Base rate system under basel3 implementation

Base Rate System
Till the late 1980s, the interest rate structure in India was largely administered in nature
by RBI and was characterized by numerous rate prescriptions for different activities. On
account of the complexities under the administered rate structure, efforts were made
since 1990 by RBI to rationalize the interest rate structure so as to ensure price
discovery and transparency in the loan pricing system. The freeing up of lending rates of
scheduled commercial banks for credit limits of over Rs.2 lacs along with the
introduction of Prime Lending Rate (PLR) system in October1994 was a major step in this
direction aimed at ensuring competitive loan pricing. Initially, PLR acted as a floor rate
for credit above Rs. 2 lacs. To bring in transparency, RBI directed banks to declare maximum spread over PLR for all
advances other than consumer credit. Banks were allowed prescribing separate PLRs
and spreads over PLRs, both for loan and cash credit component. With regard to term
loans of 3 years and above, the banks were given the freedom to announce separate
Prime Term Lending Rates (PTLRs) in 1997.
In 2001, RBI relaxed the requirement of PLR being the floor rate for loans above Rs.2
lakhs and allowed Banks to offer loans at below PLR to exporters and other creditworthy
borrowers with objective policy approved by the Banks’ Boards in a transparent manner. Banks were allowed to charge fixed/floating rate on their lending for credit limit of over
Rs.2 lakh. However, there was large divergence among banks in their PLRs and spread
over PLRs. It failed to reflect the credit market conditions in the country. Therefore, Benchmark PLR system (BPLR) came into being and tenor-linked PLRs got discontinued
The system of BPLR introduced in 2003 was expected to serve as a benchmark rate for
banks’ pricing of their loan products so as to ensure that it truly reflected the actual cost.
In course of time, competition forced the Banks to price a significant portion of their loans
out of alignment with BPLRs and thereby undermining the role of BPLR as a reference rate. The worrying factor was that most of the banks started lending at Sub-BPLR rates ignoring
the risk sensitivity of the borrowers and also quoted ‘competition’ as the main reason for
going below the BPLR. Hence, RBI opined that the BPLR system had fallen short of its
original objective of bringing transparency to lending rates.
In April 2004, the then RBI Governor, Sri Y.V. Reddy had asked industry body IBA to come
up with a transparent calculation of the BPLR. In October 2005, RBI again stated that the
BPLR system might be reviewed as there is public perception that there is

under-pricing of credit for corporates, while there could be over-pricing of lending
to agriculture and SME (cross subsidization). Over time, sub-BPLR lending had become a rule rather than an exception as about two- thirds of bank lending took place at rates below the BPLR. Further Banks have been
reluctant to adjust their BPLRs in response to policy changes. Mainly, it lacked the
downward stickiness. To explain further, there was a general complaint from the
borrowers that lenders are quick to raise their BPLR when the regulator raises the
signaling rates (repo, reverse repo, CRR & SLR), but lag behind considerably when the
regulator drop these rates. The BPLR system has, therefore, become an inadequate tool
to evaluate monetary transmissions. To overcome the above hiccups, RBI set up a Working Group headed by its Executive
Director Shri Deepak Mohanty in the month of June 2009 to review the current system
of loan pricing by the Banks popularly known as BPLR and also to improve the
transmission of monetary signals to interest rates in the economy. The Group came out
with its report on 20
th October 2009. In April 2010, after a series of circulars, discussions and consultative process, the RBI announced its decision to implement the
base rate from 1 July 2010. Banks were not allowed to lend below this rate. Under this
new rule, banks were free to use any method to calculate their base rates (the RBI did
provide an 'illustrative' formula), provided the RBI found it consistent. Banks were also
directed to announce their base rates on their websites, in keeping with the objective
of making lending rates more transparent. Banking major, State Bank of India first announced its Base Rate on 29
th
June, 2010 by
fixing the same at 7.50% per annum. Soon, all other banks announced their base rates. Most public sector banks kept their rates at 8%. As per RBI norms, the following inputs
have to be factored while arriving at the Base Rate:

Cost of deposits/borrowings. 
Negative Carry on CRR & SLR – This arises as RBI is not paying any
interest on the portion of CRR kept with it. Also, the investments that Banks
make in Government Bonds having SLR status carries less rate of interest when
compared to the deposit rate at which Banks accept deposits from the public. 
Unallocable overhead cost such as maintaining administrative
office, Board expenses, and common advertisements about the Bank etc. 
Average Return on Networth (Profit element) as decided by the Bank’s Board

The cost of deposits has the highest weight in calculating the Base Rate. For arriving at
the Cost of deposits/funds in Base Rate working, Banks can choose any benchmark for a
specific tenor that may be disclosed transparently. For example, SBI took cost of its 6
month deposit into account while initially calculating its Base Rate. To the Base Rate, borrower-specific charges, product specific operating costs and premium on account of
credit risks and tenure would be added for arriving at the borrower specific lending rate. The Base Rate would set the floor for interest rates on all types of loans. There would be
exceptions as permitted by RBI (given below):
 Loans covered by schemes specially formulated by Government of India
wherein banks have to charge interest rate as per the scheme.  Working Capital Term Loan, Funded Interest Term Loan etc granted as part
of the rectification / restructuring package.  Loans granted under various refinance schemes formulated by
Government of India or any Government Undertakings wherein banks
charge interest at the rates prescribed under the schemes.  Advances to banks’ depositors against their own deposits.  Advances to banks’ own employees including retired employees.  Advances granted to the Chief Executive Officer / Whole Time Directors.  Loans linked to a market determined external benchmarks such as LIBOR, MIBOR etc. RBI had stipulated that the banks should declare their Base Rate and made it effective
from July, 1, 2010. However, all the existing loans, including home loans and other retail
loans, would continue to be at the current rate. Only the new loans taken on or after
July 1, 2010 would be linked to Base Rate. All the existing loans when they come for
renewal, borrowers are given a choice either to go with Base Rate or with BPLR.
In the first year of operation of Base Rate, RBI had permitted banks a window of six
months till December 2010 during which they can revisit the methodology. This
flexibility was subsequently extended by RBI upto June 2011. Banks were allowed to use
whatever benchmark they felt was best suited to arrive at the rate, provided, the Bank
used the same consistently. However, RBI had asserted that:
 The methodology needed to be transparent.  Banks are required to review the Base Rate at least once in a quarter with
the approval of the Board or the Asset Liability Management Committees
(ALCOs) as per the bank’s practice.

Once the methodology for arriving at the Base Rate has been finalized by the Banks, they cannot change the same for first five years. In case a Bank desires to review its
Base Rate methodology after five years from the date of its finalization, the Bank has to
approach RBI for permission in this regard. However, RBI has recently (January 19, 2016)
changed this norm. With a view to providing banks greater operational flexibility, RBI
has permitted bank to review the Base Rate methodology after three years from the
date of its finalization, instead the earlier periodicity of five years. Accordingly, Banks
can change their Base Rate methodology after completion of prescribed period with the
approval of their Board / ALCO. Again in the methodology, Banks were following different methods. RBI wanted to
streamline this procedure also. Hence, RBI took feedback from the Banks and other
stakeholders. Thereafter, it has come out with its fresh guidelines in this regard
(December 17, 2015). RBI has instructed all the Banks that for all the rupee loans
sanctioned and credit limits renewed w.e.f. April 1, 2016 would be priced with
reference to the Marginal Cost of Funds based Lending Rate (MCLR). Hence, from April, 2016, MCLR would act as Internal Benchmark for the lending rates. The component of
MCLR is almost same when compared to the previous instructions and the same is given
below:
 Marginal Cost of Funds.  Negative carry on account of CRR.  Operating Costs.  Tenor premium. Marginal Cost of funds = 92% x Marginal cost of borrowings + 8% x Return on networth
Negative Carry on CRR arises due to return on CRR balances being nil. This will be
calculated as Required CRR x (marginal cost) / (1- CRR). The marginal cost of funds, as
calculated above, will be used for arriving at negative carry on CRR. Operating Costs associated with providing the loan product including cost of raising
funds will be included under this head. It should be ensured that the costs of providing
those services which are separately recovered by way of service charges do not form
part of this component. Tenor premium arise from loan commitments with longer tenor. The change in tenor
premium should not be borrower specific or loan class specific. In other words, the
tenor premium will be uniform for all types of loans for a given residual tenor.


Since MCLR will be a tenor linked benchmark, banks shall arrive at the MCLR of a
particular maturity by adding the corresponding tenor premium to the sum of
Marginal cost of funds, Negative carry on account of CRR and Operating costs. Accordingly, RBI has permitted banks to publish the internal benchmark for the
following maturities:
1 Overnight MCLR. 1 One-month MCLR. 1 3 month MCLR. 1 6 month MCLR. 1 One year MCLR. 1 In addition to the above, Banks are given the option of publishing
MCLR of any other longer maturity. Further, RBI has advised the Banks that they should have Board approved policy
delineating the components of spread charged to a customer. Existing customers
are given the option to move to the MCLR linked loan at mutually acceptable terms.

Assets & Liability management

Assets & Liability management
Asset Liability Management (ALM) can be defined as a mechanism to address the
risk faced by a bank due to a mismatch between assets and liabilities either due to
liquidity or changes in interest rates. Liquidity is an institution’s ability to meet
its liabilities either by borrowing or converting assets. Apart from liquidity, a bank
may also have a mismatch due to changes in interest rates as banks typically tend to
borrow short term (fixed or floating) and lend long term (fixed or floating). A comprehensive ALM policy framework focuses on bank profitability and long-
term viability by targeting the net interest margin (NIM) ratio and Net Economic
Value (NEV), subject to balance sheet constraints. Significant among these
constraints are maintaining credit quality, meeting liquidity needs and obtaining
sufficient capital. An insightful view of ALM is that it simply combines portfolio management
techniques (that is, asset, liability and spread management) into a coordinated
process. Thus, the central theme of ALM is the coordinated – and not piecemeal – management of a bank’s entire balance sheet. Although ALM is not a relatively new planning tool, it has evolved from the simple
idea of maturity-matching of assets and liabilities across various time horizons into a
framework that includes sophisticated concepts such as duration matching, variable-
rate pricing, and the use of static and dynamic simulation. Measuring Risk
The function of ALM is not just protection from risk. The safety achieved through
ALM also opens up opportunities for enhancing net worth. Interest rate risk (IRR)
largely poses a problem to a bank’s net interest income and hence profitability. Changes in interest rates can significantly alter a bank’s net interest income (NII), depending on the extent of mismatch between the asset and liability interest rate
reset times. Changes in interest rates also affect the market value of a bank’s equity. Methods of managing IRR first require a bank to specify goals for either the book
value or the market value of NII. In the former case, the focus will be on the current
value of NII and in the latter, the focus will be on the market value of equity.
In either case, though, the bank has to measure the risk exposure and formulate
strategies to minimise or mitigate risk. The immediate focus of ALM is interest-rate risk and return as measured by a bank’s
net interest margin. NIM = (Interest income – Interest expense) / Earning assets
A bank’s NIM, in turn, is a function of the interest-rate sensitivity, volume, and mix
of its earning assets and liabilities. That is, NIM = f (Rate, Volume, Mix)
Sources of interest rate risk
The primary forms of interest rate risk include repricing risk, yield curve risk, basis
risk and optionality. Effects of interest rate risk
Changes in interest rates can have adverse effects both on a bank’s earnings and its
economic value. The earnings perspective:
From the earnings perspective, the focus of analyses is the impact of changes in
interest rates on accrual or reported earnings. Variation in earnings (NII)
is an important focal point for IRR analysis because reduced interest earnings will
threaten the financial performance of an institution

Economic value perspective:
Variation in market interest rates can also affect the economic value of a bank’s
assets, liabilities, and Off Balance Sheet (OBS) positions. Since the economic value
perspective considers the potential impact of interest rate changes on the present
value of all future cash flows, it provides a more comprehensive view of the potential
long-term effects of changes in interest rates than is offered by the earnings
perspective.
Interest rate sensitivity and GAP management
This model measures the direction and extent of asset-liability mismatch through
a funding or maturity GAP (or, simply, GAP). Assets and liabilities are grouped
in this method into time buckets according to maturity or the time until the
An insightful view of ALM is that it simply
combines portfolio management techniques
into a coordinated process. Sl. No. Type of GAP Change in Interest Rates
(∆r)
Change in Net Interest
Income (∆NII)
1 RSA = RSLs Increase No change
2 RSA = RSLs Decrease No change
3 RSAs ≥ RSLs Increase NII increases
4 RSAs ≥ RSLs Decrease NII decreases
5 RSAs ≤ RSLs Increase NII decreases
6 RSAs ≤ RSLs Decrease NII increases
first possible resetting of interest rates. For each time bucket the GAP equals the
difference between the interest rate sensitive assets (RSAs) and the interest rate
sensitive liabilities (RSLs). In symbols:
GAP = RSAs – RSLs
When interest rates change, the bank’s NII changes based on the following
interrelationships:
∆NII = (RSAs - RSLs) x ∆r
∆NII = GAP x ∆r
A zero GAP will be the best choice either if the bank is unable to speculate interest
rates accurately or if its capacity to absorb risk is close to zero. With a zero GAP, the
bank is fully protected against both increases and decreases in interest rates as its
NII will not change in both cases. As a tool for managing IRR, GAP management suffers from
three limitations: • Financial institutions in the normal course are incapable of out-predicting the
markets, hence maintain the zero GAP. • It assumes that banks can flexibly adjust assets and liabilities to attain the
desired GAP. • It focuses only on the current interest sensitivity of the assets and liabilities, and ignores the effect of interest rate movements on the value of bank assets
and liabilities. Cumulative GAP model
In this model, the sum of the periodic GAPs is equal to the cumulative GAP
measured by the maturity GAP model. While the periodic GAP model corrects
many of the deficiencies of the GAP model, it does not explicitly account for the
influence of multiple market rates on the interest income. Duration GAP model (DAGAP)
Duration is defined as the average life of a financial instrument. It also provides an

approximate measure of market value interest elasticity. Duration analysis begins
by computing the individual duration of each asset and liability and weighting the
individual durations by the percentage of the asset or liability in the balance sheet to
obtain the combined asset and liability duration. DURgap = DURassets – Kliabilities DURliabilities
Where, Kliabilities = Percentage of assets funded by liabilities
DGAP directly indicates the effect of interest rate changes on the net worth of the
institution. The funding GAP technique matches cash flows by structuring the
short-term maturity buckets. On the other hand, the DGAP hedges against IRR
by structuring the portfolios of assets and liabilities to change equally in value
whenever the interest rate changes. If DGAP is close to zero, the market value of the
bank’s equity will not change and, accordingly, become immunised to any changes
in interest rates. DGAP analysis improves upon the maturity and cumulative GAP models by taking
into account the timing and market value of cash flows rather than the horizon
maturity. It gives a single index measure of interest rate risk exposure. The application of duration analysis requires extensive data on the specific
characteristics and current market pricing schedules of financial instruments. However, for institutions which have a high proportion of assets and liabilities
with embedded options, sensitivity analysis conducted using duration as the sole
measure of price elasticity is likely to lead to erroneous results due to the existence
of convexity in such instruments. Apart from this, duration analysis makes an
assumption of parallel shifts in the yield curve, which is not always true. To take
care of this, a high degree of analytical approach to yield curve dynamics is required. However, immunisation through duration eliminates the possibility of unexpected
gains or losses when there is a parallel shift in the yield curve. In other words, it is a
hedging or risk-minimisation strategy; not a profit-maximisation strategy. Simulation analysis
Simulations serve to construct the risk-return profile of the banking portfolio. Scenario analysis addresses the issue of uncertainty associated with the future
direction of interest rates by allowing the analysis of isolated attributes with the
use of ‘what if’ simulations. However, it is debatable if simulation analysis, with its
attendant controls and ratification methods, can effectively capture the dynamics of
yield curve evolution and interest rate sensitivity of key financial variables. Managing Interest Rate Risk
Depending upon the risk propensity of an institution, risk can be controlled using
a variety of techniques that can be classified into direct and synthetic methods. The
direct method of restructuring the balance sheet relies on changing the contractual
characteristics of assets and liabilities to achieve a particular duration or maturity
GAP. On the other hand, the synthetic method relies on the use of instruments
such as interest rate swaps, futures, options and customised agreements to alter the
balance sheet risk exposure. Since direct restructuring may not always be possible,
the availability of synthetic methods adds a certain degree of flexibility to the asset-
liability GAP management process. In addition, the process of securitisation and
financial engineering can also be used to create assets with wide investor appeal in
order to adjust asset-liability GAPs. Using interest rate swaps to hedge interest rate risk
Interest rate swaps (IRS) represent a contractual agreement between a financial
institution and a counterparty to exchange cash flows at periodic intervals, based
on a notional amount. The purpose of an interest rate swap is to hedge interest rate
risk. By arranging for another party to assume its interest payments, a bank can
put in place such a hedge. Financial institutions can use such swaps to synthetically
convert floating rate liabilities to fixed rate liabilities. The arbitrage potential

associated with different comparative financing advantages (spreads) enables both
parties to benefit through lower borrowing costs.
In case of a falling interest rate scenario, prepayment will increase with an attendant
shortening of the asset’s average life. The financial institution may have to continue
exchanging swap cash flows for a period longer than the average life of the asset. In
order to protect such situations, options on swaps or ‘swaptions’ may be used. Call
options on swaps allow the financial institution to call the swap, while put options
on swaps allow the institution to activate or put the swap after a specific period. Using financial futures to hedge interest rate risk
A futures contract is an agreement between a buyer and seller to exchange a fixed
quantity of a financial asset at an agreed price on a specified date. Interest rate
futures (IRF) can be used to control the risk associated with the asset/liability GAP
either at the macro-level or at the micro-level. A macro-hedge is used to protect
the entire balance sheet, whereas a micro-hedge is applied to individual assets or
transactions. A buyer, holding a long position, would purchase a futures contract
when interest rates are expected to fall. The seller of a futures contract, on the other
hand, would take a short position in anticipation of rising rates. The protection
provided by financial futures is symmetric in that losses (or gains) in the value of
the cash position are offset by gains (or losses) in the value of the futures position. Forward contracts are also available to hedge against exchange rate risk. Futures contracts are not without their own risks. Among the most important is
basis risk, especially prevalent in cross hedging. Financial institutions must also pay
close attention to the hedging ratio, and managements must be careful to follow
regulatory and accounting rules governing the use of futures contracts. Using options to hedge interest rate risk
Options can be used to create a myriad risk-return profiles using two essential
ingredients: calls and puts. Call option strategies are profitable in bullish interest
rate scenarios. With respect to the ALM process, options can be used for reducing
risk and enhancing yield. Put options can be used to provide insurance against price
declines, with limited risk if the opposite occurs. Similarly, call options can be used
to enhance profits if the market rallies, with the maximum loss restricted to the
upfront premium. Customised interest rate agreements
‘Customised interest rate agreements’ is the general term used to classify
instruments such as interest rate caps and floors. In return for the protection against
rising liability costs, the cap buyer pays a premium to the cap seller. The pay-off
profile of the cap buyer is asymmetric in nature, in that if interest rates do not
rise, the maximum loss is restricted to the cap premium. Since the cap buyer gains
when interest rates rise, the purchase of a cap is comparable to buying a strip of
put options. Similarly, in return for the protection against falling asset returns, the
floor buyer pays a premium to the seller of the floor. The pay-off profile of the floor
buyer is also asymmetric in nature since the maximum loss is restricted to the floor
premium. As interest rates fall, the pay-off to the buyer of the floor increases in
proportion to the fall in rates. In this respect, the purchase of a floor is comparable
to the purchase of a strip of call options. By buying an interest rate cap and selling an interest rate floor to offset the cap
premium, financial institutions can also limit the cost of liabilities to a band of
interest rate constraints. This strategy, known as an interest rate ‘collar,’ has the
effect of capping liability costs in rising rate scenarios. The role of securitisation in ALM
By using securitisation, financial institutions can create securities suitable for resale
in capital markets from assets which otherwise would have been held to maturity.
In addition to providing an alternative route for asset/liability restructuring, securitisation may also be viewed as a form of direct financing in which savers are
directly lending to borrowers. Securitisation also provides the additional advantage

of cleansing the balance sheet of complex and highly illiquid assets as long as the
transformations required to enhance marketability are available on a cost-effective
basis. Securitisation transfers risks such as interest rate risk, credit risk (unless the
loans are securitised with full or partial recourse to the originator) and pre-payment
risk to the ultimate investors of the securitised assets. Besides increasing the liquidity and diversification of the loans portfolio, securitisation allows a financial institution to recapture some part of the profits of
lending and permits reduction in the cost of intermediation. Conclusion
As the landscape of the financial services industry becomes increasingly competitive, with rising costs of intermediation due to higher capital requirements and deposit
insurance, financial institutions face a loss of spread income. In order to enhance the
loss in profitability due to such developments, financial institutions may be forced
to deliberately mismatch asset/liability maturities in order to generate
higher spreads. ALM is a systematic approach that attempts to provide a degree of protection to
the risk arising out of the asset/liability mismatch. ALM consists of a framework
to define, measure, monitor, modify and manage liquidity and interest rate risk. It
is not always possible for financial institutions to restructure the asset and liability
mix directly to manage asset/liability GAPs. Hence, off-balance sheet strategies
such as interest rate swaps, options, futures, caps, floors, forward rate agreements, swaptions, and so on, can be used to create synthetic hedges to manage asset/
liability GAPs.

Numericals for Risk management

Volatility with time horizon & Bond Value
Ex.1
If daily volatility of a Security is 2%, how much will be monthly volatility?
Solution
Monthly volatility = Daily Volatility * ∫30 = 2*∫30 = 2*5.477 = 10.95% Ans
Ex.2
If per annum volatility is 30% and nos. of trading days per annum be 250, how much will be
daily volatility?
Solution
Annual Volatility = Daily Volatility * ∫250 = Daily Volatility * 15.81
30 = Daily Volatility *15.81
Daily volatility = 30/15.81 = 1.90% Ans. Ex.3
If 1 day VaR of a portfolio is Rs. 50000/- with 97% confidence level. In a period of 1 year of
300 trading days, how many times the loss on the portfolio may exceed Rs. 50000/-. Solution
97% confidence level means loss may exceed the given level (50000)on 3 days out of
100.
If out of 100 days loss exceeds the given level on days =3
Then out of 300 days, loss exceeds the given level = 3/100*300 =9 days. Ans. Ex.4
A 5 year 5% Bond has a BPV of Rs. 50/-, how much the bond will gain or lose due to
increase in the yield of bond by 2 bps
Solution
Increase in yield will affect the bond adversely and the bond will lose. Since BPV of the bond is Rs. 50/-. Increase in yield by 2 bps will result into loss of value
of Bond by 50*2=100. Ex.5
1 day VaR of a portfolio is Rs. 50000/- with 90% confidence level. In a period of 1 year (250
days) how many times the loss on the portfolio may exceed Rs.50000/- Ans. 90% confidence level means on 10 days out of 100, the loss will be more than Rs. 50000/-. Out of 250 days, loss will be more than 50000/- on 25 days Ans. It means, out of 250
days, loss will not exceed on 225 days.

Off-balance sheet items

Off-balance sheet items
Off-balance sheet items have been bifurcated as follows:
(iii) Non-market related off-balance sheet items
(iv) Market related off-balance sheet items
There is two-step process for the purpose of calculating risk weighted assets in respect of
off-balance sheet items:
BI. The notional amount of the transaction is converted into a credit equivalent factor by
multiplying the amount by the specified Credit Conversion Factor (CCF)
The resulting credit equivalent amount is then multiplied by the risk weight
applicable to the counter party or to the purpose for which the bank has extended
finance or the type of asset whichever is higher. Where the off-balance sheet item is secured by eligible collateral or guarantee, the credit
risk mitigation guidelines will be applied. Non-market related off-balance sheet items:
Off balance sheet items like direct credit substitutes, trade and performance related
contingent items and commitments with certain draw downs are classified under Non- market related off-balance sheet items. The credit equivalent amount is determined by
multiplying the contracted amount of that particular transaction by the relevant CCF. Non-market related off-balance sheet items also include undrawn or partially
undrawn fund based and non-fund based facilities, which are not unconditionally
cancellable. The amount of undrawn commitment is to be included in calculating the off balance sheet items. Non-market related exposure is the maximum unused portion of the
commitment that could be drawn during the remaining period of maturity. In case of term
loan with respect to large project to be drawn in stages, undrawn portion shall be calculated
with respect of the running stage only. RBI guidelines on CCF (Credit Conversion Factor)
Direct Credit Substitutes CCF
General Guarantees (including Standby LCs), 100%
Acceptances
Transaction related contingent items (Performance 50%
bonds, Bid bonds, Warranties, Indemnities, Standby
LC relating to particular transaction
Short Term LC (Documentary) for Issuing bank as well 20%
as confirming bank

Risk weight on NPAs

Risk Weight on NPAs

a) Risk weight on NPAs net of specific provision will be calculated as under:
When provision is less than 20% of NPA o/s ---- 150%
When provision is at least 20% of NPA o/s ---- 100%
When provision is at least 50% of NPA o/s ---- 50%
Category Provision Rate Criteria Risk Weight
Substandard 15% Provision is less 150%
(Secured) than 20%
Substandard 25% Provision is at-least 100%
(Unsecured) 20%
Doubtful (DI) 25% Provision is at-least 100%
(Secured) 20%
Doubtful (DI) 100% Provision is at-least 50%
(Un-Secured) 50%
Doubtful (D2) 40% Provision is at-least 100%
(Secured) 20%
Doubtful (D3) 100% Provision is at-least 50%
(Secured) 50%
Doubtful (D2) 100% Provision is at-least 50%
(Un-Secured) 50%

Risk Management and Control

Risk Management and Control
Market risk is controlled by implementing the business policies and setting of market risk
limits or controlling through economic measures with the objective of attaining higher
RAROC. Risk is managed by the following:
1. Limits and Triggers
2. Risk Monitoring
3. Models of Analyses. Calculation of Capital Charge of Market Risk
The Basel Committee has two approaches for calculation of Capital Charge on Market
Risk as under:
1. Standardized approach
2. Internal Risk Management approach

Under Standardized approach, there are two methods: Maturity method and duration
method. RBI has decided to adopt Standardization duration method to arrive at capital
charge on the basis of investment rating as under:
Investment rating Capital Required
AAA to AA 0%
A+ to BBB
Residual term to maturity
Up to 6 M .28%
Up to 24M 1.14%
More than 24 M 1.80%
Unrated 9.00%
Rated BB and Below 13.5%
How to Calculate RWAs, if Capital Charge is given:
RWAs for Market Risk = Capital Charge (If required CAR is 9%)
.09%
Other Risks and Other Risks like Liquidity Risks, Interest Rate Risk, Strategic Risk, Capital Reputational Risks and Systemic Risks are not taken care of while
Requirement calculating Capital Adequacy in banks.

Pillar – II SRP has two issues:
Supervisory 1. To ensure that bank is having adequate capital. Review Process 2. To encourage banks to use better techniques to mitigate risks. (SRP) SRP concentrates on 3 main areas:  Risks not fully captured under Pillar -1 i.e. Interest Rate Risks, Credit concentration Risks, Liquidity Risk, Settlement Risks,  Reputational Risks and Strategic Risks. Risks not at all taken care of in Pillar -1.  External Factors. This pillar ensures that the banks have adequate capital. This process
also ensures that the bank managements develop Internal risk capital
assessment process and set capital targets commensurate with bank‘s
risk profile and capital environment. Central Bank also ensures through
supervisory measures that each bank maintains required CRAR and
components of capital i.e. Tier –I & Tier –II are in accordance with
BASEL-II norms. RBIA and other internal inspection processes are the
important tools of bank‘s supervisory techniques. Every Bank will prepare ICAAP (Internal Capital Adequacy Assessment
Plan) on solo basis which will comprise of functions of measuring and
identifying Risks, Maintaining appropriate level of Capital and
Developing suitable Risk mitigation techniques. Pillar – III Market discipline is complete disclosure and transparency in the
Market balance sheet and all the financial statements of the bank. The
Discipline disclosure is required in respect of the following:  Capital structure.  Components of Tier –I and Tier –II Capital  Bank‘s approach to assess capital adequacy
 Assessment of Credit Risks, Market Risk and Operational Risk.  Credit Aspects like Asset Classification, Net NPA ratios, Movement of NPAs and Provisioning. Frequency of Disclosure
 Banks with Capital funds of Rs. 100 crore or more will make
interim Disclosures on Quantitative aspects on standalone basis
 on their respective websites. Larger banks with Capital Funds of Rs. 500 crore or more will
disclose Tier-I capital , Total Capital, CAR on Quarterly basis on
website.

Market Risk measurement

Market Risk measurement
Measurement of Market Risk is based on:
Sensitivity
Downside potential

Sensitivity Measurement
Change in market rate of interest has inverse relation with Value of Bonds. Higher interest
rates lower the value of bond whereas decline in interest rate would result into higher bond
value. Also More liquidity in the market results into enhanced demand of securities and it
will lead to higher price of market instrument. There are two methods of assessment of
Market risk: 1. Basis Point Value 2. Duration method

1. Basis Point Value

This is change in value of security due to 1 basis point change in Market Yield. Higher the
BPV higher will be the risk. Example
Face Value of Bond = 100/- Bond maturity = 5 years
Coupon Rate = 6%
Market price of Rs. 92/- gives yield of 8%
With fall in yield from 8% to 7.95%, market price rises to Rs. 92.10
Difference in Market price = 0.10
Difference Yield = 0.05%
BPV = Diff in Market price/Difference in Yield
BPV = 0.10/0.05 = 2 paisa per Rs. 100 i.e. 2 basis points per Rs. 100/-
If Face value of the Bond is 1.00 crore, BPV of the bond is Rs. 2000/- Now, if the yield on Bond declines by 8 bps, then it will result into profit of Rs. 16000/-
(8x2000). BPV declines as maturity reaches. It will become zero on the date of maturity.


$ Duration Approach
Duration is the time that a bond holder must wait till nos. of years (Duration)to receive
Present Value of the bond. e.g. 5 year bond with Face Value of Rs. 100 @ 6% having McCauley Duration 3.7 years. It
means Total Cash Flow of Rs. 130 to be received in 5 years would be discounted with
Present Value which will be equivalent as amount received in 3.7 years. The Duration of
the Bond is 3.7 Years. Formula of Calculation of McCauley Duration = ∑PV*T
∑PV
Modified Duration = Duration
1+Yield
Approximate % change in price = Modified Duration X Change in Yield
Example
A bond with remaining maturity of 5 years is presently yielding 6%. Its modified duration is
5 years. What will be the McCauley Duration. Modified Duration = Duration/ 1+YTM
Duration = Modified Duration x (1+YTM)
5 x 1.06 = 5.30 Ans. $ Downside Potential
It captures only possible losses ignoring profit potentials. It integrates sensitivity and
volatility with adverse affect of Uncertainty. This is most reliable measure of Risk for Banks as well as Regulators. VaR is the method
to calculate downside potential. Value at Risk (VaR)
It means how much can we expect to lose? What is the potential loss?
Let VaR =x. It means we can lose up to maximum of x value over the next period say week
(time horizon). Confidence level of 99% is taken into consideration. Example
A bank having 1 day VaR of Rs. 10 crore with 99% confidence level. It means that there is
only one chance in 100 that daily loss will be more than 10 crore under normal conditions. VaR in days in 1 year based on 250 working days = 1 x 250 == 2.5 days per year. 100
Back Testing
It is a process where model based VaR is compared with Actual performance. It tells us
whether results fall within pre-specified confidence bonds as predicted by VaR models. Stress Testing
It seeks to determine possible change in Market Value of portfolio that could arise due to
non-normal movement in one or more market parameters (such as interest rate, liquidity,

inflation, Exchange rate and Stock price etc.). Four test are applied:
$ Simple sensitivity test;
If Risk factor is exchange rate, shocks may be exchange rate ±2%, 4%,6% etc. $ Scenario test
It is leading stress testing technique. The scenario analysis specifies the shocks if
possible events occur. It assesses potential consequences for a firm of an extreme.
It is based on historical event or hypothetical event. $ Maximum loss
The approach assesses the risks of portfolio by identifying most potential
combination of moves of market risks
$ Extreme value theory
The theory is based on behavior of tails (i.e. very high and very low potential
values) of probable distributions.

Basis point value

Basis point value
This is change in value of security due to 1 basis point change in Market Yield. Higher the
BPV higher will be the risk. Example
Face Value of Bond = 100/- Bond maturity = 5 years
Coupon Rate = 6%
Market price of Rs. 92/- gives yield of 8%
With fall in yield from 8% to 7.95%, market price rises to Rs. 92.10
Difference in Market price = 0.10
Difference Yield = 0.05%
BPV = Diff in Market price/Difference in Yield
BPV = 0.10/0.05 = 2 paisa per Rs. 100 i.e. 2 basis points per Rs. 100/-
If Face value of the Bond is 1.00 crore, BPV of the bond is Rs. 2000/- Now, if the yield on Bond declines by 8 bps, then it will result into profit of Rs. 16000/-
(8x2000). BPV declines as maturity reaches. It will become zero on the date of maturity.

Principles for Sound Liquidity Risk Management:

 Principles for Sound Liquidity Risk Management:

After the global financial crisis, in recognition of the need for banks to improve their liquidity risk
management, the Basel Committee on Banking Supervision (BCBS) published “Principles for Sound
Liquidity Risk Management and Supervision” in September 2008. The broad principles for sound liquidity
risk management by banks as envisaged by BCBS are as under:
Fundamental principle for the management and supervision of liquidity risk
Principle 1 A bank is responsible for the sound management of liquidity risk. A bank should
establish a robust liquidity risk management framework that ensures it maintains
sufficient liquidity, including a cushion of unencumbered, high quality liquid assets, to
withstand a range of stress events, including those involving the loss or impairment of
both unsecured and secured funding sources. Supervisors should assess the
adequacy of both a bank’s liquidity risk management framework and its liquidity
position and should take prompt action if a bank is deficient in either area in order to
protect depositors and to limit potential damage to the financial system. Governance of liquidity risk management
Principle 2 A bank should clearly articulate a liquidity risk tolerance that is appropriate for its
business strategy and its role in the financial system. Principle 3 Senior management should develop a strategy, policies and practices to manage
liquidity risk in accordance with the risk tolerance and to ensure that the bank
maintains sufficient liquidity. Senior management should continuously review
information on the bank’s liquidity developments and report to the board of directors
on a regular basis. A bank’s board of directors should review and approve the
strategy, policies and practices related to the management of liquidity at least annually
and ensure that senior management manages liquidity risk effectively. Principle 4 A bank should incorporate liquidity costs, benefits and risks in the internal pricing, performance measurement and new product approval process for all significant
business activities (both on- and off-balance sheet), thereby aligning the risk-taking
incentives of individual business lines with the liquidity risk exposures their activities
create for the bank as a whole. Measurement and management of liquidity risk
Principle 5 A bank should have a sound process for identifying, measuring, monitoring and
controlling liquidity risk. This process should include a robust framework for
comprehensively projecting cash flows arising from assets, liabilities and off-balance
sheet items over an appropriate set of time horizons. Principle 6 A bank should actively monitor and control liquidity risk exposures and funding needs
within and across legal entities, business lines and currencies, taking into account
legal, regulatory and operational limitations to the transferability of liquidity. Principle 7 A bank should establish a funding strategy that provides effective diversification in the
sources and tenor of funding. It should maintain an ongoing presence in its chosen
funding markets and strong relationships with funds providers to promote effective
diversification of funding sources. A bank should regularly gauge its capacity to raise
funds quickly from each source. It should identify the main factors that affect its ability
to raise funds and monitor those factors closely to ensure that estimates of fund
raising capacity remain valid. Principle 8 A bank should actively manage its intraday liquidity positions and risks to meet
payment and settlement obligations on a timely basis under both normal and stressed
conditions and thus contribute to the smooth functioning of payment and settlement
systems. Principle 9 A bank should actively manage its collateral positions, differentiating between
encumbered and unencumbered assets. A bank should monitor the legal entity and
physical location where collateral is held and how it may be mobilised in a timely
manner. Principle 10 A bank should conduct stress tests on a regular basis for a variety of short-term and
protracted institution-specific and market-wide stress scenarios (individually and in
combination) to identify sources of potential liquidity strain and to ensure that current
exposures remain in accordance with a bank’s established liquidity risk tolerance. A
bank should use stress test outcomes to adjust its liquidity risk management

strategies, policies, and positions and to develop effective contingency plans. Principle 11 A bank should have a formal contingency funding plan (CFP) that clearly sets out the
strategies for addressing liquidity shortfalls in emergency situations. A CFP should
outline policies to manage a range of stress environments, establish clear lines of
responsibility, include clear invocation and escalation procedures and be regularly
tested and updated to ensure that it is operationally robust. Principle 12 A bank should maintain a cushion of unencumbered, high quality liquid assets to be
held as insurance against a range of liquidity stress scenarios, including those that
involve the loss or impairment of unsecured and typically available secured funding
sources. There should be no legal, regulatory or operational impediment to using
these assets to obtain funding. Public disclosure
Principle 13 A bank should publicly disclose information on a regular basis that enables market
participants to make an informed judgment about the soundness of its liquidity risk
management framework and liquidity position. Thus, a sound liquidity risk management system would envisage that:
i) A bank should establish a robust liquidity risk management framework.
ii) The Board of Directors (BoD) of a bank should be responsible for sound management of liquidity risk
and should clearly articulate a liquidity risk tolerance appropriate for its business strategy and its role in
the financial system.
iii) The BoD should develop strategy, policies and practices to manage liquidity risk in accordance with
the risk tolerance and ensure that the bank maintains sufficient liquidity. The BoD should review the
strategy, policies and practices at least annually.
iv) Top management/ALCO should continuously review information on bank’s liquidity developments and
report to the BoD on a regular basis. v) A bank should have a sound process for identifying, measuring, monitoring and controlling liquidity risk,
including a robust framework for comprehensively projecting cash flows arising from assets, liabilities and
off-balance sheet items over an appropriate time horizon. vi) A bank’s liquidity management process should be sufficient to meet its funding needs and cover both
expected and unexpected deviations from normal operations. vii) A bank should incorporate liquidity costs, benefits and risks in internal pricing, performance
measurement and new product approval process for all significant business activities. viii) A bank should actively monitor and manage liquidity risk exposure and funding needs within and
across legal entities, business lines and currencies, taking into account legal, regulatory and operational
limitations to transferability of liquidity.
ix) A bank should establish a funding strategy that provides effective diversification in the source and
tenor of funding, and maintain ongoing presence in its chosen funding markets and counterparties, and
address inhibiting factors in this regard. x) Senior management should ensure that market access is being actively managed, monitored, and
tested by the appropriate staff. xi) A bank should identify alternate sources of funding that strengthen its capacity to withstand a variety of
severe bank specific and market-wide liquidity shocks. xii) A bank should actively manage its intra-day liquidity positions and risks. xiii) A bank should actively manage its collateral positions. xiv) A bank should conduct stress tests on a regular basis for short-term and protracted institution-specific
and market-wide stress scenarios and use stress test outcomes to adjust its liquidity risk management
strategies, policies and position and develop effective contingency plans. xv) Senior management of banks should monitor for potential liquidity stress events by using early
warning indicators and event triggers. Early warning signals may include, but are not limited to, negative
publicity concerning an asset class owned by the bank, increased potential for deterioration in the bank’s
financial condition, widening debt or credit default swap spreads, and increased concerns over the
funding of off- balance sheet items. xvi) To mitigate the potential for reputation contagion, a bank should have a system of effective
communication with counterparties, credit rating agencies, and other stakeholders when liquidity
problems arise. xvii) A bank should have a formal contingency funding plan (CFP) that clearly sets out the strategies for
addressing liquidity shortfalls in emergency situations. A CFP should delineate policies to manage a
range of stress environments, establish clear lines of responsibility, and articulate clear implementation
and escalation procedures. xviii) A bank should maintain a cushion of unencumbered, high quality liquid assets to be held as
insurance against a range of liquidity stress scenarios. xix) A bank should publicly disclose its liquidity information on a regular basis that enables market
participants to make an informed judgment about the soundness of its liquidity risk management
framework and liquidity position. 5. Governance of Liquidity Risk Management:
The Reserve Bank had issued guidelines on Asset Liability Management (ALM) system, covering inter
alia liquidity risk management system, in February 1999 and October 2007. Successful implementation of
any risk management process has to emanate from the top management in the bank with the
demonstration of its strong commitment to integrate basic operations and strategic decision making with
risk management. Ideally, the organisational set up for liquidity risk management should be as under:
A. The Board of Directors (BoD):
The BoD should have the overall responsibility for management of liquidity risk. The Board should decide
the strategy, policies and procedures of the bank to manage liquidity risk in accordance with the liquidity
risk tolerance/limits as detailed in paragraph 14. The risk tolerance should be clearly understood at all
levels of management. The Board should also ensure that it understands the nature of the liquidity risk of
the bank including liquidity risk profile of all branches, subsidiaries and associates (both domestic and
overseas), periodically reviews information necessary to maintain this understanding, establishes
executive-level lines of authority and responsibility for managing the bank’s liquidity risk, enforces
management’s duties to identify, measure, monitor, and manage liquidity risk and formulates/reviews the
contingent funding plan. B. The Risk Management Committee:
The Risk Management Committee, which reports to the Board, consisting of Chief Executive Officer
(CEO)/Chairman and Managing Director (CMD) and heads of credit, market and operational risk
management committee should be responsible for evaluating the overall risks faced by the bank including
liquidity risk. The potential interaction of liquidity risk with other risks should also be included in the risks
addressed by the risk management committee. C. The Asset-Liability Management Committee (ALCO):
The Asset-Liability Management Committee (ALCO) consisting of the bank’s top management should be
responsible for ensuring adherence to the risk tolerance/limits set by the Board as well as implementing
the liquidity risk management strategy of the bank in line with bank’s decided risk management objectives
and risk tolerance. D. The Asset Liability Management (ALM) Support Group:
The ALM Support Group consisting of operating staff should be responsible for analysing, monitoring and
reporting the liquidity risk profile to the ALCO. The group should also prepare forecasts (simulations)
showing the effect of various possible changes in market conditions on the bank’s liquidity position and
recommend action needed to be taken to maintain the liquidity position/adhere to bank’s internal limits. 6. Liquidity Risk Management Policy, Strategies and Practices:
The first step towards liquidity management is to put in place an effective liquidity risk management policy, which inter alia, should spell out the liquidity risk tolerance, funding strategies, prudential limits, system for
measuring, assessing and reporting / reviewing liquidity, framework for stress testing, liquidity planning
under alternative scenarios/formal contingent funding plan, nature and frequency of management
reporting, periodical review of assumptions used in liquidity projection, etc. The policy should also
address liquidity separately for individual currencies, legal entities like subsidiaries, joint ventures and
associates, and business lines, when appropriate and material, and should place limits on transfer of
liquidity keeping in view the regulatory, legal and operational constraints. The BoD or its delegated committee of board members should oversee the establishment and approval of
policies, strategies and procedures to manage liquidity risk, and review them at least annually. 6.1 Liquidity Risk Tolerance:

Banks should have an explicit liquidity risk tolerance set by the Board of Directors. The risk tolerance
should define the level of liquidity risk that the bank is willing to assume, and should reflect the bank’s
financial condition and funding capacity. The tolerance should ensure that the bank manages its liquidity
in normal times in such a way that it is able to withstand a prolonged period of, both institution specific
and market wide stress events. The risk tolerance articulation by a bank should be explicit, comprehensive and appropriate as per its complexity, business mix, liquidity risk profile and systemic
significance. They may also be subject to sensitivity analysis. The risk tolerance could be specified by
way of fixing the tolerance levels for various maturities under flow approach depending upon the bank’s
liquidity risk profile as also for various ratios under stock approach. Risk tolerance may also be expressed
in terms of minimum survival horizons (without Central Bank or Government intervention) under a range
of severe but plausible stress scenarios, chosen to reflect the particular vulnerabilities of the bank. The
key assumptions may be subject to a periodic review by the Board. 6.2 Strategy for Managing Liquidity Risk:
The strategy for managing liquidity risk should be appropriate for the nature, scale and complexity of a
bank’s activities. In formulating the strategy, banks/banking groups should take into consideration its legal
structures, key business lines, the breadth and diversity of markets, products, jurisdictions in which they
operate and home and host country regulatory requirements, etc. Strategies should identify primary
sources of funding for meeting daily operating cash outflows, as well as expected and unexpected cash
flow fluctuations. 7. Management of Liquidity Risk:
A bank should have a sound process for identifying, measuring, monitoring and mitigating liquidity risk as
enumerated below:
8.1 Identification:
A bank should define and identify the liquidity risk to which it is exposed for each major on and off- balance sheet position, including the effect of embedded options and other contingent exposures that
may affect the bank’s sources and uses of funds and for all currencies in which a bank is active. 8.2 Measurement of Liquidity Risk:
There are two simple ways of measuring liquidity; one is the stock approach and the other, flow approach. The stock approach is the first step in evaluating liquidity. Under this method, certain ratios, like liquid
assets to short term total liabilities, purchased funds to total assets, core deposits to total assets, loan to
deposit ratio, etc. are calculated and compared to the benchmarks that a bank has set for itself. While the
stock approach helps up in looking at liquidity from one angle, it does not reveal the intrinsic liquidity
profile of a bank. The flow approach, on the other hand, forecasts liquidity at different points of time. It looks at the liquidity
requirements of today, tomorrow, the day thereafter, in the next seven to 14 days and so on. The maturity
ladder, thus, constructed helps in tracking the cash flow mismatches over a series of specified time
periods. The liquidity controls, apart from being fixed maturity-bucket wise, should also encompass
maximum cumulative mismatches across the various time bands. 8. Ratios in respect of Liquidity Risk Management:
Certain critical ratios in respect of liquidity risk management and their significance for banks are given
below. Banks may monitor these ratios by putting in place an internally defined limit approved by the
Board for these ratios. The industry averages for these ratios are given for information of banks. They
may fix their own limits, based on their liquidity risk management capabilities, experience and profile. The
stock ratios are meant for monitoring the liquidity risk at the solo bank level. Banks may also apply these
ratios for monitoring liquidity risk in major currencies, viz. US Dollar, Pound Sterling, Euro and Japanese
Yen at the solo bank level.

No. Average
(in %)
1. (Volatile liabilities – Temporary Assets)
/(Earning Assets – Temporary Assets)
Measures the extent to which volatile money supports
bank’s basic earning assets. Since the numerator
represents short-term, interest sensitive funds, a high
and positive number implies some risk of illiquidity. 40
2. Core deposits/Total Assets Measures the extent to which assets are funded
through stable deposit base. 50
3. (Loans + mandatory SLR +
mandatory CRR + Fixed
Assets)/Total Assets
Loans including mandatory cash reserves and
statutory liquidity investments are least liquid and
hence a high ratio signifies the degree of ‘illiquidity’ embedded in the balance sheet. 80
4. (Loans + mandatory SLR +
mandatory CRR + Fixed
Assets) / Core Deposits
Measure the extent to which illiquid assets are
financed out of core deposits. 150
5. Temporary Assets/Total
Assets
Measures the extent of available liquid assets. A
higher ratio could impinge on the asset utilisation of
banking system in terms of opportunity cost of holding
liquidity. 40
6. Temporary Assets/ Volatile
Liabilities
Measures the cover of liquid investments relative to
volatile liabilities. A ratio of less than 1 indicates the
possibility of a liquidity problem. 60
7. Volatile Liabilities/Total
Assets
Measures the extent to which volatile liabilities fund the
balance sheet. 60
Volatile Liabilities: (Deposits + borrowings and bills payable up to 1 year). Letters of credit – full
outstanding. Component-wise CCF of other contingent credit and commitments. Swap funds (buy/ sell)
up to one year. Current deposits (CA) and Savings deposits (SA) i.e. (CASA) deposits reported by the
banks as payable within one year (as reported in structural liquidity statement) are included under volatile
liabilities. Borrowings include from RBI, call, other institutions and refinance. Temporary assets =Cash + Excess CRR balances with RBI + Balances with banks + Bills
purchased/discounted up to 1 year + Investments up to one year + Swap funds (sell/ buy) up to one year. Earning Assets = Total assets – (Fixed assets + Balances in current accounts with other banks + Other
assets excluding leasing + Intangible assets)
Core deposits = All deposits (including CASA) above 1 year (as reported in structural liquidity
statement)+ net worth
The above stock ratios are only illustrative and banks could also use other measures / ratios. For
example to identify unstable liabilities and liquid asset coverage ratios banks may include ratios of
wholesale funding to total liabilities, potentially volatile retail (e.g. high cost or out of market) deposits to
total deposits, and other liability dependency measures, such as short term borrowings

Gist of Important FEDAI Rules

Gist of Important FEDAI Rules
Rule 1: Hours of Business
1.1 The exchange trading hours for Inter-bank forex market in India would be from
9.00 a.m. to 5.00 p.m. No customer transaction should be undertaken by the
Authorised Dealers after 4.30 p.m. on any working day. 1.2 Cut-off time limit of 05.00 p.m. is not applicable for cross- currency transactions.
In terms of paragraph 7.1 of Internal Control Guidelines over Foreign Exchange
Business of Reserve Bank of India (February 2011), Authorised Dealers are
permitted to undertake cross-currency transactions during extended hours, provided
the Managements lay down the extended dealing hours. 1.3 For the purpose of Foreign Exchange business, Saturday will not be treated as
a working day. 1.4 “Known holiday” is one which is known at least 4 working days before the date. A holiday that is not a “known holiday” is defined as a “suddenly declared holiday”. Rule 2: Export Transactions
2.1. Post-shipment Credit in Rupees
(c) Application of exchange rate: Foreign Currency bills will be
purchased/discounted/ negotiated at the Authorised Dealer’s current bill buying rate
or contracted rate. Interest for the normal transit period and/or usance period shall
be recovered upfront simultaneously. (d) Crystallization and Recovery:
(ii) Authorized Dealers should formulate own policy for crystallization of foreign
currency liability into rupee liability, in case of non-payment of bills on the due
date. (iii) The policy in this regard should be transparently available to the customers. (iv) For crystallization into Rupee liability, the Authorised Dealer shall apply its TT
selling rate of exchange. The amount recoverable, thereafter, shall be the
crystallized Rupee amount along with interest and charges, if any.

(v) Interest shall be recovered on the date of crystallization for the overdue period
at the appropriate rate; and thereafter till the date of recovery of the
crystallized amount. (vi) Export bills payable in countries with externalization issues shall also be
crystallized as per the policy of the authorised dealer, notwithstanding receipt
of advice of payment in local currency. (d) Realization of Bills after crystallization: After receipt of advice of realization,
the authorised dealer will apply TT buying rate or contracted rate (if any) to convert
foreign currency proceeds. (e) Dishonor of bills: In case of dishonor of a bill before crystallization, the bank
shall recover:
(ii) Rupee equivalent amount of the bill and foreign currency charges at TT selling rate. (iii) Appropriate interest and rupee denominated charges. 2.2. Application of Interest
(c) Rate of interest applicable to all export transactions shall be as per the
guidelines of Reserve Bank of India from time to time. (d) Overdue interest shall be recovered from the customer, if payment is not
received within normal transit period in case of demand bills and on/or before
notional due date/actual due date in case of usance bills, as per RBI directive. (e) Early Realization: In case of early realization, interest for the unexpired period
shall be refunded to the customer. The bank shall also pay or recover notional swap
cost as in the case of early delivery under a forward contract. 2.3. Normal Transit Period:
Concepts of normal transit period and notional due date are linked to concessional
interest rate on export bills. Normal transit period comprises the average period
normally reckoned from the date of negotiation/purchase/discount till the receipt of
bill proceeds.
It is not to be confused with the time taken for the arrival of the goods at the destination. Normal transit period for different categories of export business are laid down as below:
(c) Fixed Due Date: In the case of export usance bills, where due dates are fixed, or are reckoned from date of shipment or date of bill of exchange etc, the actual due
date is known. Therefore, in such cases, normal transit period is not applicable. (d) Bills in Foreign Currencies – 25 days
(e) Exports to Iraq under United Nations Guidelines – Max. 120 days
(g) Bills drawn in Rupees under Letters of Credit (L/C)
(i) Reimbursement provided at centre of negotiation - 3 days
(ii) Reimbursement provided in India at centre different from centre of
negotiation - 7 days
(iii) Reimbursement provided by banks outside India - 20 days
(iv) Exports to Russia under L/C where reimbursement is provided by RBI - 20 days. (h) Bills in Rupees not under Letter of Credit - 20 days
(i) TT reimbursement under Letters of Credit (L/C)
(i) Where L/C provides for reimbursement by electronic means - 5 days
(ii) Where L/C provides reimbursement claim after certain number of days
from the date of negotiation - 5 days + this additional period. 2.4. Substitution/Change in Tenor:
(o) In case of change in the usance of a bill, interest on post-shipment credit shall
be charged to the customer, as per RBI guidelines. In addition, the bank shall
charge or pay notional swap difference. Interest on outlay of funds for such
swaps shall also be recovered from the customer at rate not below base rate
of the bank concerned. (p) It is optional for banks to accept delivery of bills under a contract made for
purchase of a clean TT. In such cases, the bank shall recover/pay notional
swap difference for the relative cover. Interest at the rate not below base rate
of the bank would be charged on the outlay of funds. 2.5. Export Bills sent for collection:
(a) Application of exchange rates: The conversion of foreign currency proceeds of
export bills sent for collection or of goods sent on consignment basis shall be
done at prevailing TT buying rate or the forward contract rate, as the case
may be. The conversion to Rupee equivalent shall be made only after the
foreign currency amount is credited to the nostro account of the bank. (b) On receipt of credit advice/statement of nostro account and compliances of
guidelines, requirements of the Bank and FEMA, the Bank shall transfer funds
for the credit of exporter’s account within two working days. (c) If the above stipulated time limit is not observed, the Bank shall pay
compensation for the delayed period at the minimum interest rate charged on
export credit. Compensation for adverse movement of exchange rate, if any, shall also be paid as per the compensation policy of the bank.

Rule 3: Import Transactions
3.1 Application of exchange rate:
(a) Retirement of import bills - Exchange rate as per forward sale contract, if
forward contract is in place. Prevailing Bills selling rate, in case there is no
forward contract. (b) Crystallization of Import - same as above bill (vide para 3.3 below)
(c) For determination of stamp - As per exchange rate provided by the duty on
import bills authority concerned. 3.2. Application of Interest:
(a) Bills negotiated under import letters of credit shall carry commercial rate of
interest as applicable to banks’ domestic advances from time to time. (b) Interest remittable on interest bearing bills shall be subject to the directive of
Reserve Bank of India in this regard. 3.3. Crystallization of Import Bill under Letters of Credit. Unpaid foreign currency import bills drawn under letters of credit shall be
crystallized as per the stated policy of the bank in this respect. Rule 4 Clean Instruments:
4.1. Outward Remittance: Outward remittance shall be effected at TT selling rate of
the bank ruling on that date or at the forward contract rate. 4.2. Encashment of foreign currency notes and instruments, Foreign currency
travelers’ cheques, currency notes, foreign currency in prepaid card, debit/credit
card will be encashed at Authorised Dealer’s option at the appropriate buying rate
ruling on the date of encashment. 4. 3. Payment of foreign inward remittance, Foreign currency remittance up to an
equivalent of USD 10,000/- shall be immediately converted into Indian Rupees. Remittance in excess of equivalent of USD 10,000 shall be executed in foreign
currency. The beneficiary has the option of presenting the related instrument for
payment to the executing bank within the period prescribed under FEMA. 4.4. The applicable exchange rate for conversion of the foreign currency inward
remittance shall be TT buying rate or the contracted rate as the case may be. 4.5. Compensation for delayed payment: Authorised Dealers shall pay or send
intimation, as the case may be, to the beneficiary in two working days from the date
of receipt of credit advice / nostro statement. In case of delay, the bank shall pay
the beneficiary interest @ 2 % over its savings bank interest rate. The bank shall
also pay compensation for adverse movement of exchange rate, if any, as per its
compensation policy

Rule 5 Foreign Exchange Contracts:
5.1. Contract amounts: Exchange contracts shall be for definite amounts and
periods. When a bill contract mentions more than one rate for bills of different
deliveries, the contract must state the amount and delivery against each such rate. 5.2. Option period of delivery: Unless the date of delivery is fixed and indicated in
the contract, the option period may be specified at the discretion of the customer
subject to the condition that such option period of delivery shall not extend beyond
one month. If the fixed date of delivery or the last date of delivery option is a known
holiday, the last date for delivery shall be the preceding working day. In case of
suddenly declared holidays, the contract shall be deliverable on the next working
day. Contracts permitting option of delivery must state the first and last dates of
delivery. For Example: 18th January to 17th February, 31st January to 29th Feb. 2012. “Ready” or “Cash” merchant contract shall be deliverable on the same day. “Value next day” contract shall be deliverable on the working day immediately
succeeding the contract date. A spot contract shall be deliverable on second
succeeding working day following the contract date. A forward contract is a contract
deliverable at a future date, duration of the contract being computed from spot value
date at the time of transaction”. 5. 3. Place of delivery: All contracts shall be understood to read “to be delivered or
paid for at the Bank” and “at the named place”. 5.4. Date of delivery: Date of delivery under forward contracts shall be:
(i) In case of bills/documents negotiated, purchased or discounted - the date of
negotiation/purchase/ discount and payment of Rupees to the customer. However, in case the documents are submitted earlier than, or later than the
original delivery date, or for a different usance, the bank may treat it as proper
delivery, provided there is no change in the expected date of realization of
foreign currency calculated at the time of booking of the contract. No early
realization or late delivery charges shall be recovered in such cases. (ii) In case of export bills/documents sent for collection - Date of payment of
Rupees to the customer on realization of the bills. (iii) In case of retirement/crystallization of import bills/documents - the date of
retirement/ crystallization of liability, whichever is earlier?
5.5. Option of delivery: In all forward merchant contracts, the merchant, whether a
buyer or a seller will have the option of delivery. 5.6. Option of usance: The merchant purchase contract should state the tenor of
the bills/documents. Acceptance of delivery of bills/documents drawn for a different
tenor will be at the discretion of the bank

5.7. Merchant quotations: The exchange rate shall be quoted in direct terms i.e. so many Rupees and Paise for 1 unit or 100 units of foreign currency. 5.8. Rounding off: Rupee equivalent of the foreign currency Settlement of all
merchant transactions shall be effected on the principle of rounding off the Rupee
amounts to the nearest whole Rupee i.e. without paise. RULE 6 Early Delivery, Extension and Cancellation of Foreign Exchange
Contracts
6.1. General
(i) At the request of a customer, unless stated to the contrary in the provisions of
FEMA, 1999, it is optional for a bank to: (a). Accept or give early delivery; or
(b). Extend the contract. (ii) It is the responsibility of a customer to effect delivery or request the bank for
extension / cancellation as the case may be, on or before the maturity date of
the contract. 6.2. Early delivery: If a bank accepts or gives early delivery, the bank shall
recover/pay swap difference, if any. 6.3. Extension: Foreign exchange contracts where extension is sought by the
customers shall be cancelled (at an appropriate selling or buying rate as on the date
of cancellation) and rebooked simultaneously only at the current rate of exchange. The difference between the contracted rate, and the rate at which the contract is
cancelled, shall be recovered from/paid to the customer at the time of extension. Such request for extension shall be made on or before the maturity date of the
contract. 6.4. Cancellation
(i) In case of cancellation of a contract at the request of a customer, (the request
shall be made on or before the maturity date) the Authorised Dealer shall
recover/ pay, as the case may be, the difference between the contracted rate
and the rate at which the cancellation is effected. The recovery/payment of
exchange difference on cancellation of forward contracts before the maturity
date may be either upfront or back-ended at the discretion of banks. (ii) Rate at which cancellation is to be effected:
(a) Purchase contracts shall be cancelled at T.T. selling rate of the
contracting Authorised Dealer
(b) Sale contracts shall be cancelled at T.T. buying rate of the contracting
Authorised Dealer

(c) Where the contract is cancelled before maturity, the appropriate forward
T.T. rate shall be applied. (bi) Notwithstanding the fact that the exchange contract between the customer
and the bank becomes impossible of performance, for whatever reason,
including Government prohibitory orders, the exchange contract shall not be
deemed to have become void and the customer shall forthwith apply to the
Authorised Dealer for cancellation, as per the provisions of paragraph 6.4.(i)
and (ii) above. (iv)
(d) In the absence of any instructions from the customer, vide para 6.1(ii), a
contract which has matured shall be cancelled by the bank on the 7th working
day after the maturity date. (e) Swap cost, if any, shall be recovered from the customer under advice to him. © When a contract is cancelled after the maturity date, the customer shall not be entitled
to the exchange difference, if any, in his favour, since the contract is cancelled on
account of his default. He shall, however, be liable to pay the exchange difference
against him. 6.5. Swap cost/gain:
(ii) In all cases of early delivery of a contract, swap cost shall be recovered from
the customer, irrespective of whether an actual swap is made or not. Such
recoveries should be made either back-ended or upfront at discretion of the
bank. (iii) Payment of swap gain to a customer shall be made at the end of the swap period. 6.6. Outlay and Inflow of funds:
Authorised Dealer shall recover interest on outlay of funds for the purpose of
arranging the swap, in addition to the swap cost in case of early delivery of a
contract.
If such a swap leads to inflow of funds, interest shall be paid to the customer. Funds
outlay / inflow shall be arrived at by taking the difference between the original
contract rate and the rate at which the swap could be arranged. The rate of interest
to be recovered / paid should be determined by banks as per their policy in this
regard.

Loans to NRIs

Loans to NRIs NRI can avail the following loans:
1. Rupee Loans in India
- Up to up to any limit subject to prescribed margin. - For personal purpose, contribution to Capital in Indian
Companies or for acquisition of property. - Repayment of loan will be either from inward remittances or
from local resources through NRO accounts. 2. Foreign Currency Loans in India
- Against security of funds in FCNR-B deposits. - Maturity of loan should not exceed due date of deposits. - Repayment from Fresh remittances or from maturity proceeds of
deposits. 3. Loans to 3
rd Parties provided
- There is no direct or indirect consideration for NRE depositor
agreeing to pledge his FD. - Margin, rate of Interest and Purpose of loan shall be as per RBI
guidelines. - The loan will be utilized for personal purpose or business
purpose and not for re-lending or carrying out
Agriculture/Plantation/Real estate activities. - Loan documents will be executed personally by the depositor
and Power of attorney is not allowed. 4. Housing Loans to NRIs : HL can be sanctioned to NRIs subject to
following conditions: - Quantum of loan, Margin and period of Repayment shall be
same as applicable to Indian resident. - The loan shall not be credited to NRE/FCNR account of the
customer. - EM of IP is must and lien on assets. - Repayment from remittance abroad or by debit to NRE/FCNR
account or from rental income derived from property.

FCNR-B accounts

FCNR- B FCNRB accounts can also be opened by NRIs. The conditions of NRE
accounts deposits as explained above are also applicable on FCNR-B deposits with
the following additional features:  Only FD 1-5 years tenure can be opened.  The amount is kept in Foreign Currency and repaid in the Foreign
Currency.  6 currencies i.e. GBP, USD, Euro, JPY, CAD. AUD are eligible
currencies for opening the account.  No exchange risk for the customer. The bank bears the risk.  Interest on the basis of 360 days in a year  Half yearly intervals of 180 days
 Interest exemptions from I.T.  Operating by P/A not permitted.  The amount of Principle and Interest is freely repatriable
 Interest Rate on 1-3 years FD is LIBOR + 200 bps and that of 3-5
years FD is LIBOR + 400 bps.(Previously, it was LIBOR + 300 bps)

Depository Receipts like ADR, GDR

ADRs –American Depository Receipts

American Depository Receipts are Receipts or Certificates issued by US

Bank representing specified number of shares of non-US Companies. Defined as under:

These are issued in capital market of USA alone. These represent securities of companies of other countries.

These securities are traded in US market. The US Bank is depository in this case. ADR is the evidence of ownership of the underlying shares. Unsponsored ADRs

It is the arrangement initiated by US brokers. US Depository banks create

such ADRs. The depository has to Register ADRs with SEC (Security

Exchange Commission). Sponsored ADRs

Issuing Company initiates the process. It promotes the company‟s ADRs in

the USA. It chooses single Depository bank. Registration with SEC is not

compulsory. However, unregistered ADRs are not listed in US exchanges. GDRs – Global Depository Receipts

Global Depository Receipt is a Dollar denominated instrument with

following features:

1. Traded in Stock exchanges of Europe. 2. Represents shares of other countries. 3. Depository bank in Europe acquires these shares and issues

“Receipts” to investors. 4. GDRs do-not carry voting rights. 5. Dividend is paid in local currency and there is no exchange risk for

the issuing company. 6. Issuing Co. collects proceeds in foreign currency which can be used

locally for meeting Foreign exchange requirements of Import. 7. GDRS are normally listed on “Luxembourg Exchange “ and traded

in OTC market London and private placement in USA. 8. It can be converted in underlying shares.

IDRs – Indian Deposits Receipts

Indian Depository Receipts are traded in local exchanges and represent

security of Overseas Companies. CDF (Currency Declaration Form)

CDF is required to be submitted by the person on his arrival to India at the

Airport to the custom Authorities in the following cases:

1. If aggregate of Foreign Exchange including foreign currency/TCs

exceeds USD 10000 or its equivalent. 2. If aggregate value of currency notes (cash portion) exceeds USD

5000 or its equivalent. Form A1 and

Form A2

Form A1 is meant for remittance abroad to settle imports obligations. It is

not required if value of imports is up to USD 5000. Form A2 is meant for remittance abroad on account of any purpose other

than Imports. It is not required if remittance is up to USD 25000. LIBOR Rate London Interbank Offering rate is the rate fixed at 11 am (London time) at

which top 16 banks in London offer to lend funds in interbank markets.

LIBERALISED REMITTANCE SCHEME (LRS) FOR RESIDENT INDIVIDUALS

LIBERALISED REMITTANCE SCHEME (LRS) FOR RESIDENT INDIVIDUALS
RBI introduced LRS on Feb 04, 2004. Major changes were made by RBI in LRS w.e.f. 01.06.2015 (based
on Govt. notification 15.05.15). Eligibility: All resident individuals including minors and non-individuals are eligible. Remittances under the facility can be consolidated in respect of family members
subject to individual family
members complying with the terms and conditions.
It is mandatory to have PAN number to make remittances. Forex can be purchased from authorised person which indude AD Category-1 Banks, AD Category-2 and
Full Fledged Money Changers. Capital Accounts transactions Remittances up to USD 250,000 per financial year
can be allowed for
permissible capital account transactions as under: I) opening of foreign currency
account abroad; ii)
purchase of property abroad;
ill) making investments abroad;
iv) setting up Wholly owned subsidiaries and Joint Ventures abroad;
v) loans including in Indian Rupees to Non-resident Indians relatives as defined in
Companies Act, 2013. Current account transactions • : All facilities (Including private/business visits) for
remittances have been
subsumed under overall limit of USD 250,000/FY.

Facilities for Individuals
1. Individuals can avail of forex facility for the following purposes within the limit of USD
250000. Additional
remittance shall require prior approval of RBI. 1. Private visits to a country (except Nepal & Bhutan)
2. Gift or donation. 3. Going abroad for employment or immigration. 4. Maintenance of close relatives abroad
5. Travel for business, or attending a conference or specialized training or for meeting
medical expenses, or
check-up abroad, or for accompanying as attendant to a patient going abroad for
medical treatment/ check-up. 7. Expenses for medical treatment abroad
B. Studies abroad
9. Any other current account transaction
Exception : For immigration,medical treatment and studies abroad, the individualmay
avail of exchange facility in
excess of LRS limit if required by a country of emigration,medical institute offering
treatment or the university, respectively. Facilities for persons other than individual The following remittances shall require RBI
approval:
(i) Donations beyond 1%of forex earnings in previous 3 FY or USD 5000000, whichever is less, for:
a) creation of Chairs in reputed educational institutes, b) contribution to funds (not being an investment fund) promoted by educational
institutes; and
c) technical institution/body/ association in the field of activity of the donor Company. (ii) Commission, per transaction, to agents abroad for sale of residential flats or
commercial plots in India exceeding
USD 25,000 or 5%of inward remittance whichever ismore. (iii) Remittances exceeding USD 10000000 per project for any consultancy services for
infrastructure projects and
USD 1,000,000 per project, for other consultancy services procured fromoutside India. (iv) Remittances exceeding 5%of investment brought into India or USD 100,000
whichever is higher, by an entity in
India by way of reimbursement of pre-incorporation expenses. Mode of remittance: The Scheme can be used for outward remittance in the formof 'a
DD either in the resident
individual's own name or in the name of beneficiary with whomhe intends putting
through the permissible transactions
at the time of private visit abroad, can be effected, against self declaration of the
remitter in the format prescribed. Loan facility : Banks should not extend any kind of credit facilities to resident
individuals to facilitate remittances under
the Scheme. Remittances not available under the scheme:

i. Remittance for any purpose specifically prohibited under Schedule-I (like purchase of
lottery/sweep stakes,
tickets, prescribedmagazines etc.) or itemrestricted under Schedule II of FEMA
(Current A/c Transactions) Rules, 2000.
ii. Remittancesmade to Bhutan,Nepal,Mauritius or Pakistan.
iii. Remittancesmade to countries identified by the Financial Action Task Force (FATF)
as "non co-operative
countries and territories" as available on FATF website (viz Cook Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria, Philippines and Ukraine) or as notified by RBI.
iv. Remittances to individuals and entities identified as posing significant risk of
committing acts of terrorismas advised
separately by RBI to the banks. Reporting of the transactions: The remittancesmade will be reported in the R-Return
in the normal course. The
ADsmay also prepare and keep on record dummy FormA2, in respect of remittances
exceeding USD 5000. With effect from01.07.13, the banks are required to upload the data inOnline Return
Filing System(OAFS) on a
monthly basis, by 5th of the followingmonth to which it relates.Where there is no
information, 'nil' figure is to be
uploaded. Rules related to release / remittance of foreign exchange to residents
ADbanks can release forex to residents in India as per Rules framed u/s Sec 5 of
FEMA. Forex cannot be released for
Schedule I transactions. For Schedule II transactions,Govt. permission is required. For
Schedule III transactions, forex
can be released up to specified limit byADbanks. Beyond that limit, approval of RBI is
required. Ceilings on release of amount by ADs without RBI approval are given above, under
LRS. Nepal & Bhutan - Forex for any kind of travel to or for any transactionwith persons
resident inNepal andBhutan cannot
be released. Any amount of Indian currency can be used.Highest denomination of
currency note can beRs.100. Up to Rs.25000, any denomination is allowed. Form of foreign currency: 1. Coins, currency notes and traveller's cheques. Currency
notes/coins can be up to US$
3000. The balance can be traveller's cheque or banker's draft. 2. For Iraq and Libya currency notes and coins can be obtained up toUS$ 5000 or its
equivalent. 3. For Iran, Russian Federation, and other Republics of Commonwealth of Independent
Countries, no ceiling. Mode of purchase: In cash up toRs.50,000/-.Above this, payment byway of a crossed
cheque/banker's cheque/pay
order/demand draft / debit card / credit card only.

Surrender of unused forex: Currency notes and travellers' cheques within 180 days of
return. Retention of unused forex : US$2,000 or its equivalent. There is no restriction on
residents for holding foreign
currency coins. Use of International Credit Card (ICC): Use of the ICCs / ATMs/ Debit Cards can be
made for personal
payments and for travel abroad for various purposes, only up to specified limits. Export / Import of Indian currency by Residents or non-residents : Up to Rs. 25000
each to or from
any country other than Nepal or Bhutan (Pakistan & Bangladesh Rs.10000).
Import of Foreign exchange from abroad: Any amount subject to declaration on CDF. Mandatory CDF : Where total amount exceeds US$ 10,000 (or its equivalent) and/or
value of foreign
currency notes exceeds US$ 5,000, declaration should be made to the Customs
Authorities through
Currency Declaration Form (CDF), on arrival in India. Application for purchase of FC : Form A2. It is not required up to $ 25000. A2 to be
preserved by banks for one
year for verification by Auditors. endorsement on Passport : It is not mandatory for
Authorised Dealers to
endorse the amount of foreign exchange sold for travel abroad on the passport of the
traveller. However, if
requested by the traveller, AD may record under its stamp, date and signature, details
of foreign exchange sold
for travel

IMPORTANT DAYS

Date Day Theme
11th July World Population Day 'Family Planning is a Human Right'.

1 st July ‘GST Day’

7 th July International Day of Cooperatives ‘Sustainable societies through cooperation’

21st June 4th International Yoga Day "Yoga for Peace".
International Widows' Day is a global awareness day that takes place annually on 23rd June.
26th June International Day against Drug Abuse &
Illicit Trafficking.
"Listen First - Listening to children & youth is the
first step to help them grow healthy & safe."

29th June National Statistics Day ‘Quality Assurance in Official Statistics’
20th June World Refugee Day ‘Now More Than Ever, We Need to Stand with
Refugees’
14th June World Blood Donors Day ‘Be there for someone else. Give blood. Share life’.
12th June World Day Against Child Labour -
8
th June World Ocean Day
5
th June World Environment Day "Beat Plastic Pollution"
RBI chosen customer protection as a theme for Financial Literacy Week which was conducted between 4th & 8th June.
3
rd June World Bicycle Day 1
st official World Bicycle Day was celebrated
31st May World No Tobacco Day "Tobacco & heart disease."
29th May International Day of UN-Peacekeepers ‘UN Peacekeepers: 70 Years of Service & Sacrifice’.
21st May Anti Terrorism Day -
17th May World Telecommunication & Information
Society Day
"Enabling the positive use of Artificial Intelligence
for All".
15th May International Day of Families ‘Families & inclusive societies’
12th May International Nurses Day “Nurses A Voice to Lead – Health is a Human
right” for IND 2018.
11th May National Technology Day “Science & Technology for a Sustainable Future”.
8
th May World Red Cross Day “Memorable smiles from around the world”
3
rd May World Press Freedom Day ‘Keeping Power in Check: Media, Justice & The
Rule of Law’
1
st May International Labour Day “Uniting Workers for Social & Economic
Advancement”
26th April World Intellectual Property Day 'Powering change: Women in innovation &
creativity'
25th April World Malaria Day ‘Ready to beat Malaria’
24th April National Panchayati Raj Diwas
23rd April World Book & Copyright Day World Book Capital for 2018 is Athens, Greece.
22nd April World Earth Day (WED) 'End Plastic Pollution'
18th April World Heritage Day 'Heritage for Generations'
17th April World Haemophilia Day 'Sharing Knowledge Makes Us Stronger'
10th April World Homeopathy Day Evolve, Progress: Exploring Science since 40 years
7
th April World Health Day (Slogan: Health for All) Universal health coverage: everyone, everywhere.
5
th April 55th National Maritime Day ‘Indian Shipping – An Ocean of opportunity’.
2
nd April World Autism Awareness Day "Empowering Women & Girls with Autism".
27th March World Theatre Day
24th March World Tuberculosis Day “Wanted: Leaders for a TB-free world”
22nd March World Water Day Nature for Water
20th March World Sparrow 'I Love Sparrows'
20th March International Day of Happiness "Share Happiness"

Different Organisations Report title Organisation... Just for knowledge

Asian Development Outlook ADB (Asian Development bank)
Global Money Laundering Report FATF (Financial Action Task Force)
Nuclear Technology Review IAEA (International Atomic Energy Agency)
Ease of Doing Business IBRD (World Bank)
World Development Report IBRD (World Bank)
Safety Reports ICAO (International Civil Aviation Organization)
Global Hunger Index report IFPRI (International Food Policy Research Institute)
World Employment & Social Outlook ILO (International Labour Organization)
World of Work Report ILO (International Labour Organization)
World Economic Outlook IMF (International Monetary Fund)
Global Innovation Index Cornell University INSEAD & the World Intellectual Property
Organization (WIPO)
World Energy Outlook (WEO) International Energy Agency
World Oil Outlook OPEC (Organization of the Petroleum Exporting Countries )
World Happiness Report Sustainable Development Solutions Network (SDSN)
Global Corruption Report (GCR) Transparency International
Levels & Trends in Child Mortality Report UN Inter-agency Group
World Investment Report UNCTAD (United Nations Conference on Trade & Development)
Actions on Air Quality UNEP (United Nations Environment Programme )
Global Environment Outlook UNEP (United Nations Environment Programme )
Global education monitoring Report UNESCO (United Nations Educational, Scientific & Cultural Organization)
World Cities Report UN-Habitat
The Global Report UNHCR (United Nations High Commissioner for Refugees )
Report on Regular Resources UNICEF (United Nations Children’s Emergency Fund )
Industrial Development Report UNIDO (United Nations Industrial Development Organization)
World Drug Report UNODC (United Nations Office on Drugs & Crime)
Global Information Technology Report WEF (World Economic Forum)
Travel & Tourism Competitiveness Report WEF (World Economic Forum)
Global Competitiveness Report (GCR) WEF (World Economic Forum)
World Intellectual Property Report (WIPR) WIPO (World Intellectual Property Organization)