Letter of credit

JAIIB LEGAL:

Letter of Credit
Applicant-Buyer-Importer-Opener : He is the person who applies to bank for Letter of
Credit

Issuing Bank : The bank which opens the Letter Of Credit on the request of
applicant/Buyer.
Beneficiary-Exporter-Seller : The person who is entitled to receive the benefit under
Letter of Credit.
Advising Bank / Notifying Bank : The bank in the Beneficiary/Exporters Country through
which the letter of credit is advised to the beneficiary.
Negotiating Bank : The bank in the Beneficiary/Exporters Country which negotiate the
bills (i.e. make payments on the bills drawn by the seller and accepts the documents.) If
the LC specifies a bank then that bank is the Negotiating Bank and is also called the
Nominated Bank / Paying Bank. If the LC however does not specify the bank, than any
bank can be negotiating bank.
Confirming Bank : The advising bank is only required to advise the credit to the
beneficiary. If however in addition to advising the credit the advising bank were to
confirm it, then the advising bank will also become confirming Bank.
Reimbursing Bank : It is the bank which is appointed by the Issuing Bank to make
reimbursement to the Negotiating, Paying or confirming Bank.

ACTION POINTS PROCEEDINGS UNDER SECTION-138 OF N.I.ACT,1881

ACTION POINTS

PROCEEDINGS UNDER SECTION-138 OF N.I.ACT,1881

IN CASE OF POST DATED CHEQUE (PDC)TAKEN AS SECURITY FOR LOAN

1. Branch should present the Cheque for payment within its validity.

2. If the Cheque is dishonored, please ensure following steps before initiating legal action.

a. First, the Branch has to send a Demand Notice to the drawer of the cheque within a

period of 30 days from the date of receiving the information from the Branch/Bank

regarding the return of the cheque as unpaid.

b. The Demand Notice should contain all the relevant facts, such as:-

(1). The nature of transaction. (2). Amount of Cheque. (3). Date of depositing the cheque

in the Branch/Bank. (4). Date of dishonoring of the cheque. (5). The drawer has to be

advised to pay the cheque amount within 15 days.

3. In case the notice could not be served for any reason within a period of 30 days, the

Branch/Bank has to re-submit the Cheque for payment within the period of validity of the

Cheque. If the Cheque is dishonored again, the procedure as laid down above, to be

followed.

4. The drawer of the Cheque need to make payment within a period of 15 days from the

days of receipt of notice. If the borrower fails to make payment within 15 days from the

date of receipt, the Branch/Bank can file a complaint in the Judicial Magistrate First Class

Court. The complaint should be filed within a period of 1 month from the date of

expiry of above mentioned 15 days period.

5. If the Branch/Bank fails to file the complaint within the period of 1 month, the same will

become time-barred and hence, may not be entertained by the court.

6. On receiving complaint, along with an affidavit and relevant papers, the court will issue

summons and hear the matter.

7. If the court finds the Drawer guilty, the court may award punishment which may extend to

two years imprisonment or with fine which may extend to twice the amount of Cheque or

with both.

8. In view of the above, when any Branch/Bank keeping PDC for any loan, it is required that

the concerned Branch should maintain proper records / registers in respect of the dates of

validity of the Cheques, notice in proper time, evidences of service of notice on the

drawer of the Cheque etc.

Individual elements of Balance sheet and their analysis

Most important topic forever useful::

Individual Elements of Balance Sheet
and Their Analysis:::

Liabilities
 Current Liabilities
 Term Liabilities
 Debentures
 Public Deposits
 Capital
 Reserves (including
Revaluation reserve)

Assets
 Current Assets
 ICDs/Loans
 Fixed Assets
 Capital Work-in-
Progress
 Investments
 Other Non-Current
Assets
 Fictitious & Intangible
Assets

Current Liabilities
 Current liabilities are the liabilities, including bank
borrowings, which are payable within next 12 months.
Thus, the following items are treated as current
liabilities:
 Sundry creditors for raw material supplies and other
expenses
 Advance payment received
 Dividend payable
 Instalments of term loans/deposits/DPGs/debentures
due within one year
 Any other liability which will fall due in next 12 months

Term Liabilities
 Term liabilities include loans taken from
banks or Financial Institutions for long-term
usage, which are repayable over a longer
time period. While instalment payable in next
12 months is classified as current liabilities,
the remaining instalment amount that is due
for payment after a year is classified as term
liabilities.

Debentures
 The features of debentures are:
 They are essentially in the nature of loans - much like
long-term loans granted by banks / financial
Institutions
 Companies raise them from general public and
institutions, to be repaid within a specific time frame
 Companies pay interest at a specified rate to
debenture holders from whom they raise debentures,
till they repay the principal sum
 They come in the form of certificates issued by a
company under its common seal, which is also an
acknowledgement of the company's indebtedness to
the debenture holder

Public Deposits'
 Care to be Exercised by Lending Banker
Should take care, particularly, in cases where
the company has defaulted in repaying such
public deposits
 May treat all such public deposits which have
become due for repayment, and the portion of
small investments (regardless of the age of
such deposits), as current liability

Capital
 Capital of a business enterprise is an item of
liability by virtue of:
 The entity concept used in the preparation of
financial statements, which treats capital as a
liability.
 The principles of accountancy, according to
which the enterprise owes this sum to the
owner(s) and therefore carries a liability to
pay back the capital fund with or without any
profit earned on it

Reserves
 A Reserve
 Consists of the portion of the earnings and
receipts.
 Does not serve as a provision against a
known liability or any diminution in the value
of fixed assets (i.e. accumulated depreciation)
etc., in contradistinction to Reserves which is
part of net worth of the company

Surplus
 A Surplus
 Represents credit balance in the profit and
loss account, after the dividend and reserves
etc. are provided for, appropriated or
transferred.

Assets - Current Assets
 Current assets are those assets, which: Are expected
to be converted into cash e.g. raw material, stock-in-
process, finished goods etc. in next 12 months, and
Pertain to the company's main activity
 However, in respect of receivables, the treatment is
different. Receivables are treated:
 As current assets only for a period of 6 months
 As non-current assets, if they are more than 6
months old

Fixed Assets
Fixed assets are the assets:A credit analyst
should:
 Held for use in production or providing goods,
services etc. over a long period of time
 Not meant for sale in the normal course of
business
 That are producers of merchandise and not
merchandise themselves

Assets - Investments
 Investments made by a company, appearing in the
balance sheet of a company:
 Is a very important item, appearing in the assets side,
from the point of view of a credit analyst
 Normally indicates deployment of funds in securities
or assets, which may not be directly related to the
main activities of the companyMay refer to the
surplus funds of enterprises, which they decided to
invest in short-term securities for earning profit/short-
term gainsMay also refer to, funds invested in the
shares/securities of another enterprise in which the
investor company is interested on a long-term basis.
E.g.: Investment made in subsidiaries.

Assets - Other Non-Current Assets
 Other non-current assets include:
 Advances to suppliers of capital goods (plant,
machinery etc.)
 Deferred receivables (maturity after 1 year)
 Receivables more than 6 months old
 Non-consumable stores and spares
 Dues from directors et

Assets - Fictitious & Intangible
Assets
 Fictitious Assets
 Companies incur certain expenses, which are
not charged to the profit & loss account either
fully or in part during the same year in which
they are incurred. These expenses figure on
the asset side of a balance sheet, as though
they are real assets. Such assets are known
as fictitious assets.

Assets - Fictitious & Intangible
Assets
 Intangible Assets
 Assets that may not represent any real or
tangible asset are called as intangible
assets.Intangible assets represent monetary
values of different rights enjoyed by the
business enterprise, and are therefore
considered as assets. This category of items
include goodwill, patents, copyrights,
trademark rights etc. that appear on the asset
side of a balance sheet.

IT security recollected on 27.09.2019

Some of the recalled questions/topics are as following...

2-3 questions on Escrow
Security governance
Cert in
Major change from it act to it amendment act
BC DRP steps
2 questions on firewall
RTO
RPO
CISO reports to whom
Who are responsible for IT security
Maker checker difference
Spyware
VoIP
Black/white box testing
Salami attack
ISMS
PDC and DRC
2 questions on fault tolerant systems
Disadvantage of check list audit
2-4 questions on physical security
ITAM 2 questions
What cant be disclosed under RTI act 2005
Schema
Modem
Green server
Telnet uses which port
2-3 questions on security standards
E wastes
2-3 questions related to software development
COBIT
Threat vector
DoS
SQL
Cross site scripting
Steganography
Cryptography
Beta testing
Multiplexers
CAPTCHA
Dual core processor

Certified credit professional yesterday's exam review 28.09.2019

Certified credit professional yesterday's exam review 28.09.2019

Forfaiting ,factoring- 5Marks
IRR,NPV 5 Marks
Sarfaesi 1Mark
Cersai 2Marks
IBC 5Marks
LC MBPF 5Marks
Ratio 4 Marks

annual imports 2200 lakhs

fixed costs 70 lakhs
insurance 30 lakhs
customs duty 200 lakhs

EOQ 500 LAKHS

LEAD TIME 2 MONTHS
USANCE 5 MONTHS

CALCULATE NO OF LC'S REQUIRED
LC FREQUENCY
LC AMOUNT

GIVE ME SOLUTION PLS.
This question in today exam 5 Marks


Please read thoroughly Macmillan Book Bankers Hand Book on credit management and cover the follow topic:
Factoring and forfaiting,
CP, PSL, PSLC certificate,
5 marks on LC on EOQ based, numerical on ANBC, Ratio analysis, NPV, Payback period, NPV, IRR, Questions related to wc management, CR, Activity Ratio, CERSAI, MSME act, MSME Rehabilitation, credit monitoring, NCLT, CAP, IBC, Treds, margin on HL, etc..

Certified treasury professional yesterday's exam review 28.09.2019

Certified treasury professional yesterday's exam review 28.09.2019

Cleared treasury operations today first stage ,second stage training programme is pending but few things I want to illustrate:

1.I prepared from MC Millan book only but some things were from Fabozzi book also

2.Make sure read and learn bond valuation must because about 10-15 questions from bond

3.one case study from FRA WAS THERE IN EXAM BUT SIMPLE ONE

4.FOREIGN EXCHANGE RATES MEANS WHEN AND HOW TO APPLY

5.READ EXAMPLES AT BACK OF BOOK MOST IMPORTANT 

6.HAVE THOROUGH READING OF LAST CHAPTERS BECAUSE MOST OF QUESTIONS WERE REGARDING STRATEGY U OPT WHEN U ARE IN TREASURY

PAPER WAS TOUGH I PERSONALLY FELT

Cleared treasury professional today , paper was tough main topics were FRA, FOREX,BOND MOST IMPORTANT . Read treasury management book line by line

Types of Endorsements:-

Types of Endorsements:-

1)     Blank Endorsements: section 16(1) it means endorser only signs his name with adding any words or directions this endorsement makes the instrument payable to bearer.

2)     Endorsement in Full: - The endorser added the name of endorsee specifically.

3)     Conditional Endorsement: Here the endorser puts some conditions for endorsee Here the binding of conditions is between endorsee and endorser only. 

4)     San recourse Endorsement: - Endorser added the words without recourse to me.

5)     Facultative Endorsement: - Where an endorser waives the condition of notice of dishonour.

6)     Endorsement on Bearer Cheque: - The endorsement on bearer cheque is meaning less as the cheque once bearer is always bear.

Crossing:-

General Crossing (Sec.123): Two parallel transverse lines on the face of instruments with or without word ‘Not negotiable’. It is direction to the paying bank that do not pay the cheque across the counter.

Special Crossing (Sec.124): In addition of general crossing the cheque bears the name of collecting bank either with or without the words ‘Not negotiable’.

Collection of cheques:-

Section 131: a banker who has in good faith and without negligence received payment for a customer of a cheque (not available for B/E and P/N) crossed generally or specially.  The present section gives protection provided following conditions are fulfilled…

a)    The bank must have acted in good faith and without negligence.

b)    Bank has received the payment as an agent for collection.

c)     Bank has collected the cheque in the duly introduced account of customer only.

d)    The cheque collected must be crossed.

Payment of cheques:-

Liability of drawee (paying banker): It is obligation of the banker to honour the cheques of a customer provided there is sufficient balance and the cheque is otherwise in order.  Section 31 of NI act provides that “The Drawee of a cheque:

a)    Must have sufficient funds in the account.

b)    Properly applicable to the payment of such cheque.

c)     Must pay the cheque when duly required to do so.

d)    In default of such payment, must compensate the drawer for any loss or damage.

Protection for paying banker in case of cheque:-

Regularity of endorsement Section 85(1): Paying banker’s liability is to ensure the regularity of the endorsement and is not concerned with genuineness of endorsement.  The genuineness of endorsement is the liability of collecting banker.  Therefore, protection is available to the paying banker in case of forged endorsements.

Payment in due course (Section-10):-

a)    In accordance with the apparent tenor of the instrument.

b)    In good faith and without negligence.

c)     To the person in possession of the instrument.

d)    Under the circumstances which do not afford a reasonable ground for believing that he is not entitled to receive the payment of the amount mentioned therein.

When bank should not pay:-

a)    The death of the drawer in case of individual’s account terminates the contractual relationship.

b)    Insane customers: in case of insanity.

c)     Insolvent drawers: The bank should stop the operation of such account as if drawer adjudged insolvent and balance in the account vested with official receiver/assignee.

d)    Countermanded by drawer: on receipt of valid stop payment instruction by the drawer.

e)     Others: when a cheque is post dated, with insufficient balance in the account, cheque is of doubtful legality, or cheque is irregular, ambiguous, materially altered or stale etc.

Dishonour of cheques (Sec. 138-147):-

The payee or holder in due course should give notice to drawer within 30 days of return of cheque with the reason “Insufficient balance” and demanding payment within 15 days of his receiving information of dishonour. Drawee can make payment within 15 days of the receipt of notice and only if he fails to do so prosecution could take place.  The complaint is to be made with in one month of the cause of action arising that is expiry of the notice period.

Punishments:

a)    Summary proceedings: fine up to Rs. 5000/- and imprisonment up to one year or both.

b)    Regular proceedings: fine up to the double the amount of cheque or imprisonment up to 2 years or both.

https://iibfadda.blogspot.com/2019/08/types-of-endorsements.html

Types of accounts & deposits for NRIs

Types of accounts & deposits for NRIs
NRIs / PIOs / OCIs can open account in either of Indian Rupees or foreign currency, as per the following table:

Non Resident External (NRE) (INR) &  Non Resident Ordinary (NRO) (INR)

 Savings Bank Account
 Current Account
 Term Deposit (TDR)
 Special Term Deposit (STDR)
 Recurring Deposit (RD)



Foreign Currency Non Resident (Bank) {FCNR(B)} (FC)  & Resident Foreign Currency Account (RFC) (FC)

 Term Deposit (TDR)
 Special Term Deposit (STDR)


FCNB Premium Account (FC)
 Special Term Deposit (STDR) with Forward contract on maturity

Person of Indian Origin (PIO) / Overseas Citizen of India (OCI)

Person of Indian Origin (PIO) / Overseas Citizen of India (OCI)
A ‘Person of Indian Origin (PIO)’ means a foreign citizen not being a citizen of Bangladesh, Pakistan or other countries as may be specified by the Central Government from time to time if:
 He/she at any time held an Indian passport
Or
 He/she or either of their parents / grand-parents / great grand-parents was born and permanently resident in India as defined in Government of India Act, 1935 and other territories that became part of India thereafter provided neither was at any time a citizen of any of the aforesaid countries (as referred above)
Or
 He/she is a spouse of a citizen of India or a PIO
An Overseas Citizen of India (OCI) means any foreign national who was eligible to become citizen of India on 26th January 1950 or was a citizen of India on or at anytime after 26th January 1950 or belong to a territory that became part of India after 15th August 1947 is eligible for registration as OCI. Minor children of such person are also eligible for OCI. However, if the applicant has ever been a citizen of Pakistan of Bangladesh, he/she will not be eligible for OCI.
Explanation: PIO will include an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955.
Please refer to guidelines issued by Ministry of Home Affairs vide their Gazette Notification no 25024/9/2014-F.I. dated 09.1.2015 and 26011/01/2014-IC.I. dated 09.01.2015, regarding merger of PIO into OCI, the relevant excerpts of the notification are appended below for reference :
“all the existing Persons of Indian Origin (PIO) cardholders registered as such under notification of the Government Of India in the Ministry of Home affairs number 26011/4/98- F.I. dated the 19th August, 2002, shall be deemed to be Overseas Citizens of India cardholders (OCI).”

NRI

Non-resident Indian (NRI)
As per Foreign Exchange Management Act (FEMA), 1999
In terms of Regulation 2 of FEMA Notification No.13 dated May 3, 2000, Non-Resident Indian (NRI) means a person resident outside India who is a citizen of India.
A person who has gone out of India or who stays outside India, in either case-
(a) for or on taking up employment outside India, or
(b) for carrying on outside India a business or vacation outside India, or
(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;
Students going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities available to NRIs under FEMA, 1999.
As per Indian Income Tax Laws
Non-resident Indian is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India. Thus, in order to determine whether an Individual is a non-resident Indian or not, his residential status is required to be determined under Section 6. As per section 6 of the Income-tax Act, an Individual is said to be non-resident in India if he is not a resident in India and an individual is deemed to be resident in India in any previous year;
if he satisfies any of the following conditions:
1. If he is in India for a period of 182 days or more during the previous year: or
2. If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.
However, condition No.2 does not apply where an individual being citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year. A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India.

Msme recollected on 25th August 2019

   MSME recalled questions :  Exam Date 25-Aug-2019

1) CLCSS subsidy

2) In TReds : what are the instruments

3) UNIDO’S programmes

4) Maximum money that can be sanctioned under turnover method : 500 Lakhs

5) Which is not involved in launching cluster development project

6) Maximum time for completion of one cluster

7) SIDBI’s MAHILA VIKHAS NIDHI

8) SFURTI is applicable to which item (Traditional industries)

9) Location of ITCOT ?

10) Current ratio is 1.33:1; If CA increased by  10%; CL increased by 5%; what is current ratio ?

11) Find out Debit equity ratio

12) MSME limitations

13) In partnership firm within how many months minor has to give notice after becoming Major

14) Which type of A/c’s not covered in CGTMSE

15) After sanctioned a loan with hypothecation within how many days charge has to be created ?

16) What are the precautions to be made by a banker in case of joint Hindu Family; in JHF Minor became major ?

17) ISO9000 : max benefit amount

18) To start industrial unit with whom permission to be obtained ?

19) Under the composite loan scheme what is the max amt eligible ?

20) Functions of NABARAD

21) Duration for Loan disbursement

22) Rating agency for MSME  - SMERA

23) One question from Pre-Shipment advances (packing credit advances)

24) One question from Red clause LC

25) One question from Factoring

26) 4-5 questions from CGTMSE

27) 1 question on DIC – District Industries centre

28) 4 questions from MUDRA

29) 1 question from TUFS & TEQUP

30) 3 questions from investment in P&M, Equipment

31) 1 question from re-construction of P-ship firm

32) 1 question on rights & liabilities of directors & shareholders in Pvt ltd. Co & Public ltd. Companies ?

33) 3 questions on women entrpeneur enterprise => How much share and categories of women enterprises, supportive measures for women entrepenuer activities.

34) 1^st question in 1^st chapter (asked differently)

35) 4-5 questions on CGTMSE

36) 1 question on DIC  - Direct Industries Centre

37) NSIC schemes

38) Find our Debt equity ratio

39) Max amt for sanction in (Nayak committee) Turnover method (page 142)

40) MSME rating agencies : 147 page

41) EDP training – PMEGP : 164 page

42) 4^Th question in 6^th chapter

43) Sick unit definition : 239 page

44) Guidelines for rehabilitation of sick MSME’s : 253 page

45) Wilful defaulters : 257 page

46) Benefits of ARC : 266 page

47) Microfinance institutions : 273 page

48) 2 questions on MUDRA

49) One question on relationship Banking

50) One question from WTO

51) One question Basal 2 & 3

Fedai

CAIIB-BFM (TOPIC: FEDAI).

FEDAI (Foreign Exchange Dealers Association of India) is registered under Companies Act 1956 & was incorporated in the Year 1958. The Associaton has been recognized by RBI, as well as GOI. The main functions of FEDAI are to lay down uniform rules & guidelines to be observed by all dealers in India.
Some of Its functions are:
1. Maintaining a close liaison with RBI & GOI.
2. Maintaining a liaison with International Chamber of Commerce & Other World bodies related to Foreign Trade & Business.
3. To Circulate various policies matters & decisions related to FOREX business amongst the members.
4. Represents Indian FOREX dealers on policy matters related to FOREX dealings.
5. Maintaining of FEDAI rules regarding Transit Period, Crystallization, Forward Covers etc.. that govern all the members.
6. Other functions include approving FOREX brokers.

IMPORTANT FEDAI RULES:
1. All cancellations shall be bu Bank's opposite TT rates, TT selling rate for purchase contract & TT buying rate for sale contract.
2. In the event of delay in Payment of Interbank Foreign currency funds, Interest 2% above the prime rate of the currency of the specified Banks shall be paid by the seller Bank.
3. In event of delay in Payment of ₹. Settlement funds, Interest for delayed period 2% above NSE MIBOR ruling on each day.
4. FEDAI, also prescribes code of conduct for FOREX dealers as also guidelines with regard to dealings with FOREX brokers.

MORE IMPORTANT FEDAI RULES:
-HOURS OF BUSINESS: Left at the descretion of the Banks now. Extended business hours for dealers, if any, should be approved by respective Management.
RATES: ADs will quote exchange rates in direct terms.
All Currencies to be quoted -- /Unit of Foreign Currency = INR.
(while JPY to be quoted as 100Units of JPY=INR).
-EXPORT BILLS FOR COLLECTION: In the event of ADs delay of Payment to exporter, they will pay Interest form date of realization to the date of Actual Payment. ADs may utilize 1-3 claim to release Payment depending upon the distance/location of Branch where Payment has to be remitted.

-CRYSTALLIZATION: Unpaid Export bills should be crystallized at TT selling rate. Earlier FEDAI rule made it mandatory to crystallize unpaid demand bills 30days after the the transit & Usance Bills, 30days after the due date. However FEDAI has given the authorized dealers the freedom to decide-on the period for crystallization which may be linked to Risk Factors like Credit perception of different types of exporter clients, operational aspects etc. In case the bills are realized after crystallization, TT Buying rate is to be applied.
-IMPORTS: Unpaid Foreign Currency bills drawn under L/C will be crystallized on delay from due date at Bills Selling Rates or Contracted Rates.
-INWARD REMITTANCES: All Foreign Currency inward remittances equivalent to ₹.1 Lac should immediately be converted in Indian Rupees. Inward remittance for more than ₹.1 Lac may be converted at the request of the customer but with the permissible period. If the Payment of inward remittance is delayed, ADs will Pay Interest @ 2% over the applicable to SB A/c's after a period of 10days, for remittances up to ₹.1 Lac & for 3days after remittances for more than ₹.1 Lac..

Money laundering stages

Three Stages in the Money Laundering Cycle::



Money laundering often involves a complex series of transactions
that are usually difficult to separate. However, we generally
consider three phases of money laundering:
􀂄 Step One: Placement — The physical disposal of cash or
other assets derived from criminal activity.
During this initial phase, the money launderer introduces
the illegal proceeds into the financial system. Often, this is
accomplished by placing the funds into circulation through
financial institutions, casinos, shops and other businesses,
both domestic and international. This phase can involve
transactions such as:
􀂉 Breaking up large amounts of cash into smaller sums and
depositing them directly into a bank account.
􀂉 Transporting cash across borders to deposit in foreign
financial institutions, or to buy high-value goods — such as
artwork, antiques, and precious metals and stones — that
can then be resold for payment by check or bank transfer.

􀂄 Step Two: Layering — The separation of illicit proceeds from
their source by layers of financial transactions intended to
conceal the origin of the proceeds.
This second stage involves converting the proceeds of the
crime into another form and creating complex layers of
financial transactions to disguise the audit trail, source and
ownership of funds.
This phase can involve transactions such as:
􀂉 Sending wire transfers of funds from one account to
another, sometimes to or from other institutions or
jurisdictions.
􀂉 Converting deposited cash into monetary instruments (e.g.
traveler’s checks).
􀂉 Reselling high-value goods and prepaid access/stored
value products.
􀂉 Investing in real estate and legitimate businesses.
􀂉 Placing money in investments such as stocks, bonds or life
insurance

􀂉 Using shell companies or other structures whose primary
intended business purpose is to obscure the ownership of
assets.

􀂄 Step Three: Integration — Supplying apparent legitimacy to
illicit wealth through the re-entry of the funds into the
economy in what appears to be normal business or personal
transactions.
This stage entails using laundered proceeds in seemingly
normal transactions to create the perception of legitimacy. The
launderer, for instance, might choose to invest the funds in real
estate, financial ventures or luxury assets. By the integration
stage, it is exceedingly difficult to distinguish between legal and
illegal wealth. This stage provides a launderer the opportunity
to increase his wealth with the proceeds of crime. Integration
is generally difficult to spot unless there are great disparities
between a person’s or company’s legitimate employment,
business or investment ventures and a person’s wealth or a
company’s income or assets.

Difference between company and partnership

Partnership and Company are the most familiar terms for the people who are pursuing business education or commerce education. Besides being very familiar, many of us can’t able to correctly differentiate these two forms of business. This article presents you the top differences between Partnership Firms and Companies.

PARTNERSHIP

Indian Partnership Act, 1932 defines Partnership as ” Partnership is a relationship between two or more persons who have agreed to share the profits of a business carried on by all partners or any one partner acting for all”. The members of the Partnership firm are called as Partners. There are different types of partners such as Active partner, Sleeping partner, Nominal partner, Minor partner, Etc.

Partnership Frim is created by agreement between two or more people by registering the partnership firm with Registrar of Firms according to Indian Partnership Act, 1936.

Registration of a partnership firm is very simple process and Application for registration of firm must contain the following details

✔ Name of the firm

✔ Names of the partners and their addresses

✔ location where the business is carried on.

✔ Partnership tenure between the partners

✔ The main office of the firm, etc.

COMPANY

Indian Companies Act, 2013 defines Company as ” A Company formed and registered under this Companies Act or under any previous company law”. A company is defined easily as an association of two or more persons which is formed for doing business collectively and registered with Registrar of Companies according to Indian Companies Act, 2013.There are different types of companies like One Person Company, Private company and Public Company, etc.

To get registered with Registrar of Companies, the promoters are required to submit the copies of Articles of Association and Memorandum of Association which consists of various information relating to internal management and external management of the company.

The company exhibits certain special characteristics, such as

✔ It have a Separate Legal Entity

✔ It contains Common Seal under its name

✔ It has limited liability

✔ It acts as an artificial person, Etc.

COMPARISON

PARTNERSHIP COMPANY

The members of the Partnership firm are called as Partners. The members of the company are called as shareholders of a company.

 Enacted by

Partnership Form of business is governed by "The Indian Partnership Act, 1932." Company Form of business is governed by "The Indian Companies Act, 2013”.

 Number of Members

Partnership firm must have Minimum of 2 partners and maximum of 20 partners. A Company must have Minimum of 2 and maximum of 200 in the case of private company. Minimum 7 and maximum is unlimited number of members in case of public company

 Created by

Partnership Firm is Created by Contract between two or more people. Company Firm is Created by Law i.e created by incorporation of a company under company law.

 Regulation Authority

It is regulated by the Registrar of Firms which comes under State Government. It is regulated by the Registrar of Companies which comes under Central Government.

 Registration procedure

The registration of a Partnership firm is Not Mandatory. The registration of Company with Registrar of Companies is Mandatory.

 Documents Required

Partnership Deed(Agreement Document) is the mandatory document for creation of a Partnership Firm. Memorandum of Association(MoA) and Articles of Association(AoA) are the main documents to the incorporation of the company.

 Separate Legal Entity

Partnership firm is not a separate legal entity from partners. The Partners of the firm are collectively referred as a Partnership firm. A company is a separate legal entity, It is a separate entity from its members, directors, promoters, etc.

 Liability of Members

The partners have Unlimited Liability in all the matters relating to Partnership Firm. The Shareholders and promoters have Limited liability to Capital of the company.

 Accounts and Audit

Partnership Firm has to maintain accounts as per the conditions stated in partnership deed. A Company should maintain accounts and auditing of accounts by certified Chartered Accountant are Compulsory.

 Common Seal

A Common Seal is not required for Partnership Firm. A Common Seal in the form of a stamp is required for the company for legal and functional purposes.

 Management

Management of the activities of a Partnership Firm is usually done by the working partners. Management of the activities of a Company is done by Board of Directors.

 Change of Name

The name of the Partnership Firm can be changed easily by having a discussion between partners. The name of the company cannot be changed easily and a prior approval of Central Government is required to change the name.

CONCLUSION

The Indian Partnership Act, 1932 laid down certain rules and regulations on matters relating to Rights of partners, Liabilities of Partners, Duties of Partners, etc. Indian Companies Act, 2013 laid down various principles relating to the functioning of companies to protect the shareholders and investors of companies. Both Partnership and Company form of businesses is very prevalent in the world.

Companies and partnership act

COMPANIES & PARTNERSHIP ACT

1. A modification of charge under Section 125 of Companies Act, 1956, is registered by using which

Form Nos. Form Nos 8 & 13. The revised system for registration of charge with ROC is through

Electronic mode – MCA 21 (E-filing)

2.While granting advances to a company with charge created on securities which require registration

under Section 125, what is to be seen as a banker? As a banker, we should ensure that there is no

prior charge on the same securities by inspecting register of mortgages and charges at the office of

registrar of companies

3.Under Section 125 of Companies Act, a charge created by a joint stock company is required to be

registered with whom? With Registrar of Companies (ROC) under whose jurisdiction company’s

registered Office is located.

4. Which of the following charges is required to be registered with ROC under Section 125 of

Companies Act?

Charge on Plant & Machinery, hypothecation of stocks, furnitures and fixtures, stores, spares, EQM,

Registered Mortgage etc

5. M/S ABC Corporation Ltd borrowed from IOB on the security of plant and machinery by executing

loan papers on 22.10.08. The company borrowed from Canara Bank against the hypothecation of

same machinery by executing loan papers on 29/10/08. Canara Bank got their charge registered on

5.11.08 and IOB got their charge registered on 10.11.08. Who will get precedence in this case?

Charge of IOB will have precedence. Both the banks have registered their charge with ROC within the

stipulated time of 30 days, the date of execution of loan papers by IOB is earlier and hence IOB will

have the precedence.

6. The Board of Directors of a company can exercise powers to borrow money in excess of limit

specified in Section 293 (i) (d) provided - Such a resolution is passed in general body meeting of

share holders.

7. An advance to a limited Company does not require registration of charges with Registrar of

Companies if the advance is in the nature of Pledge (Effective possession is within the bank)

8. Execution of security documents by a Limited Co. should be - By affixing common seal only if

required by Articles of Association.

9. The effect of Non Registration of charge within the time limit is that Advance becomes an

unsecured advance.

10. Registration of the charge under Companies Act in the following case is not required- In case of

physical possession is delivered (IF NO COLLATERAL SECURITY OF STOCK, IMMOVABLE PROPERTY IS

TAKEN) In case of Hypothecation, Mortgage and book debts, registration is required.

11. The ceiling imposed by Companies Act, 1956 for a public Limited Company to borrow from banks

under Section 293 (1) (d) is Paid up capital + free reserves

12.The resolution of a company to borrow from a bank must be passed by whom? Resolution in a

Board Meeting

13. In case of private limited company loan document should be executed by - The delegated

authorities as per board of Directors.

14. A public limited company is sanctioned guarantee limits (performance guarantee) against

mortgage of land and building belonging to the company. As per lawyer‘s opinion instead of equitable

mortgage registered (simple) mortgage was put through; whether registration of charge is required?

Required. Charge is to be registered with the Registrar of Companies in case of EQM/Regd Mortgage

of company’s properties.

15. In the case of a company advance, what is the position of a secured creditor? Can stand outside

the winding up and satisfy his debt out of the property charged without proving his claim before

the liquidator

16. The winding up order of a company is effective from - Date of petition of winding up

17. Whether a secured creditor of a company can file a winding up petition despite the creditor

having security? YES.A Secured creditor of a Company can file a winding up petition despite the

Creditor having security.

18. In the case of a partnership firm, mandate may be revoked - By any Partner.

19. Partnership is to be registered with before advance is granted to customer - Registrar of Firms

20. If the partnership firm is not registered, what is the implication? The firm cannot sue others

legally

21. In case of a conflict in the operations condition of a firm‘s account, the provisions contained in

the following document will prevail- Partnership Letter to the bank

22. In the case of a mortgage transaction of a property standing in the name of the firm, the

mortgage papers have to be executed by All the partners of the firm (or by the partner who

has been specifically Authorized to execute mortgage papers by all the remaining

partners).

23. X and Y are authorised to sign cheque on behalf of the firm. A cheque dated 10 1 04 duly signed

by them is presented in clearing on 17 1 04. X expired on 14 1 04. Bank loses protection if paid

24. One of the partners of a firm has become insolvent. What should be done if a cheque drawn by

other partner is presented for payment? The cheque should be returned with the remark, “Refer to

drawer”

25. A HUF directly or indirectly cannot become partner of a firm because The firm is an association of

individuals. HUF is a floating body whose composition changes by births, deaths, marriages and

divorces. A HUF is not being “a legal person” cannot enter into an agreement of partnership. Hence

HUF cannot become partner of the firm.

26. Whether Branches are required to open current/TD accounts of partnership firms where one or

more of the partners are HUF - Cannot open CA/TD account.

27 What precautions branch is required to take in respect of partnership accounts already opened

where one or more of the partners are HUF. The branch should exercise caution in the transactions &

take Undertaking letter duly signed by all the co-parceners and Kartha.

28 Whether finance can be provided to Partnership firms where one or more of the partners are HUF

– No

29. Simple mortgage is to be registered with which office With Sub - Registrar of assurances under

whose jurisdiction the mortgaged property is situated

6 inspiring quotes by Sir Mokshagundam Visvesvaraya

An engineer is considered to be the one who creates the world which has never been. And for all those outstanding engineers, an Engineers Day is celebrated in India on September 15 every year as a tribute to India’s greatest engineer and Bharat Ratna, Mokshagundam Visvesvaraya. Born on 15 September 1861 in a Telugu speaking family, Sir Mokshagundam Visvesvaraya was an Indian engineer, scholar, statesman, and the 19th Diwan of Mysore. For his magnificent works as an Engineer,  he received India’s highest honour, the Bharat Ratna, in 1955. The intricate system of irrigation in the Deccan area, flood protection system in Hyderabad and KRS Dam across the Kauvery River in Karnataka are some of his renowned works. The great man is not just famous in the field of engineering but also for his quotes. Here are 6 famous quotes of Sir Mokshagundam Visvesvaraya on the occasion of Engineers Day.

#1 “Self-examination not moral or spiritual, but secular – that is, a survey and analysis of local conditions in India and a comparative study's of the same with those in other parts of the globe.”

#2 “Mental energy is wasted in caste disputes and village factions.”

#3 “It is better to work out than rust out.”

#4 “Self-examination not moral or spiritual, but secular – that is, a survey and analysis of local conditions in India and a comparative study of the same with those in other parts of the globe.”

#5 ” The way to build a nation is to build a good citizen. The majority of the citizens should be efficient, of good character and possess a reasonable high sense of duty.”

#6 ” Every man who has become great owes his achievement to incessant toil