whatever the strategy you follow for JAIIB examination make sure you are sticking with your plan and be true to yourself.

CAIIB BFM Strategy

BFM::;;

The strategy for the study of Bank Financial Management which many people finds difficult to clear. If you study properly, it is easy to clear the BFM. This subject also contains 4 modules, they are;

-International Banking

-Risk Management

-Treasury Management

-Balance Sheet Management

Many people do not correlate the syllabus of the subject with day to day banking activity. So they find it difficult to score and understand this subject. But this not true, this subject is very much important which will increase your knowledge regarding top management & middle management functioning of your bank as well as banking as a whole industry.

All the modules are equally important, but you may clear the paper with three modules study also. Module A & B are relatively easy and scoring as well. Let us discuss strategy for each module.

Module A-International Banking

Important topics are Exchange Rates and Forex Business, Basics for Forex Derivatives, Documentary LC, and Facilities for Exporters & Importers

Rapid reading or bullet point reading is quite useful for this module. Practice numerical again and again.

Many numerical/case studies are asked from this module which are quite easy as compared to Module B & Module D case studies. Refer the case studies from McMillan given at the end of the topic. Also N.S.Toor book has many numerical and case studies. Questions are asked on Exchange rates, Shipment Finance etc.

Module B-Risk Management

All chapters are equally important as they are interlinked to each other. Again focus more on case studies/numericals given in Apendix at the end of chapter. Maximum case studies are asked from this module. Though short notes are useful for this module I would suggest McMillan reading for this module because some questions are twisted type for which you require details of the concept which is hard to get from short notes. RBI website contains FAQs which are quite useful for this modules, you should read them at least once.

Module C- Treasury Management

Important topics are Introduction, Types of treasury products, Treasury Risk Management, Treasury and Asset-Liability Management.

Mostly questions asked on this module are theoretical type, so through reading of McMillan is important. If you don’t get time then you can skip this module or read short notes since the weighted of this module for exam point of view is low according to me as compared to Module A&B. But those who wish to make carrier or work in treasury department, this is the best module to learn.

Module-D Balance Sheet Management

Important chapters are Components of ALM in Bank’s Balance Sheet, Capital and banking Regulation,, Capital Adequacy, Asset Classification and Provisioning Norms, Interest rate Risk management.

Though McMillan book contain sufficient material but I would suggest you to refer RBI website for this module. In this module focus more on Case Studies as compared to theoretical questions. Do not skip this module as it is much important for exam as well as knowledge point of view. No need to read McMillan line by line.

Overall you have to keep balance between theoretical reading as well as case studies/numerical since the paper would contain 40-45% case studies. N.S.Toor book contains good case studies and MCQs. Also there are many resources available on the internet from where you will get case studies for this module. After giving this paper you will realized that BFM is easier as compared to ABM and no need to worry for BFM.

Caiib ABM Strategy

CAIIB ABM Strategy

ABM is one of the compulsory subjects for CAIIB. Most of the people find difficult to clear this paper. Today, I will tell you how to study for ABM subject.

This subject also contains 4 modules

MODULE – A: Economic Analysis

MODULE – B : Business Mathematics

MODULE – C : HRM in banks

MODULE – D : Credit Management

As we are bank employees we get very less time for study, so how to decide which topics to be read, which topics to be skipped?

-As I had told you in my previous blog article that generally paper consists of 60% theoretical & 40% numerical or case studies, so choose the module to be study in deep so as to clear the paper easily depending upon your personal strength and weakness.

If you observed all the modules, you will realize that Module A and Module C are most scoring modules. Do not skip these modules. Module B contains Business Mathematics which many people find difficult to study as the level of mathematics is tough, especially for non-engineering background people. Those who works in Credit/Loan Department will find that Module D easy as well as interesting. Module D is most important not only exam point of view but also for your daily working in Credit Department. So do not skip Module D.

IMPORTANT TOPICS FROM EACH MODULE

Module A- Supply and Demand, Money Supply and Inflation, Business Cycles, GDP Concepts and Union Budget.

No need to read McMillan Book line by line for thise module, short notes will be quite useful for studying this module. Don’t read stats given in these chapters. In GDP Concepts and Union Budget chapters numerical are asked which are quite easy provided you know the components and formula.

Module B-Time Value of Money, Sampling Methods, Simulation, Bond Investment

Don’t go to deep for study this module as mathematical calculations are difficult to understand especially for non engineering background people. Practice the examples given in McMillan. Those who are not good at math can skip this module and focus more on remaining modules.

Module C-Development of Human Resources, Human Implications of Organisations, Performamce Management, HR & IT

You need to read thoroughly all the topics from this module from McMillan. It is quite easy and theoretical only. Repeatedly read MCQs from N.S. Toor book of this module.

Module D-Overview of Credit Management, Analysis of Financial Statement, Working Capital Finance, Credit Control and Monitoring, Rehabilitation and Recovery.

Read this module from McMillan book only. The chapters in this module are not lengthy as compared to other modules. Practice Numerical from Financial statement and balance sheet.

Overall, you have to study at least three modules in detail so as to achieve the 50 score. You can choose the modules to study more depending upon your strength. I would suggest that you can keep module B at last, just read formulas from this module, as this module is quite boring, lengthy and hard to understand.

EXPORT IMPORT CREDIT MCQs

EXPORT IMPORT CREDIT MCQs

1. Minimum andmaximum amount up to which the Gold Credit card can be issued to exporter is Rs

________ lac and Rs lac. : (a) 100,1000 (b) 50, 500 (c) 100, 5000

(d) 20,200 (e) None of these as it is based on anticipated turnover.**

2. Aspertheexchangecontrolregulations,thepaymentforexportsshouldingeneralberealizedwithina

periodof:(a) 12months fromdate of shipment** (b) 3months from date of shipment

(c) 6months fromthe date of shipment (d) 1month fromdate of shipment

(e) 45 days formdate of shipment

3. Units in a special economic zone are permitted to realise and repatriate to India the full export value of

goods or software within a period of......................................... from the date of shipment.

(a) 3months (b) 6months (c) 180 days (d) 360 days (e) none of these as there is no time limit*

4. In respectof shipmentsmade toIndianownedwarehouses abroad establishedwithpermissionof RBI,

export proceeds shouldbe realizedwithin:

(a) 6 months (b)3 months (c) 9 months (d)15 months* (e) 150 days

5. RBImonitorsoverdueexportbills-not realizedwithinthestipulatedtimeby calling for ahalf yearly

statement fromADs referredtoas : (a) BEF (b)XOS** (c) GTE-1 (d) ST-9 (e) ENC

6.Packing credit advances mean :

advances granted to industrial units for packing of manufactured goods for sale in Indiaadvances granted to eligible exporters for purchase/manufacture/processing/transporting/packing etc. of goods meant for export*

(c) advancesgrantedtoimporterstoenablethemtostoreandsubsequentlysellimportedgoodslocally

(d) any one or more of the above (e) none of the above.

7. To be eligible for packing credit advances the customer :

(a) should not be in the caution list of RBI or specific approval list of ECGC

(b) must be holding importer/exporter code number allotted byDGFT

(c) should be recognised export house (d) all above (e) both (a) and (b)**

8. Packing credit advances is normally allowed for :

(a) 90 days (b) 60 days (c) 360 days (d) 180 days (e) as per requirement of the exporter**

9. `Normal Transit Period ' in the context of export financemeans:

(a) the number of days the documents take to reach destination

(b) the gap between period taken by the ship and the documents to reach destination

(c) the number of days taken by a ship to complete a voyage

(d) the number of days fixed by FEDAI and is the average period normally involved from date of negotiation to credit to

NOSTRO account.**

(e) either (a)or (b)

10. For facilities grantedupto30.6.2010, rateof interestonpost shipment credit inrupeesupto180days in

respectofusancebills is :

(a) 12% (b) 15% (c) not exceeding BPLR

(d) not exceeding BPLR minus 2.5% (e) not exceeding BPLR plus 1.5%**

11. Refinance for export credit fromRBI is available for howmany days?

(a) 90 days . (b) 180 days** (c) 360 days (d) 270 days- (e) None of these

12. Refinance against eligible export finance is available from:

(a) RBI* (b) IDBI (c) ECGC (d) Exim Bank (e) None of these

13. On PCFC refinance is available to the extent of % of outstanding PCFC.

(a) 15% (b) 50% (c) 25% (d) Nil** (e) None of these

14. Forfacilitiesgrantedupto30.6.2010ConcessionalinterestrateonPostshipmentcreditinrupeesis

permittedupto:

(a) 180 days** (b) 90 days (c) 270 days (d) 360 days (e) None of these

15. Which of the following is not correct regarding Liberalised Remittance Scheme?

(a) Amount can be remitted for capital aswell as current account transactions

(b) Maximumamount that can be remitted in a financial year is restricted toUSD200,000

(c) Remittance for gift and donationwill bewithinUSD200,000 permitted under LRS

(d) Bank can allowadvance to a resident individual formaking remittance under this scheme**

(e) None of these

16_ For outward remittance formedical expenses, estimate fromthe doctor or hospital is required if the

remittance is more than USD : (a) 1 lac (b) 5 lac (c) 10 Lac (d) none of these as it is required in all cases

17. What is themaximumamount of inwardremittance that can bedone by a resident individual?

(a) USD 1 Lac (b) USD 5 lac (c) USD 10 Lac (d) None as there is no limit

*

18. How much amount can be released for remittance abroad for education on declaration basis and withou estimate

from educational institution?

(a) USD 1 Lac** (b) USD 5 lac (c) USD 10 Lac (d) None as there is no limit

19.Which of the following is true?

(a) If a bank has oversold position, Bankwill gain if the rate of foreign currency rises.

(b) If a bank has oversold position, Bankwill gain if the rate of foreign currency declines**

(c) If a bank has oversold position, Bankwill lose if the rate of foreign currency declines

(d) If a bank has overbought position, Bankwill gain if the rate of foreign currency declines

(e) None of these

20. ADsmay allowadvance remittance for import of goodswithout any ceiling.However, if the amount of

advance remittance exceedsUSD50,00,000 or its equivalent it ismandatory to obtain-

(a) unconditional irrevocable stand byUC of an international bank of repute situated outside India

(b) guarantee froman international bank of repute situated outside India(c) guarantee of anADinIndia, if such guaranteeis issuedagainst counter guarantee of aninternational

bankof reputesituatedoutside India

(d) any one of the above (e) either (a) or (b) only***

21. BEF statement containingdetailsof remittance exceedingUSD1,00,000where evidence of import is

not furnishedwithin6months fromdateof remittance is submittedby ADs toRBIon:

(a) monthlybasisby 10thof thefollowingmonth

(b) quarterlybasisby 15thof themonthfollowing closeofquarter

(c) half yearly basis forMarch/ September by 15th of succeedingmonth

(d) half yearly basis as of June/ December by 15th of succeedingmonth **(e) none of these

22. Crystallisation of import bill under UCmeans:

(a) bill is scrutinisedwhether it is as perUC terms or not

(b) it is ensured that currency of IJC and insurance is the same or not

(c) converting bill amount into Indian rupees and deciding customer's liability on due date in case of usance**

bill and on 10th day from date of receipt in case of demand bills.

(d) none of the above as the concept is gonewith the termination of PSCFC

23. ApplicationformakingpaymenttowardsimportsintoIndiahastobemadetoauthoriseddealersby

importersin:(a) ENC (b) R-3 (c) Form A-1 *(d) Form A-4 (e) none of the above

24. Advance remittance for import of goods into India is to be allowed after obtaining guarantee froman

international bank of repute situated outside India or guarantee of an AD in India against counter-guarantee of an

international bank when amount of advance remittance exceeds:

(a) US $ 10,000 (b) US $ 25,000 (c) US $5,000 (d) US $ 15,000 (e) US $ 50,00,000***

25. How much advance remittance is allowed for import of services without guarantee of a reputed

international bank?

(a) USD 1 Lac (b) USD 5 lac **(c) USD 10 Lac (d) None as there is no limit

26. Which of the following types of Bill of Lading is not acceptable by a bank under LC?

(a) On Board (b) Clean (c) Charter Party** (d) AN of these (e) None of these

27. Interest Subvention is available on rupee export credit at the rate of 2% for loan up to Rs

but

interest rate after subvention should not be less than 7%.

(a) Rs 3 lac (b) Rs 5 lakh (c) Rs 10 lakh (d) Rs 100 lakh (e) None of these**

-28. Interest rate charged by RBI on export refinance to banks is at the rate of :

(a) Bank Rate (b) Repo Rate** (c) Reverse Repo Rate (d) Base Rate (e) None of these

29. Export Refinance is provided by RBI at the rate of __________ % of eligible outstanding export credit?

(a) 15% **(b) 25% (c) 50% (d) 100% (e) None of these

30. R Return is submitted to RBI onwhich of the following dates of themonth?

(a) 7th and 2151 (b) 15th & last day **(c) 10th, 20th and last day (d) None of these

31.Overdue import demand bills and usance bills are crystalised onwhich dates?

(a)10thday&duedate **(b)15thdayand30thday (c)30thdayand60thday(d)10thdayand60thday(e)Noneofthese

132. Which of the following is incorrect regarding export declaration forms?

(a) GR formis usedfor declaration of exports other than by postwhere customoffice not linked to EDI

(b) ExportDeclaration formis not required to be submitted for exports up toUSD25000.

(c) Softex formis used for declaration of export of software in physical or electronic form.**

(d) None of these (e) All of these

33.. Presently rate of interest on pre-shipment credit in forex (PCFC) up to 180 days is not exceeding:

(a) 200 basis points above LIBOR ***(b) 100 basis points above LIBOR

(c) 150 basis points above LIBOR (d) 50 points above LIBOR (e) 350 basis points below LIBOR

34. As per current guidelines of RBI, for loans sanctioned up to 30.6.2010, rate of interest on pre-shipment credit in rupees up to

270 days should not exceed :

(a) Bank Rate plus 2.5% (b) BPLR plus 1.5% (c) BPLR minus 2.5%**

(d) Bank Rate minus 2.5% (e) lower of (a) and (b)

35. As per the exchange control regulations, the payment for exports should in general be realized within a period of:

(a) 12 months from date of shipment** (b) 360 days from date of packing of goods

(c) 180 days from the date of shipment (d) 270 days from date of shipment

(e) 180 days from the date of receipt of consignment by the buyer in foreign country

36. Which of the following is/are not true with regard to features of Gold Card Scheme for exporters:

(a) Only exporters whose accounts have been 'Standard' continuously for 3 years are eligible

(b) Gold Card holderswill be given preference is granting packing credit in foreign currency (PCFC)

(c) Time normfor disposal of fresh applications for credit under the schemewill be 25 days

(d) Gold Card for exporters will be issued for a period of 5 years (e) none of these**

EXPORTFINANCE

Case- STUDY

An exporter approaches the popular bank for pre-shipment loanwith estimated sales ofRs.100 lakh. The bank

sanctions a limit ofRs.50 lakh,with followingmargins: Pre-shipment loan on FOB value—25%; ForeignDemandBill -

10%; Foreign usance bilis—20%.

The firmgets an order forUSD50,000 (CIF) toAustralia.On 1.1.2011when theUSD/INRratewasRs.43.50 perUSD,

the firmapproached theBank for releasing pre-shipment loan (PCL),which is released.

On 31.3.2011, the firmsubmitted export documents, drawn on sight basis forUSD45,000 as full and final shipment.

The bank purchased the documents atRs.43.85, adjusted thePCL outstanding and credited the balance amount to the

firm's account, after recovering interest forNormalTransit Period (NTP). The documents were realized on

30.4.2011 after deduction of foreign bank charges of USD 450. The bank adjusted the outstanding post

shipment advance. against the bill. Bank charged interest for pre-shipment loan@7%up to 90 days and,@8%

over 90 days up to 180 days. For Post shipment credit, theBank charged interest@7%for demand bills and@7.5%

for usance (D/A) documents up to 90 days and@8.50%thereafter and on all over dues, interest@10%.

01 What is the amount that the Bank can allow as PCL to the exporter against the given export order,

considering the profit margin of 10% and insurance and freight cost of 12%?

a) Rs.2200000 b) Rs.1650000 c) R6.1485000 d) Rs.1291950

02What is the amount of post shipment advance that can be allowed by the Bank under foreign bills

purchased, for the bill submitted by the exporter?

a) Rs.19,80,000 b) Rs.17,75,925 c) Rs.19,73,250 d) Rs.21,92,500

03 What will be the period for which the Bank charges concessional interest on DP bills, from date of

purchase of the bill?

a) 90 days b) 25 days c) 31 days d) Up to date of realization

04 in the above case, when should the bill be crystallized (latest date), if the bill remains unrealized for

over two months, from the date of purchase-(ignore holidays)?

a) On 30.4.2011 b) On 24.4.2011 c) On 24.5.2011 d) On 31.5.2011

05 What rate of interest will be applicable for charging interest on the export bill at the time of realization,

for the days beyond Normal Due Date (NDD)?

a) 8% b) 7% c) 7.5% d) 10%

Ans. 1-d 2-c 3-b 4-c 5-d Explanations:

1. FOB value =

CIF Value i.e. 50000x43.5 = 2175000

Deduct Insurance & freight 12% of 2175000 = 261000

Balance = 1914000

Deduct profit margin 10% of 1914000 =191400

Balance = 1722600

Less Margin 25% = 430650

PCL = 1291950

2. 45000 x43.85=1973250

3. Concessional• rate will be charged for normal transit period of 25 days and there after overdue

interest will be charged.

4. Crystallisation will be done when the bill becomes overdue after 25 days of normal transit period. Date of

overdue will be 25.4.2011. if bill remains overdue, it will be crystalised within 30 days i.e. up to 24.5.2011.

5. Rate of interest will be 10%as the overdue interest is stated as 10%in the question.

Export credit

EXPORT CREDIT::

   Export sector has been recognised as a thrust area considering its importance
and contribution of this sector to the economy. Therefore, the sector is being
presently extended finance at concessional rates, with flexibility in financing norms.

Export finance is by a large regulated through the directive / guidelines issued by
the Reserve Bank of India (RBI), Director General of Foreign Trade (DGFT) and
the Foreign Exchange Dealers’ Association of India (FEDAI). Export finance is

broadly classified into two categories
:
(i) Pre-shipment finance and
(ii) Post-shipment finance

Pre-shipment finance often referred to as ‘Export Packing Credit (EPC)’ is extended
as working capital for purchase of raw materials, processing, packing, transportation
and warehousing of goods meant for export. Both manufacturers as well as merchant
exporters are eligible to avail Rupee Packing Credit at concessional rate of interest.
Pre-shipment credit is available in foreign currency also. It has two essential features,
viz.,. existence of an export order and / or letter of credit and liquidation of the credit by
submission of export documents within a stipulated period. In case of exporters of
proven standing, the facility can also be extended on a running account basis
provided the conduct of the account is satisfactory and orders are lodged
subsequently within a reasonable time. Substitution of contracts / export orders are
also permitted in case of running accounts.
EPC can also be provided to units established in SEZ / EPZ/ AEPZ/ EOUs for
supply to units in the same or another SEZ / EPZ/ AEPZ/ EOU although
no movement of merchandise takes place across the borders of the country.

 There is no fixed formula for determining the quantum of finance to be granted to an
exporter against specific order / LCs. The guiding principle to the applied in all such
cases is a concept of need-based finance. The period for which the Bank gives
packing credit depends upon the manufacturing / trade cycle or specific requirements
of the individual export, normally not exceeding 180 days. The percentage of
margin is determined depending on the nature of order, commodity, capability of
exporter, etc. keeping in view the spirit behind RBI guidelines for liberal finance to
export sector.

 Since packing credit loans are concessional and purpose oriented, it will be
necessary to ensure proper end use of amounts disbursed to the exporters.

 Post- shipment finance can be extended upto 100% of the invoice value of goods. It
can be short term or long term finance depending upon the payment terms offered
by Indian exporters to overseas buyers. The maximum period usually allowed for realisation of export proceeds is 180 days from the date of shipment, with certain
exceptions. Post- shipment finance is also available both in rupees and specified
foreign currencies. Very often export business takes place without support of
documentary Letters of Credit and the Bank normally extends finance to the exporters
by purchasing the bills drawn by them of foreign buyers or granting advance against
bills sent on collection basis. While purchasing the bill, the Bank takes into
consideration the track record of the exporter, country risk, nature of merchandise,
terms of payment, payment record of the drawee, etc. Advances against Duty
Drawback receivable are also granted under Post-shipment Finance.

 RBI has been traditionally pursuing a policy to make available export credit at
reasonably low interest rate with a view to helping the exporters to be competitive
vis-a-vis their competitors. RBI have rationalised the interest rates on export
credit which are indicated by RBI, periodically, in their Monetary & Credit Policy as
ceiling rate in respect of all categories of export credit so that interest rates
charged by the banks can actually be lower than the prescribed rate. Such ceiling
rates will be linked to PLRs of respective banks as applicable to other domestic
borrowers.

 As far as deferred exports are concerned, RBI has allowed banks to charge
their normal term lending rate based on the credit rating of the borrower. In this
connection, deferred exports are those where the realisation period exceeds 180
days, with certain exceptions. All deferred exports are subject or regulatory
guidelines contained in Project Export Manual (PEM) published by RBI.

The Export Credit Guarantee Corporation of India Ltd. (ECGC) provides support to
both exporters and financing banks through export credit insurance. The related
guarantee / policies issue by ECGC cover individual Packing Credit Guarantee
(IPCGO) cover from ECGC for pre-shipment credits on a case-to-case by authorities
empowered by the Bank for the same. As regards post - shipment credit, Bank
may stipulate Individual post- shipment Guarantee (IPSG) on a case-to-case basis
depending on the risk perception.

ARTICLES OF UCPDC 600

ARTICLES OF UCPDC 600

Article-1 : UCPDC-boo apply to any LC when its text expressly indicates that it is subject to these rules. The rules are binding on all

parties thereto unless expressly modified or excluded by the credit.

Article-2: Definitions : Advising bank, Applicant, Banking day, Beneficiary, Complying presentation, Confirmation, Confirming

bank, Credit, Honour, Issuing bank, Negotiation, Nominated, Presentation, Presenter.

Article-3 Interpretations:

 A credit is irrevocable even if there is no indication to that effect.

 Branches of a bank in different countries are separate banks.

 The expression "on or about" will be interpreted as an event to occur during a period of 5 calendar days before until 5

calendar days after the specified date, both start and end dates included.

 The terms "first half" and "second hal' of a month shall be construed respectively as the 1st to the 15th and the 16th to the

last day of the month, all dates inclusive.

 The terms "beginning", "middle" and "end" of a month shall be construed respectively as the 1st to the loth, the nth to the

loth and the 21st to the last day of the month, all dates inclusive.

Article-4 Credits v. Contracts: A credit is a separate transaction from the sale. Banks are not concerned with or bound by such

contract, even if any reference is included in the LC.

ArticIe-5 Documents v. Goods: Banks deal with documents and not with goods, services or performance to which documents

relate.

Article-6 Availability, Expiry Date and Place for Presentation: A credit must state an expiry date for presentation. An expiry date

for negotiation is deemed expiry date for presentation which must be made on or before the expiry date.

Article-7 Issuing Bank Undertaking: If stipulated documents are presented to the nominated bank or to the issuing bank, the

issuing bank must honour.

Article-8 Confirming Bank Undertaking: The confirming bank must honour the credit. It must reimburse another nominated bank

that has negotiated a complying presentation and forwarded the documents to the confirming bank.

Article-9 Advising of Credits and Amendments: A credit and any amendment may be advised to a beneficiary through an

advising bank. An advising bank advises the credit and any amendment without any undertaking to negotiate. By advising the

credit, the advising bank signifies that it has satisfied itself as to the apparent authenticity of the credit and the advice accurately

reflects the terms and conditions of the credit or amendment received.

Article-io Amendment: A credit can neither be amended nor cancelled without the agreement of the issuing bank, the

confirming bank and the beneficiary. Partial acceptance is not allowed and will be deemed to be notification of rejection of the

amendment.

Article-it Tele transmitted and Pre-Advised LC and Amendments: An authenticated teletransmission will be deemed to be the

operative credit or amendment, and any subsequent mail confirmation shall be disregarded. If it states "full details to follow" the

tele-transmission will not be operative credit or amendment.

Article-12 Nomination: By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank

authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that

nominated bank.

Article-13 Bank-to-Bank Reimbursement Arrangements.: If a credit states that reimbursement is to be obtained by a nominated

bank, the credit must state if the reimbursement is subject to the ICC rules in effect on the date of issuance of the credit.

Article-14 Standard for Examination of Documents:

(a) A nominated bank and issuing bank shall each have a maximum of 5 banking days following the day of presentation to

determine if the documents are in order.

(b) A presentation must bemade by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment as

described in these rules, but in any event not later than the expiry date of

the credit.

(c) A document may be dated prior to the issuance date of the credit, but must not be dated later than its date of presentation.

Article-15 Complying Presentation: a. When an issuing bank or confirming bank determines that a presentation is complying, it

must honour or negotiate the documents.

Article-16 Discrepant Documents,Waiver and Notice:

a. When a nominated bank determines that a presentation does not comply, it may refuse to honour or negotiate.

b. When an issuing bank determines that a presentation does not comply, it may approach the applicant for a waiver of

discrepancies.

Article-17 Original Documents and Copies: a. At least one original of each document stipulated in the credit must be presented.

Article-18 Commercial Invoice: (a) A commercial invoice, must appear to have been issued by the beneficiary; made out in the

name of the applicant, made out in the same currency as the credit; and need not be signed. (b) The description of the goods,

service or performance in a commercial invoice must correspond with that appearing in the credit.

Article-19 Transport Document Covering at Least Two Different Modes of Transport: The date of issuance of the transport

document will be deemed to be the date of dispatch, taking in charge or shipped on board, and the date of shipment

A transport document indicating that trans-shipment will or may take place is acceptable, even if the credit prohibits transshipment.

Article-2o Bill of Lading: a. A bill of lading, must indicate that the goods have been shipped on board a named vessel at the port

of loading stated in the credit. The date of issuance of the bill of lading will be deemed to be the date of shipment.

Article-21 Non-Negotiable Sea Waybill: It must indicate that the goods have been shipped on board a named vessel at the port

of loading stated in the credit.

Article-22 Charter Party Bill of Lading: It must indicate that the goods have been shipped on board a named vessel at the port of

loading stated in the credit. The date of issuance of the charter party bill of lading will be deemed to be the date of shipment.

Ai-tide-23 Air Transport Document: It must appear to indicate that the goods have been accepted for carriage and indicate

the date of issuance. This date will be deemed to be the date of shipment.

Artiele-24 Road, Rail or Inland Waterway Transport Documents: These must indicate the date of shipment or the date the goods

have been received for shipment, dispatch or carriage at the place stated in the credit. The date of issuance of the transport

document will be deemed to be the date of shipment.

Article-25 Courier Receipt, Post Receipt of Certificate of Posting: A courier receipt evidencing receipt of goods for transport,

must indicate a date of pick-up or of receipt or wording to this effect. This date will be deemed to be the date of shipment.

Article-26 "On Deck", "Shipper's Load and Count", "Said by Shipper to Contain" and Charges Additional to Freight: A transport

document must not indicate that the goods are or will be loaded on deck. A clause on a transport document stating that the

goods may be loaded on deck is acceptable.

Article-27 Clean Transport Document: A clean transport document is one bearing no clause or notation expressly declaring a

defective condition of the goods or their packaging.

Article-28 Insurance Document and Coverage: An insurance document can be an insurance policy, an insurance certificate or a

declaration under an open cover. Cover notes will not be accepted

(b) The date of the insurance document must be no later than the date of shipment, unless it appears from the insurance

document that the cover is effective from a date not later than the date of shipment

(c) The insurance document must be in the same currency as the credit (d) If there is no indication in the LC of the insurance

coverage required, the amount of insurance coverage must be at least no% of the CIF or CIP value of the goods.

Article-29 Extension of Expiry Date or Last Day for Presentation: If the expiry date of a credit or the last day for presentation

falls on a day when the bank to which presentation is to be made is closed, the expiry date or the last day for presentation, as the

case may be, will be extended to the

first following banking day. In such case, a nominated bank must provide a statement on its covering schedule that the

presentation was made within the time limits extended in accordance with article 29. The latest date for shipment will not be

extended as a result of article 29.

Article-30 Tolerance in Credit Amount, Quantity and Unit Prices:

(a) The words "about" or "apprx" used in connection with the amount of LC or the quantity or the unit price stated in the LC are

to be construed as allowing a tolerance not to exceed 10% more or 10% less than the amount, the quantity or the unit price to

which they refer.

(b) A maximum tolerance of 5% more or 5% less than the quantity of the goods is allowed, where the credit does not state

quantity in terms of a stipulated no. of packing units or individual items and the total amount of the drawings does not exceed

the amount of LC.

(c) Even when partial shipments are not allowed, a tolerance not to exceed 5% less than the amount of the credit is allowed,

provided that the quantity of the goods, if stated in the credit, is shipped in full and a unit price, if stated in the credit, is not

reduced or that sub-article 30 (b) is not applicable.

Article-31 Partial Drawings or Shipments: Partial drawings or shipments are allowed.

Article-32 Instalment Drawings or Shipments: If a drawing or shipment by instalments within given periods is stipulated in the

credit and any instalment is not drawn or shipped within the period allowed for that instalment, the credit ceases to be available

for that and any subsequent instalment.

Article-33 Presentation Time: A bank has no obligation to accept a presentation outside of its banking hours.

Article-34 Disclaimer on Effectiveness of Documents: A bank assumes no liability or responsibility for the form, sufficiency,

accuracy, genuineness, falsification or legal effect of any document, or for the general or particular conditions stipulated in a

document or superimposed thereon; nor does it assume any liability or responsibility for the description, quantity, weight, quality,

condition, packing, delivery, value or existence of the goods, services or other performance represented by any document, or for

the goods faith or acts or omissions, solvency, performance or standing of the consignor, the carrier, the forwarder, the consignee

or the insurer of the goods or any other person.

Article-35 Disclaimer on Transmission and Translation: A bank assumes no liability or responsibility for the consequences arising

out of delay, loss in transit, mutilation or other errors arising in the transmission of any messages or delivery of letters or

documents, when such messages, letters or documents are transmitted or sent according to the requirements stated in the

credit, or when the bank may have taken the initiative in the choice of the delivery service in the absence of such instructions in

the credit.

Article-36 Force Majeure: A bank assumes no responsibility for consequences arising out of the interruption of its business by

Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, or by any strikes or lockouts or causes beyond its

control.

Article-37 Disclaimer for Acts of an Instructed Party: A bank utilizing the services of another bank for the purpose of giving effect

to the instructions of the applicant does so for the account and at the risk of the applicant.

Article 38- Transferable Credits: A transferable credit may be made available in whole or in part to 2nd beneficiary at the request

of the first beneficiary. It cannot be transferred at the request of a second beneficiary. The first beneficiary can substitute its own

invoice and draft for those of a second beneficiary for an amount not in excess of LC.

Article-39 Assignment of Proceeds: The beneficiary can assign any proceeds to which it may be or may become entitled under

the credit.

eUCP : Supplement to UCPDC for Electronic Presentation (Version IA)

eUCP has been created to take care of the demand of the market for the presentation of electronic documents or for a mixture of

paper documents and electronic presentation. It provides definitions permitting UCP 60o terminology and providing rules to

allow both sets of rules to work together.

Article el of eUCP narrates the scope of eUCP. eUCP also deals with relationship of eUCP and UCP 600 (e2), definitions (e3),

format (e4), presentation (e5), examination (e6), notice of refusal (e7), originals and copies (e8), date of issuance (e9), transport

(elo), corruption of electronic record after presentation (en) and additional disclaimer of liability for presentation of electronic

records under eUCP (e12).

INTERPRETATIONS USED IN UCPDC-600

 A credit is irrevocable even if there is no indication to that effect.

 On or about — Such expression will be interpreted as a stipulation that an event is to occur during a period of 5 calendar days

before until 5 calendar days after the specified date, both start and end dates included.

 The words `to', 'until', 'from' and 'between' when used to determine a period of shipment include the date mentioned and

the words 'before' and 'after' exclude the date mentioned.

 The words 'from' and 'after' when used to determine a maturity date exclude the datementioned.

 The terms 'first half and 'second half of a month shall be construed respectively as the 1st to the 15th and the 16th to the last

day of the month, all dates inclusive.

 The terms 'beginning', 'middle' and 'end' of a month shall be construed respectively as the ist to 10th, the 11th to the 20th and

the 21St to the last day of the month, all dates inclusive.

 Branches in different countries are considered to be separate banks.

 The date of issuance of the transport documents will be deemed to date of despatch, taking in charge or shipped on board

and the date of shipment. If the transport document indicates, by stamp or notation, a date of despatch taking in charge or

shipped on board, this date will be deemed to the date of shipment.

 Trans-shipmentmeans unloading from onemeans of conveyance and reloading to anothermeans of conveyance (whether or not in

different modes of transport) during the carriage, from the place of dispatch taking in charge or shipment to the place of final

destination stated in the credit.

 A clean transport documents is one bearing no clause of notation expressly declaring a defective condition of the goods or

their packaging.

 If there is no indication in the credit about insurance coverage, amount of insurance coverage must be at least 110% of CIF or

CIP value of the goods.