Regular Study - Accounting & Finance for Bankers

Regular Study - Basic Accounting Terms
The understanding of the subject becomes easy when one has the knowledge of a few
important terms of accounting. Let us go through some of them.
Transactions
Transactions are those activities of a business, which involve transfer of money or goods or
services between two persons or two accounts. For example, purchase of goods, sale of
goods, borrowing from bank, lending of money, salaries paid, rent paid, commission
received and dividend received. Transactions are of two types, namely, cash and credit
transactions.
Cash Transaction is one where cash receipt or payment is involved in the transaction. For
example, When You buys goods from a seller paying the price of goods by cash
immediately, it is a cash transaction.
Credit Transaction is one where cash is not involved immediately but will be paid or
received later. In the above example, if You, do not pay cash immediately but promises to
pay later, it is credit transaction.
Proprietor
A person who owns a business is called its proprietor. He contributes capital to the business
with the intention of earning profit.
Capital
It is the amount invested by the proprietor/s in the business. This amount is increased by the
amount of profits earned and the amount of additional capital introduced. It is decreased by
the amount of losses incurred and the amounts withdrawn. For example, if Mr. Ram starts
business with Rs.10,00,000, his capital would be Rs.10,00,000.
Assets
Assets are the properties of every description belonging to the business. Cash in hand, plant
and machinery, furniture and fittings, bank balance, debtors, bills receivable, stock of
goods, investments, Goodwill are examples for assets. Assets can be classified into tangible
and intangible.
Tangible Assets: These assets are those having physical existence. It can be seen and
touched. For example, plant & machinery, cash, etc.
Intangible Assets: Intangible assets are those assets having no physical existence but their
possession gives rise to some rights and benefits to the owner. It cannot be seen and
touched. Goodwill, patents, trademarks are some of the examples.
Liabilities
Liabilities refer to the financial obligations of a business. These denote the amounts which a
business owes to others, e.g., loans from banks or other persons, creditors for goods
supplied, bills payable, outstanding expenses, bank overdraft etc.
Drawings
It is the amount of cash or value of goods withdrawn from the business by the proprietor for
his personal use. It is deducted from the capital.
Debtors
A person (individual or firm) who receives a benefit without giving money or money’s
worth immediately, but liable to pay in future or in due course of time is a debtor. The
debtors are shown as an asset in the balance sheet. For example, Mr. Ravi bought goods on
credit from Mr. Ram for Rs.10,000. Mr. Ravi is a debtor to Mr. Ram till he pays the value
of the goods.
Creditors
A person who gives a benefit without receiving money or money’s worth immediately but
to claim in future, is a creditor. The creditors are shown as a liability in the balance sheet. In
the above example Mr. Ram is a creditor to Mr. Ravi till he receive the value of the goods.
Purchases
Purchases refers to the amount of goods bought by a business for resale or for use in the
production. Goods purchased for cash are called cash purchases. If it is purchased on
credit, it is called as credit purchases. Total purchases include both cash and credit
purchases.
Purchases Return or Returns Outward
When goods are returned to the suppliers due to defective quality or not as per the terms of
purchase, it is called as purchases return. To find net purchases, purchases return is
deducted from the total purchases.
Sales
Sales refers to the amount of goods sold that are already bought or manufactured by the
business. When goods are sold for cash, they are cash sales but if goods are sold and
payment is not received at the time of sale, it is credit sales. Total sales includes both cash
and credit sales.
Sales Return or Returns Inward
When goods are returned from the customers due to defective quality or not as per the terms
of sale, it is called sales return or returns inward. To find out net sales, sales return is
deducted from total sales.
Stock
Stock includes goods unsold on a particular date. Stock may be opening and closing stock.
The term opening stock means goods unsold in the beginning of the accounting period.
Whereas the term closing stock includes goods unsold at the end of the accounting period.
For example, if 5,000 units purchased @ Rs. 30 per unit remain unsold, the closing stock is
Rs. 1,50,000. This will be opening stock of the subsequent year.
Revenue
Revenue means the amount receivable or realised from sale of goods and earnings from
interest, dividend, commission, etc.
Expense
It is the amount spent in order to produce and sell the goods and services. For example,
purchase of raw materials, payment of salaries, wages, etc.
Income
Income is the difference between revenue and expense.
Voucher
It is a written document in support of a transaction. It is a proof that a particular transaction
has taken place for the value stated in the voucher. It may be in the form of cash receipt,
invoice, cash memo, bank pay-in-slip etc. Voucher is necessary to audit the accounts.
Invoice
Invoice is a business document which is prepared when one sell goods to another. The
statement is prepared by the seller of goods. It contains the information relating to name and
address of the seller and the buyer, the date of sale and the clear description of goods with
quantity and price.
Receipt
Receipt is an acknowledgement for cash received. It is issued to the party paying cash.
Receipts form the basis for entries in cash book.
Account
Account is a summary of relevant business transactions at one place relating to a person,
asset, expense or revenue named in the heading. An account is a brief history of financial
transactions of a particular person or item. An account has two sides called debit side and
credit side.
Regular Study - Classification of Accounts
Classification of Accounts
Transactions can be divided into three categories.
i. Transactions relating to individuals and firms
ii. Transactions relating to properties, goods or cash
iii. Transactions relating to expenses or losses and incomes or gains.
Therefore, accounts can also be classified into Personal, Real and Nominal. The
classification may be illustrated as follows
Personal Accounts:
Accounts recording transactions relating to individuals or firms or company are known as
personal accounts. Personal accounts may further be classified as:
(i) Natural Person’s personal accounts: The accounts recording transactions relating to
individual human beings e.g., Anand’s a/c, Ramesh’s a/c, Pankaj a/c are classified as natural
persons’ personal accounts.
(ii) Artificial Persons’ Personal accounts: The accounts recording transactions relating to
limited companies, bank, firm, institution, club, etc., Delhi Cloth Mill; M/s Sahoo & Sahoo;
Hans Raj College; Gymkhana Club are classified as artificial persons’ personal accounts.
(iii) Representative Personal Accounts: The accounts recording transactions relating to
the expenses and incomes are classified as nominal accounts. But in certain cases (due to
the matching concept of accounting) the amount, on a particular date, is payable to the
individuals or recoverable from individuals. Such amount (i) relates to the particular head of
expenditure or income and (ii) represent persons to whom it is payable or from whom it is
recoverable. Such accounts are classified as representative personal accounts e.g., “wages
outstanding account”, pre-paid Insurance account, etc.
The proprietor being an individual his capital account and his drawings account are
also personal accounts.
Impersonal Accounts
All those accounts which are not personal accounts. This is further divided into two types
viz. Real and Nominal accounts.
i. Real Accounts: Accounts relating to properties and assets which are owned by the
business concern. Real accounts include tangible and intangible accounts. For example,
Land, Building, Goodwill, Purchases, etc.
ii. Nominal Accounts: These accounts do not have any existence, form or shape. They
relate to incomes and expenses and gains and losses of a business concern. For example,
Salary Account, Dividend Account, etc.
Rules of debit and credit (classification based)
1. Personal accounts : Debit the receiver - Credit the giver (supplier)
2. Real accounts : Debit what comes in - Credit what goes out
3. Nominal accounts : Debit expenses and losses - Credit incomes and gains

JAIIB – AFB (ACCOUNTING & FINANCE FOR BANKERS)

JAIIB - Accounting & Finance for Bankers - Module - A - Business
Mathematics and Finance
JAIIB-AFB-MOD-A-INTEREST CALCULATION
Simple Interest
'Simple' interest or 'flat rate' interest is the amount of interest paid each year in a fixed
percentage of the amount borrowed or lent at the start.
Formula for calculating simple interest :
Interest = Principal x Rate x Time (PRT), where:
'Interest' is the total amount of interest paid
'Principal' is the amount lent or borrowed
'Rate' is the percentage of the principal charged as interest each year.
'Time' is the time in years of the loan.
Example :
Principal: 'P' = Rs. 50,000, Interest rate: 'R' = 10% = 0.10, Repayment time: T = 3 years. Find
the amount of interest paid.
Interest = PRT
= 50,000x0.10x3
= Rs. 15,000/-
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Compound Interest
Compound interest is paid on the original principal and accumulated part of interest.
Formula for calculating compound interest :
P = A(1 +r/n)^nt, where
P = the principal
A = the amount deposited
r = the rate (expressed as fraction, e.g. 6 per cent = 0.06)
n = number of times per year that interest is compounded
t = number of years invested
Frequently compounding of Interest. If the interest is compounded :
Annually = P (1 + r)
Quarterly = P (1 + r/4)^4
Monthly = P (1 + r/12)^12
Example :
The compound interest on Rs. 30,000 at 7% per annum is Rs. 4347. The period (in years) is:
Amount = Rs. (30000 + 4347) = Rs. 34347.
Let the time be n years. Then
30000(1+7/100)^n = 34347
(107/100)^n = 34347/30000
(107/100)^n = 11449/10000
(107/100)^n = (107/100)^2
n = 2 years.
The Rule of 72: Allows you to determine the number of years before your money doubles
whether in debt or investment. Divide the number 72 by the percentage rate.
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EQUATED MONTHLY INSTALMENTS (EMIs)
Equated Monthly Installment (EMI) refers to the monthly payment a borrower makes on his loan.
Though it is a combination of interest payment and principal repayment, the total monthly
amount is calculated in such a way that it remains constant all through the repayment tenure. In
Equated Monthly Installments (EMIs), the principal and the interest thereon is repaid through
equal monthly installment over the fixed tenure of the loan. The benefit of an EMI for borrowers
is that they know precisely how much money they will need to pay toward their loan each month,
making the personal budgeting process easier.
Formula :
E = P×r×(1 + r)n/((1 + r)n - 1)
E is EMI
where P is Principle Loan Amount
r is rate of interest calculated in monthly basis it should be = Rate of Annual interest/12/100
if its 10% annual ,then its 10/12/100=0.00833
n is tenure in number of months
Example :
For 100000 at 10% annual interest for a period of 12 months, it comes to :
100000*0.00833*(1 + 0.00833)12/((1 + 0.00833)12 - 1) = 8792
JAIIB-AFB-MOD-A-PV-FV-Annuity
Present Value
Present value describes how much a future sum of money is worth today. Three most influential
components of present value are : time, expected rate of return, and the size of the future cash
flow. The concept of present value is one of the most fundamental and pervasive in the world of
finance. It is the basis for stock pricing, bond pricing, financial modeling, banking, insurance,
pension fund valuation. It accounts for the fact that money we receive today can be invested
today to earn a return. In other words, present value accounts for the time value of money.
The formula for present value is:
PV = CF/(1+r)n
Where:
CF = cash flow in future period
r = the periodic rate of return or interest (also called the discount rate or the required rate of
return)
n = number of periods
Example :
Assume that you would like to put money in an account today to make sure your child has enough
money in 10 years to buy a car. If you would like to give your child 10,00,000 in 10 years, and
you know you can get 5% interest per year from a savings account during that time, how much
should you put in the account now?
PV = 10,00,000/ (1 + .05)10 = 6,13,913/-
Thus, 6,13,913 will be worth 10,00,000 in 10 years if you can earn 5% each year. In other words,
the present value of 10,00,000 in this scenario is 6,13,913.
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Future Value
The value of an asset or cash at a specified date in the future that is equivalent in value to a
specified sum today. It refers to a method of calculating how much the present value (PV) of
an asset or cash will be worth at a specific time in the future. There are two ways to calculate FV:
1) For an asset with simple annual interest: = Original Investment x (1+(interest rate*number of
years))
2) For an asset with interest compounded annually: = Original Investment x ((1+interest
rate)^number of years)
Example:
1) 10,000 invested for 5 years with simple annual interest of 10% would have a future value of
FV = 10000(1+(0.10*5))
= 10000(1+0.50)
= 10000*1.5
= 15000
2) 10,000 invested for 5 years at 10%, compounded annually has a future value of :
FV = 10000(1+0.10)^5)
= 10000(1.10)^5
= 10000*1.61051
= 16105.10
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Annuities
Annuities are essentially a series of fixed payments required from you or paid to you at a specified
frequency over the course of a fixed time period. The most common payment frequencies are
yearly, semi-annually (twice a year), quarterly and monthly. There are two basic types of
annuities: ordinary annuities and annuities due.
Ordinary Annuity: Payments are required at the end of each period. For example, straight bonds
usually pay coupon payments at the end of every six months until the bond's maturity date.
Annuity Due: Payments are required at the beginning of each period. Rent is an example of
annuity due. You are usually required to pay rent when you first move in at the beginning of the
month, and then on the first of each
JAIIB-AFB-MOD-A-Present Value of an Annuity
Present Value of an Annuity
The present value an annuity is the sum of the periodic payments each discounted at the
given rate of interest to reflect the time value of money.
PV of an Ordinary Annuity = R (1 − (1 + i)^-n)/i
PV of an Annuity Due = R (1 − (1 + i)^-n)/i × (1 + i)
Where,
i is the interest rate per compounding period;
n are the number of compounding periods; and
R is the fixed periodic payment.
Example :
1. Calculate the present value on Jan 1, 2015 of an annuity of 5,000 paid at the end of
each month of the calendar year 2015. The annual interest rate is 12%.
Solution
We have,
Periodic Payment R = 5,000
Number of Periods n = 12
Interest Rate i = 12%/12 = 1%
Present Value
PV = 5000 × (1-(1+1%)^(-12))/1%
= 5000 × (1-1.01^-12)/1%
= 5000 × (1-0.88745)/1%
= 5000 × 0.11255/1%
= 5000 × 11.255
= 56,275.40
2. A certain amount was invested on Jan 1, 2015 such that it generated a periodic payment
of 10,000 at the beginning of each month of the calendar year 2015. The interest rate on
the investment was 13.2%. Calculate the original investment and the interest earned.
Solution
Periodic Payment R = 10,000
Number of Periods n = 12
Interest Rate i = 13.2%/12 = 1.1%
Original Investment = PV of annuity due on Jan 1, 2015
= 10,000 × (1-(1+1.1%)^(-12))/1.1% × (1+1.1%)
= 10,000 × (1-1.011^-12)/0.011 × 1.011
= 10,000 × (1-0.876973)/0.011 × 1.011
= 10,000 × 0.123027/0.011 × 1.011
= 10,000 × 11.184289 × 1.011
= 1,13,073.20
Interest Earned = 10,000 × 12 − 1,13,073.20
= 1,20,000 – 1,13,073.20
= 6926.80
JAIIB-AFB-MOD-A-Bond Value
Bond Value
Debt
DEBT means a sum of money due by certain and expresses agreement. In a less technical
sense, it means a claim for money. Loans from banks or financial institutions are one of the
popular forms of debt.
Bonds
Debt capital consists of mainly bonds and debentures. The holder of debt capital does not
receive a share of ownership of the company when they provide funds to the firm. Rather,
when a company first issues debt capital, the providers of debt capital purchase a
debenture, which involves lending money to the firm. In return for loaning this money, bond
holders have a right to certain guaranteed payments during the life of the bond.
For example : a company issued a bond of a face value of Rs. 100 carrying a coupon rate of
10 per cent for ten years. This entitles the bondholder to receive Rs. 10 (10 per cent of Rs.
100) for ten years as interest. At the end of tenth year, the bondholder is also entitled to
receive back the invested amount of Rs. 100. Irrespective of the level of profits or losses,
which company makes during that period of ten years, the bondholder is entitled to receive
the coupon interest during that period.
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TERMS ASSOCIATED WITH BONDS
Face Value: Also known as the par value and stated on the face of the bond. It represents
the amount borrowed by the firm, which it promises to repay after a specified period.
Coupon rate: A bond carries a specific rate of interest, which is also called as the coupon
rate.
Maturity: A bond is issued for a specified period. It is to be repaid on maturity.
Redemption Value: The value, which the bondholder gets on maturity, is called the
redemption value. A bond is generally issued at a discount (less than par value) and
redeemed at par.
Market Value: A bond may be traded on a stock exchange. Market value is the price at
which the bond is usually bought or sold in the market.
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Bond Value
A bond, whose par value is Rs. 1,000, bears a coupon rate of 12 per cent and has a
maturity period of 3 years. The required rate of return on the bond is 10 per cent. What is
the value of this bond?
Solution
Annual interest payable = 1,000 * 12% = 120
Principal repayment at the end of 3 years = Rs. 1,000
The value of the bond
= 120 (PVIFA 10%, 3 yrs) + Rs. 1,000 (PVIF 10%, 3 yrs)
= 120 (2.487)+1,000 (0.751)
= 298.44 + 751
= Rs. 1,049.44
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A bond, whose par value is Rs. 1000, bears a coupon rate of 12 per cent payable semiannually
and has a maturity period of 3 years. The required rate of return on bond is 10 per
cent. What is the value of this bond?
Solution
Semi-annual interest payable = 1,000 x 12 per cent/2= 60
Principal repayment at the end of 3 years = Rs. 1,000
The value of the bond
= 60 (PVIFA 10%/2, 6 pds) + Rs. 1,000 (PVIF 10%/2, 6 pds) =
60 (5.0746) + 1,000 (0.746) = 304.48 + 746 = 1,050.48

JAIIB – LRAB (LEGAL & REULATORY ASPECTS OF BANKING)

JAIIB - Legal & Regulatory Aspects of Banking - Mod - A - Regulations and
Compliance
Unit - 1 : Legal Framework of Regulation of Banks
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Banking means acceptance of deposits of money from the public for lending or investment.
Such deposits may be repayable on demand or may be for a period of time as agreed to, by
the banker and the customer, and may be repayable by cheque, draft or otherwise.
Apart from banking, banks are authorised to carry on other business as specified in Section 6
of the Banking Regulation Act.
Banks are, however, prohibited from undertaking any trading activities.
Banks are constituted as companies registered under the Companies Act, 1956, statutory
corporations constituted under Special Statutes or Co-operative societies registered under the
Central or State Co-operative Societies Acts. The extent of applicability of the regulatory
provisions under the Banking Regulation Act and the Reserve Bank of India Act to a bank
depends on the constitution of the bank.
Reserve Bank of India is the central bank of the country and the primary regulator for the
banking sector.
The government has direct and indirect control over banks. It can exercise indirect control
through the Reserve Bank and also act directly in appealsarising from decisions of the Reserve
Bank under the various provisions of the Banking Regulation Act.
In public sector banks like the State Bank of India and its subsidiaries, nationalised banks and
the regional rural banks, 50% or more of their shares are held by the Central Government.
Central Government has substantial control over the management of these banks. Only
certain provisions of the BR Act are applicable to these banks as indicated in that Act.
Co-operative banks operating in one state only are registered under the State Co-operative
Societies Act and are subject to the control of the State Government as also the Reserve
Bank.
In the case of non-banking business of the banks, they are subject to control by other
regulatory agencies.
Constitution Of Bank
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Banks in India fall under one of the following categories:
1. Body corporate constituted under a special statute;
2. Company registered under Companies Act, 1956 / foreign company
3. Cooperative Society registered under a central and state enactment on cooperative
societies.
Reserve Bank as Central Bank
The Reserve Bank was constituted under Section 3 of RBI Act. The Central Govt holds the
whole capital of RBI.
1. Regulating the issue of bank notes
2. Keeping of reserves for ensuring monetary stability
3. Generally to operate the currency and credit system of the country to its advantage.
RBI: Regulator and Supervisor
1. Power to License
2. Power to appointment and removal of banking boards/personnel
3. Power to regulate the business of banks
4. Power to give directions
5. Power to inspect and supervise banks
6. Power regarding audit of banks
Government as a Regulator of Banks
The Reserve Bank is primary regulator of banks. But Central govt. has also been conferred
extensive powers under the RBI Act and the BR Act either directly or indirectly over the
banks.
Unit - 2 : Control Over Organisation Of Banks
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A company wanting to commence banking business requires prior licence from the Reserve
Bank.
The Reserve Bank has the discretion to reject licence or approve the licence on such
conditions as it thinks fit. Before granting licence, Reserve Bank has to be satisfied by
inspection or otherwise of the suitability of the company for licence.
A licence once given may also be cancelled after giving the bank an opportunity to be heard.
Further, for opening new branches or shifting branches outside a city, town or village,
permission of the Reserve Bank is required.
Banking companies have to have minimum capital and reserves as specified in the Banking
Regulation Act. The shareholders of a banking company are entitled to dividends only after all
the capitalised expenses are written off.
The commission or brokerage payable on selling shares is restricted to two and half per cent
of the paid-up value of the shares.
The board of directors of a bank has to be constituted with persons having special knowledge
or experience in accountancy, banking, economics, law, etc., as stipulated. The directors
should not have substantial interest in other companies or firms.
The maximum period of office is limited to eight years continuously.
Authorized Capital the maximum limits of share capital which a company is authorised to have
under its Memorandum.
Paid-up Capital The amount of share capital of a company is subscribed and paid-up.
Subscribed Capital The amount of share capital of a company, which is issued and subscribed.
The Reserve Bank is empowered to reconstitute the board, if the board is not properly
constituted. Every banking company should have a full-time chairman (or a full-time
managing director, if there is no fulltime chairman) with the specified qualifications.
The Reserve Bank has powers to remove the chairman and appoint a suitable person in his
place in certain cases. The Reserve Bank also has powers to remove the directors or
managerial personnel or other employees of banking companies.
The principles of corporate governance including the 'fit and proper' criteria for directors apply
to banking companies as well as public sector banks.
A Temporary branch for less than 30 days in a town where a bank has an existing branch
does not require permission from RBI.
Unit - 3 : Regulation Of Banking Business
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The Banking Regulation Act empowers the Reserve Bank to issue directions to banking
companies in public interest, in the interest of banking policy and in the interest of depositors.
Section 21 provides for the issue of directions to regulate loans and advances by banking
companies. This may be done by regulating the purposes of lending, margins in respect of
secured loans, rate of interest and terms and conditions of lending.
Section 35A gives wide general powers to issue directions. The Reserve Bank issues
directions from time to time under Section 21 (read with Section 35 A) regulating acceptance
of deposits and lending.
Under Section 21A of the Act, the rate of interest on loans and advances contracted
between a bank and its customer is not liable to be reopened by a court of law.
Section 20 of the Act imposes restrictions on loans and advances to directors, and
companies and firms in which directors are interested as director, partner, etc.
A banking company which is a scheduled bank has to maintain a certain percentage of the
time and demand liabilities as cash reserve with the Reserve Bank under Section 42 of the
Reserve Bank of India Act, as notified by the Reserve Bank from time to time.
Failure to do so renders the banking company liable to penalty. For non-scheduled banking
companies, Section 18 of the BR Act provides for cash reserve.
Banking companies have also to maintain a certain percentage of their demand and time
liabilities in liquid assets as stipulated under Section 24 of the BR Act. These assets may be
maintained to the extent and in the form and manner as notified by the Reserve Bank. Apart
from this, banking companies are required to maintain such assets in India at not less than
seventy five per cent of demand and time liabilities as at the close of business of the last
Friday of every quarter.
Banking companies also have to transfer to the reserve fund twenty per cent of their annual
profits as disclosed in the profit and loss account.
Regulation of credit to different sectors of the economy is known as Selective Credit Control.
While General Credit Controls operate on the cost and volume of credit, Selective credit
controls aim at regulating the distribution or direction of bank resources to particulars sectors
of the economy.
Selective Credit Control seeks to influence the demand for credit by
i. Making borrowing costly for certain purposes, which are relatively inessential
ii. By imposing stringent conditions on lending for such purposes
iii. By giving concessions for certain desired types of activities
The tools employed for exercising selective credit control are
i. Minimum margins for lending against selected commodities
ii. Ceiling on the levels of credit
iii. Charging minimum rate of interest on advances against specified commodities Scheduled
Banks
A scheduled bank is a bank included in the second schedule of the RBI Act. Section 42(6) of
the Act. RBI may include any bank in the second schedule
if it satisfies the following requirements.
a. It has paid-up capital and reserves of an aggregate value of not less than Rs. 5 Lakhs.
b. It satisfies the Reserve Bank that it affairs are not conducted in a manner detrimental to
the interests of depositors; and
c. It is
(1) State cooperative Bank
(2) A company defined in section 3 of the companies act
(3) An institution notified by central govt.
Cash Reserve : The penalty which is payable by a banking company which is scheduled
bank for failure to maintain cash reserve in any week for the first time is 3% of over bank
rate. For 2nd time 5% over bank rate.
Unit - 4 : Returns, Inspection, Winding Up, Mergers & Acquisitions
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Every banking company has to prepare its balance sheet and profit and loss account annually
as at the end of the calendar year or at the end of twelve months as on a date notified by the
Central Government.
The accounts have to be audited by auditors duly qualified to be auditors of companies.
Three copies of the balance sheet, profit and loss account and the auditor's report have to be
submitted as returns to the Reserve Bank and to the Registrar of Companies.
Banking companies have also to furnish other returns like return on maintenance of cash
reserve, maintenance of liquid assets, etc.
The Reserve Bank is authorised to inspect or conduct, scrutiny of banking companies, their
books and accounts.
The Board for Financial Supervision set up by the Reserve Bank by statutory regulations
framed under the Reserve Bank of India Act supervises the affairs of banking companies.
The Government may acquire the undertakings of banking companies in certain circumstances
based on a report from the Reserve Bank.
The Central Government may also order moratorium on banking companies on the application
of the Reserve Bank. During moratorium, the Reserve Bank may prepare a scheme for
amalgamation, which may be sanctioned by the Central Government. Such an amalgamation
scheme will have overriding effect on any laws, agreements, etc.
The Reserve Bank may also apply to the High Court for winding up of a banking company
when it is not able to pay its debts and also in certain other circumstances.
The Reserve Bank of India Act and the Banking Regulation Act impose certain penalties for
contravention or default committed by banking companies or other persons.
Board for Financial Supervision
It is constituted by RBI. The board consists of Chairman (Governor of RBI), Vice Chairman
(one of the Dy. Governor of RBI), Four directors from the Central Board. The board performs
functions and exercises the powers of supervision and inspection under the RBI Act and the
BR Act.
The board meets at lease once in a month. Three members of whom one Chairman / vicechairman
shall form a quorum for the meeting.
Unit - 5 : Public Sector Banks and Cooperative Banks
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The public sector banks, namely, State Bank and its subsidiaries, the Nationalised banks and
the regional rural banks are statutory corporations (or body corporate) established under
special statutes.
State Bank and its subsidiaries
State Bank and its subsidiaries, as Nationalised banks, are commercial banks engaged in the
business of banking and other forms of business permissible for banking companies.
State Bank Of India was established under Section 3 of the State Bank Of India Act, 1955 for
taking over the undertaking of the Imperial Bank Of India. The majority of shares are held by
Reserve Bank. Although shares are freely transferable, the Reserve Bank cannot transfer the
shares if such transfer would result in reducing its holding below 50% of the issued capital.
No shareholder other than Reserve Bank can exercise voting rights above 10%.
The chairman and Managing Director are appointed for a period not exceeding 5 years and
are eligible for reappointment. Their services can be terminated by the Central Govt. by giving
3 months notice or notice pay in lieu thereof after consultation with the Reserve Bank.
The State Bank and its subsidiaries and the Nationalised banks also act as agents of the
Reserve Bank to transact the banking business of the Central Government.
Subsidiary Banks
SBH State Bank of Hyderabad Act, 1956
SBS Saurashtra State banks(amalgamation) Ordinance, 1950
All other banks State Bank Of India (Subsidiary Banks) Act, 1959
The majority of shares are held by State Bank Of India. Shares are freely transferable as
provided in Section 18 of the Act, However State Bank is not entitled to transfer the shares if
such transfer would result in reducing its shareholding to less than 50%.
Management of Subsidiary Bank
The Board consists of Chairman of the State Bank (ex-officio chairman), Managing Director
and other directors. The state bank appoints Managing Director after consulting the board of
subsidiary bank and with the approval of Reserve Bank.
Business of Subsidiary Bank
A subsidiary bank has to act as a agent of State Bank under Section 36 of the SBI Subsidiary
Act.
Regional Rural Banks
They were first set up in 1975 under the RRB Ordinance 1975. The ordinance was later
replaced by RRB Act, 1976. Section 3 of the RRB Act authorised Central Govt. to establish
RRB by notification in the official gazette at the request of Sponsor Bank.
Issued Capital ratio (50:35:15) (Cental Govt:SponsorBank:state govt.)
The regional rural banks are also commercial banks but operating in limited local areas to
cater to rural industries, trade, farmers, artisans, etc.
Nationalised Banks
The Bank Nationalisation Act 1970 and Banking companies (Acquisition and Transfer of
Undertaking) Act 1980. Transferred the undertaking of existing private banks to the
corresponding new banks popularly knows as Nationalised banks.
Paid-up Capital – Originally entire Paidup Capital was held by Central govt., some of these
banks have recently made public issue of shares, but the Central Govt. still holds majority of
shares in all these banks. The Shares other than those held by the Central Govt. are freely
transferrable.
SBI Act 4 Divide capital into shares of Rs.10 each instead of Rs.100
Restriction on voting rights (being 200 shares only) was modified upto 10 % of the Issued
Capital and restriction on dividend deleted BC(A&T) 3 Authorised Capital of Rs.1,500 crore
divided into shares of Rs.10 each.
The Banking Companies (Acquisition and Transfer of Undertakings)
All public sector banks are governed by their respective, statutes and the rules, regulations or
schemes made under these statutes. In addition to this, these banks are also governed by
certain provisions of the Banking Regulation Act as stipulated in Section 51 of that Act. The
provisions of the Reserve Bank of India Act are also applicable to them.
Cooperative Banks
A Cooperative Bank is a cooperative society engaged in the business of banking.
The co-operative banks, functioning in one state only are registered under the state laws on
co-operative societies.

JAIIB: PPB (PRINVIPLES & PRACTICES OF BANKING)

JAIIB - Principles & Practices of Banking-Module-A - Indian
Financial System
Unit – 1 : Indian Financial System
1. NBFC are allowed to raise money from the public and lend monies through various
instruments for ex leasing, hire purchase and bill discounting.
2. Primary dealers deal in government securities, primary as well as secondary markets.
3. FI are financial institutions which provide long term funds for industry and agriculture.
4. Co-operative banks are allowed to raise deposits and give advances from/to public.
5. Urban co-operative banks are controlled by State government and RBI.
6. Other co-operative banks are controlled by State Government and NABARD.
7. CRR is a percentage of demand and time liabilities of a bank which is deposits held by the
bank.
8. SLR is a percentage of demand and time liabilities of a bank which is held in prescribed
government securities by the bank.
9. Bonds and debentures are examples of corporate securities and can be used to raise debts.
10. Debts, equities and derivatives are examples of securities.
11. SEBI is the capital market regulator.
12. Merchant bankers aka Investment bankers are licensed by SEBI and they issue stocks, raise
fund and manage them.
13. FII are authorized by SEBI to invest in Indian equity and debt market through stock
exchanges.
14. Depositories held securities in demat form (not physical).
15. Mutual fund pools money from investors and invests in stocks, debt and other securities.
16. The three regulatory authorities are:
RBI - for banks,
SEBI - for capital markets and
IRDA - for insurance sectors
Unit – 2 : Banking Regulation
1. RBI was constituted under the RBI Act 1934.
2. RBI started functioning with effect from 1 Apr 1935.
3. RBI is a state owned institution under the RBI (Transfer of Public Ownership) Act 1948.
4. RBI has 4 Deputy Governors and 15 Directors nominated by Union government.
5. All coins and Re 1 note is issued by Government of India but put into circulation by RBI.
6. RBI manages the exchange rate between the Indian Rupee and foreign currencies by selling
and buying foreign exchange to/from Authorised Dealers (RBI’s specified branches and other
dealers).
7. Important macroeconomic policies:
Monetary and credit policies - issued by RBI annually
Fiscal policy - issued by Ministry of Finance
EXIM policy - Ministry of Commerce
8. Saving and current accounts are demand liabilities.
9. Reducing CRR reduces loanable funds with banks.
10. RBI can prescribe SLR from 0 to 40 percent of bank’s DTL.
11. Increasing SLR reduces loanable funds with banks.
12. Bank rate is the rate at which RBI is prepared to buy or rediscount bills of exchange or other
eligible commercial paper from banks.
13. No bank held shares in a company as pledge or mortgagee in excess of the limit of 30% of
the paid-up capital of that company or 30% of the bank’s Paid-up capital and reserves, whichever
is less.
14. Open market operations refer to sale or purchase of government securities by RBI in the open
market.
15. Selective credit control is another tool which RBI uses for monetary control. It prevents
holding of essential commodities and resultant rise in their prices. Presently buffer stocks of
sugar, unreleased stocks of sugar with sugar mills representing free sale sugar and levy sugar are
covered by SCC.
Unit -3 : Retail Banking, ADR, GDR and PNs
1. Retail banking refers to dealing of commercial banks with individual customers, both assets
and liabilities sides.
Products offered are: SB, RD, CA, TDR, STDR, No Frill A/C, Home loan, auto loan, personal
loan, education loan, crop loan, credit card, debit cards, lockers, bankassurance etc.
2. Wholesale banking aka corporate banking or commercial banking refers to doing banking
business with industrial and business entities – mostly corporate and trading houses, including
multinationals, domestic business houses and prime public sector companies.
Products offered are: LC, BG, Collection of bills and documents, forex desk, tax collection,
RTGS, term lending, etc.
3. International banking refers to dealing in cross border transaction.
4. Universal banking offers all types of financial products like mutual fund, capital market
related products including share broking, commodity broking, etc, sale of gold/bullion,
government/corporate bonds, merchant banking, general banking, insurance (both life and nonlife),
etc under one roof.
5. A depository receipt (DR) is a form of negotiable (transferable) financial instrument that is
traded on a local stock exchange of a country but represents a security, usually in the form of
equity that is issued by a foreign publicly listed company.
6. Participatory Notes are like contract notes. They are issued by FII to entities that want to
invest in the Indian stock market but do not want to register themselves with the SEBI.
7. FII are not allowed to issue Participatory notes to Indian national or overseas corporate bodies
(because majority are owned/controlled by NRIs).
Unit – 4 : Role of Money Markets, Fixed Income Markets, Forex markets and FEMA
1. Money markets play a key role in banks’ liquidity management and the transmission of
monetary policy.
2. In normal times, money markets are among the most liquid in the financial sector.
3. By providing the appropriate instruments and partners for liquidity trading, the money market
allows the refinancing of short and medium-term positions and facilitates the mitigation of your
business’ liquidity risk.
4. The banking system and the money market represent the exclusive setting monetary policy
operates in.
5. A developed, active and efficient interbank market enhances the efficiency of central bank’s
monetary policy, transmitting its impulses into the economy best.
6. Development of the money market smoothes the progress of financial intermediation and
boosts lending to economy, hence improving the country’s economic and social welfare.
7. Therefore, the development of the money market is in all stakeholders’ interests: the banking
system itself, the Central Bank and the economy on the whole.
8. "Money Market" refers to the market for short-term requirement and deployment of funds.
Money market instruments are those instruments, which have a maturity period of less than one
year.The most active part of the money market is the market for overnight call and term money
between banks and institutions and repo transactions. Call Money / Repo are very short-term
Money Market products. The below mentioned instruments are normally termed as money
market instruments:
1. Certificate of Deposit (CD)
2. Commercial Paper (C.P)
3. Inter Bank Participation Certificates
4. Inter Bank term Money
5. Treasury Bills
6. Bill Rediscounting
7. Call/ Notice/ Term Money
9. Government Securities are issued by the Government for raising a Public loan or as notified in
the official Gazette.

CUSTOMER SERVICE IN BANKS

CUSTOMER SERVICE IN BANKS (Ref RBI circulars)

GUIDELINES

Banks are required to constitute a Customer Service Committee of the Board and

include experts and representatives of customers as invitees. The role of the

Committee includes:

· formulation of a Comprehensive Deposit Policy

· issues such as the treatment of death of a depositor for operations of his account

· product approval process with a view to suitability and appropriateness

· annual survey of depositor satisfaction

· tri-enniel audit of such services,

· Examination/review of the Awards being issued by Banking Ombudsman in respect

of complaints relating to provision of banking services and address issues of

systemic deficiencies existing in banks brought out by the Awards.

Banks are also required to set up Standing Committee to review the practice and

procedures prevalent in the bank and take necessary corrective action on an ongoing

basis. The committee would act as a bridge between the various departments of the

bank and the Board / Customer Service Committee of the Board.

Banks are further required to establish Customer Service Committee at branch level to

encourage a formal channel of communication between the customers and the bank at

the branch level. Besides these, each bank is expected to have a nodal

department/official for customer service at H.O. and each Controlling Office with whom

customers with grievances can approach at first instance and with whom the Banking

Ombudsman and RBI can liaise.

Policies

Along with profit, growth, and fulfilment of social obligations, customer service is treated

as priority objective of banks. Accordingly, banks are required to have in place Board

approved policies in respect of:-

a) Comprehensive Deposit Policy - covering rights of the depositors in general and

small depositors in particular and aspects of operation of deposit accounts,

charges, and other related issues.

b) Cheque collection policy – covering aspects viz. (i) immediate credit for

local/outstation cheques, (ii) Timeframe for collection of local/outstation

instruments, and (iii) Interest payment for delayed collection (Policy dealt

separately).

c) Customer Compensation Policy – covering (i) Erroneous Debits arising on

fraudulent or other transactions, (ii) Payment of interest for Delays in collection, (iii)

.

Payment of interest for delay in issue of duplicate draft, and (iv) Other unauthorised

actions of the bank leading to a financial loss to customer.

d) Customer Grievance Redressal Policy - To be framed based on the broad

principles (dealt separately)

Banks should give adequate publicity of the policies by placing them prominently in their

Websites and also the notice boards of the branches.

Financial Inclusion– Role of Banks

a) “Basic Savings Bank Deposit Account”

Banks have been advised by RBI to offer “Basic Savings Bank Deposit Account” which

will offer the minimum common facilities as under:-

■ The account should be considered as a normal banking service available to all;

■ No requirement of minimum balance;

■ Facilitate deposit and withdrawal of cash at bank branch as well as ATMs;

■ Receipt/credit of money through electronic payment channels or by means of

cheques/ collection of cheques drawn by Central/State Government Agencies and

departments;

■ Account holders are permitted a maximum of four withdrawals in a month including

ATM withdrawals;

■ Facility of ATM card or ATM-cum Debit Card

■ Facilities are free of charge and no charge would be levied for nonoperation/

activation of in-operative ‘Basic Savings Bank Deposit Account’;

■ Holders of ‘Basic Savings Bank Deposit Account’ are not eligible for opening of any

other savings bank accounts and existing such accounts should be closed down within

a period of 30 days from the date of opening of ‘Basic Savings Bank Deposit Account’.

■ Existing ‘no frills’ accounts can be converted to ‘Basic Savings Bank Deposit Account’

■ The account would be subject to RBI instructions on Know Your Customer (KYC) /

Anti-Money Laundering (AML) for opening of bank accounts issued from time to time.

In case the BSBDA is opened on the basis of simplified KYC norms, the account would

additionally be treated as ”Small Account” and further subject to the conditions

applicable thereof.

b) I.T. enables Financial Inclusion

Banks are required to increase their banking outreach to the remote corners of the

country with affordable infrastructure and technology so as to lower the transaction

costs to make small ticket transactions viable. Care should be taken to ensure that the

solutions developed are highly secure, amenable to audit, and follow widely accepted

open standards to allow inter-operability among different systems adopted by different

banks.

HRM in banks

 Fundamentals of Human Resource Management
The Perspective
An organisation is primarily a ramification of the fact that there is implied in the satisfaction of needs of individuals alongside with th aen a icnhteiervdeempeenndt eonf cy organisational objectives
••FTowrom satlr eoar mInsf oorfm thaol u ghts:
1. tHhoew w toor ko rpgraonciesses tehse a ancdt iovpiteiersa tmioonsst csayns tbeme abtriocuagllyh ta anbdo aunt alytically so that specificity in 2. How to understand an individual’s relation to a given activity now recognised as ‘work’
••CRhoabrelrets OBwabebna (g1e7 7(117-19825-188):7 1A)d:v Docivaitseio onf obfe ltatbeor uwro rking conditions for ‘vital machines’ •Frederick Taylor (1856-1915): Scientific Management Approach
1. Conducted ‘Division of Labour’ and ‘Time and Motion’ studies
•Elton Mayo: Howthorne Studies 1924-33
1. sPioginnitfeicda ntoc ev ainri othues rdeimsterinctseiodn as popfr ohaucmha tna kbeenh aevairoliuerr that were not considered to be of any
•mFaonll’o pweerdsp beyc tHivuem an relations movement that replaced ‘rational-economic man’ by ‘social •HLeartzebre rregs peoarinctheedr so luikt et hCahtr iins dAivrgidyuriasl,s Aabrera mhaomtiv Mataesdlo bwy, oDtohuegr ltahsa Mn cmGorengeotar rayn fda cFtroerds etroicok •Line managers are the delivery points
Development of People Management Functions
•A distinct managerial function since end of nineteenth century
1. Few organisations had the post of welfare secretary(also referred to as social secretaries)
••ETxhpee treimrme npte orsno gnrnoeul po fbfeichear vwioausr pbeyr hParopfs Afi rKs tR uicsee din i nA hthmee cdhaebmadic aRli caen dM pillhsa irnm 1a9c5e2u t ical i•nTdhues tcroiensc einr n1 9fo6r0 hs u man element did not occur until the socio-psychological upheavels in t•hTew loa tme a1j9o2r 0trsa adnitdio enasr olyr 1tr9e3n0dss :
12.. Hard headed, profit minded approach to utilisation of human resources Social welfare viewpoint
FRUENLACTTIIOONNSSH IP BETWEEN HRM & HRD AND THEIR STRUCTURES AND
LPaebrsoounrn aenl dD eWpealrftamree nDte partment CHlRa sDseipfiacratmtieonnt o f HRM Activities
Administration and Maintenance (Personnel)
1. Conventional component of 2. people management 3. Administration tSeyrsmte mbesn reefliatst ed to acquisition, promotion & evaluation, administration, salary and long 45.. Maintenance Systems Traditional labour management, grievances and discipline management activities
Human Resource Development
1. dDeevveellooppmmeenntt aaln sdy sgtreomwst hs,u pcher afosr minadnucceti oanp parnadis saol caianldis acotiuonns oefli nthge, cinadreiveird upalalsn,n ing 2. dOergvealnoipsamtieonnta l interventions for climate development, employee and organisational
ROLE OF HR PROFESSIONALS
Supportive Role
1. Developing systems that deal with people, their problems and organisational dynamics
Systems Development and Research
1. IPnlatengnrinagti nFgu tpueroep mlea annpdo wtheeri,r Rroelcer,u Piteinrgfo, rUmtailinzcineg a bnyd pploatceenmtieanl ta,s Mseostsivmaetinntg, ,P Rlaentaniinnign g, growth of individuals etc
Managerial Role
1. Technical, managerial, helping, coping and processing competence
Developing Competence
1. oCrrgeaantiinsga tnioencaels lseavreyl caunldtu traek ainngd cvoarlrueecst ivine tshtee posr ganisation, diagnosing the problem at
Process Role
1. oCrrgeaantiinsga tnioencaels lseavreyl caunldtu traek ainngd cvoarlrueecst ivine tshtee posr ganisation, diagnosing the problem at
Critical Attributes
Technical
Knowledge of -
12.. Performance Appraisal Systems and their functioning 3. Potential appraisal and mechanism of developing a system 4. Various tests and measurements of behaviour 5. Personnel and management 6. Behavioural Sciences 7. Career planning processes and practices 8. Counselling Behavioural research techniques
9. Ability to design and coordinate training programmes at worker, managerial levels supervisor and 1101.. Understanding of overall organisational culture Counselling skills
Managerial
12.. Organizing Ability Systems Development Skills
Personality
12.. Initiative 3. Faith in human beings and their capabilities 4. Positive attitude to others 5. Imagination and creativity 6. Concern for excellence 7. Concern for people and their development 8. Friendly, sociable and affable 9. Attitude for research and development work 10 . Interest in learning new things Ability to work as a team member
Competencies for HR Heads
Behavioural
12.. Communication 3. Initiative 4. Drive 5. Creativity 6. Self-confidence 7. Teamwork 8. Influencing Ability 9. Problem Solving Inter Personal Skills
Functional
12.. Business Knowledge 3. Change Management 4. Diversity Management 5. Service Orientation 6. Execution Excellence 7. Financial perspective 8. Building expertise 9. Personal credibility 10 . Relationship management Strategic Thinking and Alignment
Strategic Role in the Future
1. To become a partner with senior and line managers in strategy execution, move planning from conference room to the market place helping to 2. aTdom biencisotmraet ivaen eefxfpiceiertn ciny tthoe e wnsauyr ew othrka ti sc oosrtgsa anrizee rde danudce edx wechuiltee dq,u daeliltiyv eisr inmga intained 3. Tmoa nbaegcoemmee nat cahnadm apt iothne f osar meme ptilmoyee, ews,o rvkiginogr otuos ilny crreeparsees eenmtipnlgoy tehee icr ocnotnricbeurtnios nt o senior 4. tToog betehceorm ime parno vaeg eannt oorfg caonnistiantuioonu’ss tcraapnascfiotyrm foart iochna, nsghea ping processes and a culture that
Development of HR functions in India
12.. During the British raj, the ripples of whatever happened were felt in India 3. Labour Welfare Officers under the Factories Act 4. By 1950s the provisions of the Industrial Disputes Act, 1947 began to percolate down Bmya n1a9g6e0ms denemt saynsdte fmors paenrds olanwnesl rporsoef essionals with specific knowledge about people 56.. Institutes were setup: 7. Indian Institute of Personnel Management (IIPM), 1947 8. National Institute of Labour Management aNbaotivoen atwl Ion sintisttuittuet eosf personnel Management (NIPM), 1982: Formed upon merger of the 19.0 . Indian Society for Training and Development , 1970 11. MNCs gave more attention to personnel issues based on home country experience 12. In India TISCO took proactive measures in the field 13. Govt. enacted legislations related to employment and employee welfare: 14. Article 16(1) of the Indian Constitution: Equal opportunity for employment 15. Apprentices Act, 1961: Training linked to employment 16. Child Labour Act, 1986 17. Bonded Labour System Act, 1976 18. Interstate Migrant Workmen Act, 1979 19. Next major transformation in 1980s with the onset of the HRD era Establishment of National HRD network in 1985
Unit - 21 : Development of Human Resources
HRD and its subsystems
1. iOmrpgraonvizinegd jloeba rpneinrgfo ermxpaenrcieen gcreo wint ha definite time period to increase the possibility of 2. Aw apyr otcoe: ss by which employees of an organisation are helped in a continuous and planned 3. tAhceqiur iprere osre nsht aorrp eexnp ceacpteadb ifliutiteusr er ejoqbusir ed to perform various functions associated with 4. pDoetveenlotipa l tfhoeri rt hgeeinr eorwaln c aanpda/boilri toiersg aans isinadtiiovnidaul adlse vaenlodp dmisecnotv epru rapnods ee xploit their own inner 5. tDeeavmewloopr ak na nodrg caonlilsaabtoiorantaiol ncu altmuroen gin swubhiucnhi tssu apreer vsitsroorn-gsu abnodr dcinonatteri bruetlaet itoon tshheip s, professional well-being, motivation and pride of employees
Goals of HRD
To develop:
1. Capabilities of each employee 2. as an individual 3. Capabilities of each individual in relation to his or her present role 4. Capabilities of each employee in relation to his or her expected future role(s) 5. Dyadic relationship between each employee and his/her supervisor 6. Team spirit and functioning in every organisational unit (department, group etc) 7. Collaboration among different units of the organisation eOnrgabanlinisga tcioanp’asb oilviteiersa lol fh einadltihvi daunadl ss,e dlfy-raedn teewaimngs , caanpda bthilieti eesn,t iwreh iocrhg, ainni stuatrino nin crease the
Job/Role Analysis
Job Description
1. List of requirements: Skills, Qualifications etc. for performing the job
Job Specifications
1. iUnsdeuds ttroy compare two jobs within an organisation or between organisations or even an
Job Evaluation
1. iUnsdeuds ttroy compare two jobs within an organisation or between organisations or even an
Task
12.. Complex system of tasks 3. Requires a person to achieve an overall product The relationship is irrelevant
Job
1. Puts an individual in a hierarchical position
Position
1. Emphasises on the pattern of mutual expectations
Role
1. Goes a step further to encompass socio-psychological relationship
Work
1. Goes a step further to encompass socio-psychological relationship
Training and Development – Role and Impact of Training
Involves:
1. Identification 2. of Training Needs 3. Conducting the training 4. Evaluation of Training Selection and development of trainers
Purpose of Training and Development
Training
12.. Improved performance of individual on his present job Learning related to present job
Education
12.. His preparation for an identified job in a not too distant future 3. Learning to prepare the individual for a different but identified job General Learning
Development
12.. His general growth (development) not related to any specific job 3. Learning for growth of the individual not related to a specific present or future job Futuristic Learning
Importance of clarity of purpose
12.. Purpose will determine the choice as shown earlier 3. It will make the expected outcomes clear to both the parties Helps in identifying who is responsible for what activity
Imperatives of Adult Learning
1. Andragogy – Adult learning process. Analogous to pedagogy
1. iAs ctoo odpisecroavtievre tvheen mtuerea ninin gn oonf- eaxuptheorireitnacreia, na, qinufeosrmt oafl mleainrdn iwngh,i cthh ed icghsi edfo pwunrp toos teh oe f rwoohtisc h owfh tihche mpraekceosn ceedputcioantiso nw hcoicthe rfmorinmouulsa twe iothu rli fceo nadnudc ht;e nac tee cehlenviqautees olifv lienagr nitisneglf ftoor tahdeu lltesv el of adventurous experiment.
Learning Theories
Mechanistic (or Behaviorist) Theories
12.. Hold that learner is passive in the learning process 3. Every input/stimulus will get a predetermined response sLteimarunliunsg occurs when a learner is conditioned to give the ‘right’ response to a given 4. Mechanistic (or Behaviorist) Theories
Cognitive Theories
1. Equate man with his brain – humans are capable of critical thinking and problem solving
2. Purpose of learning is to teach the brain to engage in such critical thinking solving and problem
Cognitive Theories
12.. Organismic (or Humanistic) Theories tLheeairrn pinegrs oocncaul rlsif ew shietuna lteioanrn ers have ‘freedom to learn’ what is particularly relevant to 3. Ppuotrepnotsiea l of learning is to encourage each individual to develop his or her full, unique
Variables associated with actual Teaching-Learning situation
12.. Learning is enhanced when learner is motivated 3. Learning requires feedback 4. Reinforcement increases the likelihood that a learned behaviour will be repeated 5. Practice increases a learner’s performance Learning must be transferable to the job
Systematic Approach to Learning (SAT)
12.. Will the training be done internally or externally? pHaorwt? much and what kind of training will be done externally and is this also an essential 3. Who are the functionaries responsible for administering the training system?
SAT – The process
12.. Training Need Analysis(TNA) and Identification of Training Needs 3. Preparation of a Training Plan Conduct of the Training
(including designing the programme)
1. Evaluation of the Training Programme and the plan
(Reaction Level, Learning Level, Behaviour Level and Functioning Level)
1. Selection and Development of Trainers
Support systems for Training and Development
12.. Performance Appraisal System 3. Human Resource Information System Organisational Culture
Attitude Development
12.. Persistent tendency to feel and behave in a particular way towards some object 3. Characteristics: 4. Tends to persist unless something is done to change it tCoa nn efgaall taivney where in the continuum from very favourable to very unfavourable or positive
5. Directed towards some object about which a person has perception, feelings which may result in emotionally charged opinion and prejudices and beliefs,
C omponents of Attitudes Emotional Component
12.. Person’s feelings or their effect – positive, neutral or negative – about an object Expression of emotions, whether positive or negative, is important to work behaviour
Information Component
12.. Beliefs and information that an individual has about an object cUosruraelclyt founded on insufficient observations or opinions which may not be empirically
Behavioural Component
1. Person’s tendency to behave in a particular way towards the object
Significance of Attitude at Workplace
Adjustment Function
1. Help people adjust to their work environment
Ego-defensive Function
1. Help people defend their self-image
Value-Expression Function
12.. Provide people a basis for expressing their values Helps to subscribe to the ethics
Knowledge Function
1. tHheel pw sourpldp layr ostuanndd athrdems a nd frames of reference that allow people to organise and explain 2. aRnedg aorbdjleecstss oifm hpoawct atchceu sraetnes ea tpheer sinodni’vs idviueawl mofa kreeasl iotyu ti so, fa wtthitautd eiss gtooiwnga rodn p. eople, event
Changing Attitudes
Barriers to attitude change:
12.. Prior commitment to a particular thing Insufficient information
Overcoming the Barriers to attitude change:
12.. Use of Fear 3. Provide New Information 4. Resolving discrepancies between attitude and behaviour Ipnefolupelen cinev oofl vpeede rins ,i mfripernodvse manedn to pprinoicoens sle aders Co-Opting – Getting the dissatisfied
Career Path Planning
The idea behind Career Path Planning
12.. Individuals desire and expect change at certain stages in life 3. There is a (predictable) pattern in these changes There is a feeling of frustration if things do not happen as desired or expected
Life (Adulthood) Stages
Adolescence
12.. Individual’s development is to achieve an ego identity pAe rrecceoivnec ihliaimtio tno pbreo caensds mofa wkeh aatn haed jpuesrtceedi vaesss ehsimsmseelnf tt oto b feo,r mwh haits hidee tnhtiintyk s others
Young Adulthood
1. oSctacrutps adteiovne.l oping relationship with individuals, groups (interest group or work group) or
Adulthood
12.. Guiding the next generation Passing on the knowledge, values or sponsoring the younger colleagues
Maturity
1. oPre rssaotnis faytitnegm pts to achieve ego integrity by examining whether life has been meaningful
Career Roles
Apprentice
12.. Beginning of the career 3. Does routine work under the supervision of the mentor Needs to accommodate himself to a certain level of dependency
Colleague
12.. Beginning of making independent contribution Less dependence on superiors for advice and direction
Mentors
1. Beginning of complex functions
2. Individual develops ideas, manages others and must learn to assume subordinates’ work responsibility for
Sponsors
12.. Needs to broaden perspective and think long term Nweoeudlds dtoe vdeelofipn e the direction in which the entire organisation or atleast a major segment 3. sNuepepdosr tt ot hdee vperolocpe stsh eo fc ainpfalubeilnitcyi ntgo choose the right people in the organisation who can
Career Concepts
Linear Career Concept
1. Plan for upward movement within the same profession using organisational hierarchy
Steady State Career
1. iInn dthiveid huiaelrsa rcchhoyo se a profession, acquire higher skills, but do not choose to go higher up
Transitory Pattern
1. Individuals shift from one job to another not necessarily related to the previous one
Spiral Career
1. tIhnedniv imduoavles otank eto o ann ao tnheewr t jyopbe, owfo wrko rhka radn,d p feorlfloowrm t hwee lsla, mmeo vpea tutpe rinn othf ed esvtaetloups manedn tr aannkd, performance
Plateau Career
1. Reaching a level higher than where one started but then continuing on the same level
Career Path
1. tWo hheanv eth kensoew mleodvgeem oefn atsll aarcet ivpirteiedse toefr tmhien eodrg iann ais alotgioicna (l hsoerqizuoenntcael mtoo evneambelen ta)n, dinifdfeivriednuta l (pheersirpaercchtiivael)s iot fc moualnda bgee msaeidn tt h(faiet ltdh ea nodr gcaonnitsraotliloinng )h aasn dd edvieffleorpeendt ale vcealrse oefr m paantahg ement
1. cWointhti nauno eusst asubplisphlye do fC ianrdeievird Puaatlsh wPliathn nreinqgu iSreudb scyaspteambi litthiees ofrogra fnuitsuarteio rno cleasn have a
Components of Career Anchors
12.. Self perception of talents and abilities based on one’s performance Self perceived motives and needs based on self diagnosis and feedback
3. Self perceived attitudes and values based on interactions with the implicit in the organisation norms and values
Schein’s Career Anchors
Technical/Functional Competence
1. ‘in love’ with a particular field or function
Managerial Competence
1. Early experiences indicate an individual will be able to rise in the management hierarchy
Security
1. Secure work environment and career
Creativity
1. Desire to create something new
Autonomy
1. Some find organisational life unpleasant or difficult. Prefer to maintain their freedom
Career Path Planning System
aMraei:n responsibilities of the organisation while developing and implementing a career plan
1. pTehref opromliacyn coef acta rcereitric palla sntnaignegs iws hmicahd eth eex pelmicpitl.o Iyte leasy sm duoswt nat tthaien benchmarks for 2. Iatd ivsa mncaedme ecnlet ar that the career path is a facility for growth and not a right for 3. tToh eh igcahreere lre vpealt h– –is am saedqeu eknncoew onf tjoo bth aes seimgnpmloeyneetss, ftrroamin inthge r teiqmueir eomf eennttrsy .a Pnedr pforrommaontcioen 4. feedback is a part of the career path 5. The career path is followed uniformly for all employees without any bias/prejudices Igti vsehno uclidrc ubme sflteaxnibceles to accommodate variations which may be needed to deal with the
Career Path Planning Process
12.. Define the career stages (Role) in relation to the organisational levels 3. Identify the core jobs at each level 4. Define and spell out the criteria for each successive level Placement in the next career role
Multiple Careers in one organisation
12.. In flatter organisations hierarchy is neither desired, nor available What is needed is to develop expertise in different areas
3. The concept of spiral careers is becoming an ideal one in this situation
…………………………………………………………………………………………………………………………… …
Self Development
dSeiflffe dreenvte tloapskmse annt de sssiteunattiiaolnlys rwefiethrs c toom dpeavrealtoivpein ega as em. aPtruorcee spse orsfo dniascliotyv ewrihnog caannd huatnildislien g the tremendous potential within one’s individual personality
Patent Self
1. External self comprising individual’s identity and physical features
Inner Self
1. aSnigdn iwfieesa ktnhees bseesh avior patterns, values and other psychological factors including strengths
Aspects of Self Development in relation to an organisation Individual Level
Individual Level
12.. Motivational Pattern 3. Locus of Control Power Bases
Interpersonal Level
12.. Interpersonal Needs Transactional Analysis
Group Level
1. Being effective member in the work group
Locus of Control
12.. Belief of an individual about who is responsible for what happens in life 3. Types: pEextresornnasl :i nB esolieciveet yt,h lautc ke,v ednetsst ianrye a dnedt esrom oinne d by external forces like other influential 45.. Internal: Believe individuals can determine events gMrootwivtaht ion has to come from with in for real growth. Internal locus of control ensures
Power Bases
1. aPso waveor:id A b peeinrsgo fno’src peodt eton tdiaol wtoh gaet th oet hoer rssh teo ddooe sw nhoatt whea notr tsoh de ow ants them to do, as well 23.. Types: cClooesrecniveess B taos eas s: oOurrgcae noisf aptoiownearl ,p woistihtihoonl,d pinugn iisnhfomrmenatt,i ocnh aornis mreas,o puercresos nal relationship, 4. Persuasive Bases: Expertise, competence and modelling
Interpersonal interactions: Dyadic relationship
1. In organisations most of the situations imply interacting with and 2. influencing others rDeylaatdio: nTswhoip individuals maintaining a sociologically significant relationship - Interpersonal 34.. Underlying concepts: 5. Interpersonal Needs Interpersonal Interactions (Transactional Analysis)
Interpersonal Needs
Need for Inclusion
1. iTnote ersatcatbiolins ha nadn da smsoaciniatatiionn a satisfactory relationship with people with respect to
Need to Control
12.. To establish and maintain satisfactory relationship including: 3. Psychologically comfortable relationship in controlling all behaviour of other people Eliciting behaviour from them which controls one’s own behaviour
Need for Affection
Transactional Analysis (TA)
1. cEogror esstpaotensd:i n‘cgo ncsoinssteisntte npta tptaetrtne ronf ofef eblienhga avinodu re’ xperience directly related to a
Parent
12.. Regulates behaviour and nurtures it 3. Ethical, conscientious behaviour Influenced by preaching’s from parents and elders
Adult
12.. Collects information and processes it Analytical, rational and practical orientation
Child
1. PCroonfceesrsnoer)d with creativity, curiosity, reactions to others and adjusting behaviour (Little 2. Instinctive behaviour with motive of enjoyment
TA - Types of Transactions
12.. Complementary (Most Desirable) 3. Crossed (Not Desirable) 4. Angular Duplex
TA - Life Positions
1. I AM OK YOU ARE OK 2. (Ideal Situation) 3. I AM OK YOU ARE NOT OK 4. I AM NOT OK YOU ARE OK 5. I AM NOT OK YOU ARE NOT OK I AM OK YOU ARE OK THEY ARE NOT OK
Working in Teams
1. aTcehaimev:e Am gernotu opf oaf gpoeaolp oler twhieth c ohmigph ledteiognre oef otfa sinkt erdependence geared towards the 23.. Group Dynamics: 4. Internal nature of groups 5. How they form 6. Their structure and processes How they function and affect individuals and organisation
Stages in Group Formation and Behaviour
1. tFeoarmm’isn gg o(aAlw aanrde nitess sro) lMe embers with varied awareness get acquainted, understand the 23.. Storming (Conflict) Conflict among the members helps the team in defining itself tNeoarmm?in g (Cooperation) How the task will be accomplished? Rules and regulations of the 45.. Conforming (Adjustment) Adjusting one with the team expectations and norms tPheerifro rgmoainl.g F (uPlrl oednuecrtgivyi tdye)d Miceamtebde tros bweohrakv. e in mature fashion and focus on accomplishing
Self-Awareness
12.. Understanding self helps in the process of self-development 3. Johari Window by Luft and Ingham The more one knows oneself, the better equipped he is to face challenges
TKON OSWELNF SNEOLTF KNOWN TO
KNOWN TO OTHERS ARENA BLIND
NOT KNOWN TO OTHERS CLOSED DARK
Emotional Intelligence
1. cAobniltitrioels i msupcuhl saes abnedin dge alabyl eg rtoat mificoatitvioante, toon eresgeulfl aatned o pneer’ssi smt oino dths ea nfadc ek eoefp f rauwstarya tdioisnt,r etoss 2. from swamping the ability to think, to empathise and to hope. Unlike IQ, EQ grows throughout adulthood
Five components of Emotional Intelligence
Self Awareness
1. oAnb iloittyh etors recognize, understand one’s mood, emotions and drives, as well as their effects
Self-Regulation
1. Ability to control or redirect disruptive impulses and moods and propensity judgement – to think before acting to suspend
Self-Motivation
1. Pgaosaslsio wn ittho ewnoerrkg fyo ar nreda pseornssis ttheantc eg o beyond money or status and propensity to pursue
Empathy
1. tAob itlhiteyi rt oe munodtieornsatal nreda tchteio nesm otional make up of others and skill to treat people according
Social Skills
1. Pgrroofuicnide nacnyd i nb umilda nraagpipnogr tr elationships and building networks and ability to find common
Morale
12.. The morale denotes a spirit as of dedication to a common goal that unites a group 3. Displays the emotional or mental condition w.r.t. cheerfulness, confidence, zeal etc eHxigphe cmtaotrioanles tfroarn psleartfeosr minaton cpeo asintidv eh ampoptyiv eamtiopnlo, yineecrse ased productivity, exceeding
Employee Morale Boosters
12.. Welcome Ideas 3. Keep Score 4. Inspect Thank You Notes 5. Huddle 6. Open Up 7. Have Fun 8. Show Charity 9. Add Perks 10 . Fire Staff Measure It
11. Unit - 22 : Human Implications of Organizations
12. HUMAN BEHAVIOUR AND INDIVIDUAL DIFFERENCES
13. uTnhdee bre thhaev fiooullor wofin agn h ienaddivsi:d ual is influenced by several factors. These can be grouped
14. a1n. dE n(cv)i rPoonlitmicealn; tal Factors: (a) Economic, (b) Social (norms and cultural values), (2f.) PNeor. soofn daelp Feancdtaonrtss;: (a) Age, (b) Sex, (c) Education, (d) Abilities, (e) Marital Status, 3D.e sOigrng,a (nci)z aLetiaodnearslh Fipa,c (tdo)r sC:o (map) ePnhsyastiicoanl Faancdi liRtieews,a (rbd) S Oyrsgteamni;z aatniodn Structure and (4e.) P Lseyacrnhionlgo.g ical Factors: (a) Personality, (b) Perception, (c) Attitudes, (d) Values.
15. EMPLOYEES BEHAVIOUR AT WORK
16. There are some basic assumptions about human behaviour at work:
17. 1. There are differences between 2. Concept of a whole person. individuals. 34.. BAenh ianvdiiovuidru oafl ahna si nddigivnidituya. l is caused. 56.. OThrgearen iizsa mtiountsu aalritey soofc iinatl esryesstte mams.o ng organizational members. 7. Organization behaviour is holistic.
18. oWrghailen itzhaeti ofinrsst. Tfohuer lcaosnt coenpet si sc ae nctoremdb ainraotuionnd opfe othpele f,i rtshte s nixe axst stuwmo patrioen cso. ncerned with
19. Ppeerrssoonns i sd, ifinfe rc earntadi na greasinp,e tchtes,r e are certain 'commonalities' in the persons. Every 12.. lliikkee asoll moeth oetrh peer rpsoenrsso, ns, and 3. like no other person.
20. aB yg ruenadte ersxttaenndt,i npgr ecdeirctta tinh ed ilmikeelnys bioenhsa ovifo puer risno ntearlmitys aonf da cbteiohnasv iaonudr, omuatcnoamgeerss o cfa n, to apcetrisoonnsa ilnit yr.e sOpneec td oimf eenmspiolony oefe sp.e Trshoenrael iatyre w sheivcehr aisl gtheettoinrige sa ttote enxtipolna ibno tthhe frcoomnc ept of oprrgoafinleizs.a tional as well as medical researchers is the Type A and Type B behaviour
21. qAu picekr saocnh ieexvheimbietinntg aTnydp ep eAr fbeecthioanviiosmur. is generally restless, impatient with a desire for lTeyspse c o'Bm' ppeertistoivnea laitnyd p meooprele pahrielo msoupchhi cmalo irne neaatsuyr eg.o ing, relaxed about time pressure,
22. FTryipeed mAa pne, rMsoenyaelrit ya:n d Ray Roseman have mentioned the following characteristics of
23. 12.. IRse ismtlepsast iebnyt nwaittuhr eth, es op athcaet ohfe t hailnwgasy, sd misloikveess ,w waaitliknsg aanndd eisa tism rpaaptiidelnyt. with those 3w.h Mo ualrteit ansokte rim –p daotieesn ts.e veral things at once. e4v. eTrryieths intog sisc hdeodnuel eo rm nooret. and more in less and less time, irrespective of whether 56.. OUsftueanll yd idspoelasy sn onte crvoomupsl egtees tounree st hsiuncgh b aesf ocrlee nscthaertdin fgis ot na nadn obtahnegri.n g on a table. 7. Does not have time to relax and enjoy life.
24. sToycpiea bBle p aenrsdo hnaasli tay beaxhlainbictesd j uosutt tlohoek o opnp olisfeit.e characteristics and is more relaxed,
25. sEtraikgseosn w hhaisc hid aernet ibfiaesde edi gohnt ad epveersloopnm'se snttaatle s otaf gmeisn din aetx ap lgaiinveinng ptohien tp oefr stoimnael iatyre. These mentioned below:
26. SSttaaggee 12:: ATruutostn voemrysu vse Mrsiusstr uSshta me and Doubt SSttaaglee 4 3:: l nIndiutisattriyv ev evresrussu sI nGfeurilito rity SSttaaggee 56:: IIdnetinmtaitcyy v veersrsuuss R Iosloel aDtiioffnu sion SSttaaggee 78:: IGnrtoewgtrhit yv evresrusus sS tDaegsnpaatiiro n ……………………………………………………… ………………………………………………………………………
27. THEORIES OF MOTIVATION AND THEIR PRACTICAL IMPLICATIONS
28. What Motiva tiiso nM iont aivna otirogann?i zational context is referred as 'the extent of willingness of an edmirepcltoeyde,e c toon srecisopuosnlyd otor uthnec oonrsgcaionuizsalyti,o tnoawl arerdqsu isreamtisefnactsti'.o nM ootfi vnaeteiodns i(sm goetniveersa)l.ly Mmoatnivaagteiorsn inas o arg baenhizaavtiioounrsa lt ocdoanyc.e pt is of great interest to the executives and
29. TThhee ovraireiosu os ft hMeootriievsa otifo mn otivation are: 12.. SHcuimenatnif icR eMlaatnioangse mMeondte lo r Rational Economic View 34.. FArberdaehraicmk MHearszlobwer'sg 'Ns eTewdo H-Fiearcatorcrh Tyh Tehoeryo ry 56.. ACclahyietovne mAlednetr fMero'tsi vEaRtiGo nT hTehoeroyr y 78.. JVaicmtoers HS tVarcoyo Amd'as mExs'p Eeqctuaitnyc yT hMeoodrey l 19.0 .L yRmeiannfo Wrc.e mPoerntet rT ahnedo rEyd ward E Lawler - Performance Satisfaction Model. (Go through all the 10 theories)
30. BMeohtaivviaotuiro onf aannd in Bdeivhidauvailo ius rg enerally motivated by a desire to achieve some goal. Bmeohtaivvaiotiuorn .i sI neditihveidr uaanls ' adciftfiveirt yn' ootr o, n'aly s einr iethse oirf aabcitliivtyit iteos 'd. oE abcuht aaclstoiv iitny tihs esiur pwpioll rttoe dd ob,y owri tmhiont tivhaet iionnd.i vMidoutaivle. sT haeres es oamree dtiimreecst edde ftionwedar adss ngeoeadlss,, wwhainchts ,m daryiv bees, coorn ismcipouulss eosr 'shuobpceodn sfociro' ures.w Gaordasls t aorwea ordusts widhei cahn minodtiivviedsu aalr.e G doiarelsc taerde. sometimes referred to as
31. MMaontaivgaetr ioshno tuold W alosor kk now specific ways and techniques to motivate employees in the bwyo rhki msi tiuna tthioen n. oMromsat l ocfo tuhressee. tSeocmhneiq oufe tsh ea rfer epqruaectnictlayl uins enda tcuorme manodn cinacne bneti vaedso ipnt ed organizations are :
32. Mmoanneayg,e ampepnrte,c aiantdio qnu, ajolibty e onfl awrgoerkm. ent, job enrichment, job rotation, participative
33. Factors contribute to the quality of work life:
34. 12.. AA dseaqfeu aatned a hneda flathiry c eonmvpireonnsmateinotn.. 34.. JGorbosw athim aendd aste dcuervietylo; pjoinbgs aanimd euds iantg eexmpapnlodyineeg' se mskpilllos yaeneds ' acbaiplitaibesil.it ies rather than l5e.a Adnin gen tvoi rtohnemir eonbts ionl ewscheicnhc ee.m ployees develop self-esteem and a sense of identity. 67.. PAr osetencstibiolen ianntdeg rreastpioenc to ffo jro ebm caprloeyeer ea'sn dri gfahmtsi ltyo l ipferi vaancdy ,l edisisusreen tti,m eeq.u ity. etc.
35. Role Set Conflicts
36. rTohlee role set consists of important persons who have different expectations from the tehxapte actna tiniodnivsi douf asli goncicfiucpainets .o tThheer sc oannfdli ctthse a irnisdeiv diduuea lt oh iimncsoemlf.p Tahtiebsileit yr oalem soentg c tohnef licts take the following forms:
37. 12.. RRoollee aEmxpbeicgtuaittiyo n Conflict
34.. RRoollee EOrvoesriloona d 56.. PReerssoounracel IInnaaddeeqquuaaccyy 7. Role Isolation
38. Unit - 23 : Employees’ Feedback and Reward System
39. Feedback Through Climate Surveys
40. aOnrg oarngiazantizioantiso nu saerde tcoa lmleeda csluimrinagte esmurpvloeyyes.e sT'h pee crcoevpetriaognes ooff ath tey ppirceavl asiulinrvge ycl icmaant eb ein a s follows:
41. r1u.l eSst,r urecgtuulraeti:o nTsh,e p freoecleindgu rtehsa,t ceommpmlouyneiecsa thioanvse cahbaonunte tlhs e( lcaoyenrsstr ianin dtes coisni otnh em garkoiunpgs),, d2e. lRegeastpioonn asnibdi laituyth: oTrhitey ,f eeetcli.n g of being your own boss, clarity of role and r3e.s Rpoenwsiabrildit:y Tvhise- afe-veilsin sgu poef rbioerin, gsu rbeowradrindaetde sfo arn ad jpoebe dros,n eet cw.e ll, perception about r4e.w Rairsdk a: nTdh ep usneinsshem oefn rti sskyisnteesms ,a pnedr ccehpatlileonng aeb ionu tth pea jyo abn adn dp rionm thotei oonr,g eatnci.z ation, and aarney permotpehcatesids) oonr tpalkaiyningg c asalcfuel aiste edn rciosuk r(argisekd t aaknidn ga cisc eepntceodu. r aged and bona fide errors a5t.m Wosaprhmetrhe,: tThhee p greevnaelreanl cfee eolifn ign foofr mfealllo swusphpipo rtthinagt cpureltvuariels a innd t hseo cwiaol rgkrgoruopusp. t6h.e S gurpopupo,r te:m Tphhea psiesr coenp mtiountu aabl osuutp phoelrpt ffurlonmes as boofv me aannadg beerslo awn din o tthhee rh eemiraprlcohyye.e s in p7e. rSfotarmnadnacred sst:a Tnhdea rpdesr,c tehivee edm imphpaosritsa nocne d oofi nimg pal igciot oadn djo bex, pthlicei tc hgaolalelsn gane dr epresented i8n. pCeornsofnliaclt :a nTdh eg rfoeueplin ggo tahlsa.t the managers and other workers want to hear different o9p. iIndioennst, itthye: Tprhoec efeses lionfg c oofn bfleiclto nregsinoglu ttioo nth, eo poprgoartnuinzaittyio tno aenxdp rpeesrsc tehivee vdi evwalsu,e e tinc . the organization and work group, etc.
42. REWARD AND COMPENSATION SYSTEM
43. cThhaen wgea gae jso ibn. tThhee f ocormm poef ncsoamtiponen sshaotiuolnd inso vt iebwe esdo amse tahgee mr tahinat a etmtrapclotiyoene tso d joo inno otr f eel amtotrtaivcatste tda lteon tp, uitt iisn ath meiar jboer ssto. utrhcee coofm repteennstaiotino no fs hthoeu ledx biseti nsgu cmh atnhpato wit ecro anntidn uhaallsy an edge which motivates them to give their best.
44. Types of Compensations
45. bCoonmupse, ncsaasthio anl loisw eaxnpcreess saendd i nb etneermfitss osfu mcho anse ya.c Icti dweonut,l dh ethaultsh iinncsluurdaen:c we acgoevse ro,r salary, jeombps laoryee rb'sr ocaodnltyr icbluatsisoinfi etdo itnh efo ruert igreromuepnst afnudn dtsh,e p croomvispieonns oaft ioancc foomr mthoedma tiiso nco, metmc.o Tnhlye referred to as shown below:
46. 12.. SMuapneargveisroiarly ( .t.o. ps,a mlairdyd le, junior) ... remuneration 34.. CUlnesrkicilalel do,r sAedmmi-inskisiltlreadt,iv sek i.l.e dsa alanrdy highly skilled ... wages
47. Compensation Base
48. bCaosmisp oern sfaactitoonr sp oonli cwy hisic ahn c oimmppoerntasnatt ioenle mgeetnst dienc pideerdso?n Int eclo muladn baeg:e ment. What is the
49. 1. 2. CMoamrkpeat nsyit uoabtjieocnt ivoer sp revailing market rate 3. Internal and external pressures.
50. cAo gnosiodde rcaotmiopnes,n ssautpiopnly paancdk adgeem sahnodu pldo sciotivoenr, ffaacirtonress sli,k ee qaudael qpuaayc yfo, rs oecqiueatal lw ork and job evaluation.
51. TTahkei nagd mthinisi satsra tthioen p irsi mboeu onbdj etcot ipvreo tthecet Itnhdei awno Grkofvoerrcnem freonmt hirarsa teionnaacltleyd l:o w wages.
52. 12.. TThhee PMainyimmeunmt oWf aWgaegs eAsc At,c 1t,9 14983 6, 34.. TThhee PEaqyumale Rnet mofu nBeornautsio An cAt,c t1,9 16957, 6a.n d
53. Unit - 24 : Performance Management - Part 1
54. epmerpfolormyeaen pcee rafoprpmraainsacel ,is t aakne i mcoprorertcatnivte t ostoel pbsy twhrhoiuchg ht htera oinrginagn,i zinatteiornves nrteiovinesw o r ppelarcfoemrmeannt cdee tcois aio nhsig, hreerw laervde lg. ood performance and attempt to take the employee
55. Objectives of Performance Appraisal System
56. 12.. JDuedvgeelompemnetanlt a- l f-o rt eslalinlagry a inn cermeapsloeyse, etr ahnoswfe irss haen dd opinrogm aontdio snusg; gesting changes in 3h.is C sokuilnlss,e alitntgit ubdye ss,u pbeerhioavr i-o ufor;r giving feedback and understanding problems for poor performance.
57. Uses of Performance Appraisal t1h. uIst rmaateksin agl l tthheem e mcopmlopyaereasb lien oan u an icfioemd mmoann nfoeor tbinyg u. sing the same rating scales and i2n.c Irte apsroevs,id teras ninsffeorrsm, atrtaioinni nwgh, icehtc c. ould be critical while deciding on promotion, pay i3n.i tIita tpioronv oidfe cso irnrefocrtmivea tsiotenp asb. out the areas of weaknesses of the employee to enable 45.. ITth iem spyrsotveems ,t hife i mqupalelimtye notf esdu pweitrhvi soipoenn anse tshse a nsudp terruvsits,o er nbseucroems ebse tate kre iennte orpbesersrovnear.l relations between the employee and his supervisor.
58. Performance Appraisal Methods
59. Traditional Methods 12.. FSrteraei gFhotr mRa Ensksinagy MMeetthhoodd 34.. CGoramdpinagri sMoent hMoedt hod 56.. FGorarcpehdic C ohro Licinee Daer sRcaritpintigo nS cMaeletsh od 78.. FGororcuepd ADpipstrraibisuatli oMne tMheotdh od
60. Modern Methods 12.. AMsasneasgsmemenent tC beyn tOreb jWecotrivkeshs ops 3. Human Asset Accounting Method
4. Behaviourally Anchored 5. 360 Degree Appraisal M eRtahtoindg Scales
61. Performance Appraisal versus Confidential Report
62. Icna rari eladr goeu tn ausm ab ecro noffi doergnatinailz aactitoivnitsy t.h Ien afancntu, atlh pee froformrm iann wceh iachp ptrhaeis pael refxoermrcaisnec eis of the employee is evaluated and reported is called confidential report.
63. Merits and Demerits of performance appraisal system
64. The merits are: t1r.u Istt rienv tehael so arg caonnizcaetrino nfo. r performance and creates an atmosphere of openness and t2i.m Gei.v es feedback to the employee and ensures that corrective steps are taken in 3. It raises the general motivation level of the employees if implemented properly.
65. The demerits are: i1n.f lTuheen chea ltoh ee fafesscet s—sm ae tnetn. dTehnec yh atloo aisll otow roantee atrna iet morp lcohyaerea cctoenrissitsitce notfl ya nh iegmh polro yloewe .t o a2n. dT haec cleonrdieinngclyy othr es tariscstensessms etennt dgeentcs yi nofflu tehnec seudp. eTrhioer sinutpeerrfieorre iss wuinthab tlhee t oa pcpormaies aol ut o3.f tThhees ec etnetnrdael ntecniedse. ncy problem refers to assigning average ratings to all the feemaprlleosyselye.s without properly evaluating each aspect of appraisal carefully and t4r.a Sitism ailnadr eprarroarm ise ttehres .t eTnhdoesnec wy hoof csohmowp atrhineg s itmheil aerm cphlaoryaecete wrisitthic os naersee nlfo ormn avlalyri orautse d high.
Unit - 25 : HRM and Information Technology
oGrlogbanaliizsaattiioonns hfraosm re amllo pvaerdts a oll ft thhee p whoyrslidc,a lb, ya nudse n oaft ioITn.a Hl bRoMu nadsa ar iefusn bcyti olinn khinags dual irnefsopromnastibioilnit yte tcoh rneoslopgoyn d( ItTo) ,t hfoer d teravnelsofpormmeanttiso nh aovf inthge t amkiennd pselatc oef ina llt hined aivriedau aolfs across the organization and also use of IT in day to day decision process.
aT hvea rbieatnyk ionfg d seelicvteorry hcahsa nabnseolsr btoe ds umpapxoirmt ucmus ttoemchenros'l ongeye dfosr inth aenir eofpfeicriaetniot nasn.d I Te fhfeacst iovfef ered manner.
Role of IT in HRM
tTrhaeinrien gis, lpolta coef msceonpte, afoprp ruasiesa ol fa InTd irne wwahrodle s ryasntegme ,o of rHgRanMiz fautniocntiaoln dse iv.ee.l orpemcreunittm ineintita, tives eetmc.p lTohyee en euesde df owr ituhsien othf eIT o rcgaann bizea tsieoenn. Ntherwo udgimh ethnes iofonlslo hwainvge :b ie. eBna saidc dinefdo rtmo aetmiopnl oaybeoeu t dHaRtDa sduecchis iaosn str aairnei ndga,t ac-obmapseedte nnocwie sa, nsdk ilIlTs, perxopveidcetast itohnast edtact.a U. Apddahteiorenn ocef etom pstlaotyueteosr yd ata rcehqaulleirnegmee nint sk.e Aesp ipnegr tNhaed wleorr:k if.o Mrcaes'ss ivve.- cinrkfl uaxn do fk tneocwhnleodlogge yb iansteo cwuorrrekpnlta acne dp raevsoeidn ts great dweomrkofroarlcizei nogb seoffleescct.e nHcReD N eefwfo rtto omlsu sdti sarluigpnt ttroa dthiteio cnoarlp woorartke p paltatnenrninsg a. nHdR cDa ne fhfoarvtes would rbees uelxtas.m ined in terms of contributing to high performance work unit and demonstrating
HR Information and Database Management
Computer based data can enhance the quality of decision making. information system includes the following types of data: The need Afo rty upsicea ol fH IRT can be sOeregna nthisraotuiognha lt hheis tfoorllyo w(einngtr:y i .l eBvieol-,d partoam, Eodtiuocna,t ipolnaacel mqueanltifsi,c atrtaioinni,n Pgr,o pfeesrsfoiormnaal nqcuea lification appraisal, competencies, Salary & allowances.
pTrhoev iadbeosv leo tt yopf ein offo rdmataat,io rne qausi rinesp ufet wfo rc hdaencgiseios no vmear kain tgim. e period. But the data base
sHyRst eRmess eliakerc rhe c:r uRietmseeanrct,h p irno HmRoMtio cna, nt rbaein uinngd,e arptapkreanis atol suynsdteemrs teatncd. :t otr uennddes rosft aenxdis tthineg sweonrskiftoivrec et oin i ntteerrmnsa lo ef nmviorotinvmateionnt,, creogmumlairt mopeinnti,o enx spuercvteaytiso,n b, efnrucshtmraatrioknin ge,t cc.l itmo arteem satuind ies etc. can be conducted.
dKinstoriwbuletidngg eaMnda n(da)g peomoleinngt t(hKeM k)n o: wKlMed rgeefe (rass t op eprr oWcielcsosx o-1f 9(a9)7 )c.rTehaeti npge,o (pble) sinto ar insygs (tec)m raeresp tohnes isboiluitryc eosf othf ec rienafotirnmga ktnioonw tleecdhgneo wlohgiyle m staocrhininge aryn do fd tihster iobrugtainngiz tahteio nin.f oHremnaceti on is the bmuarneaaguecmraetinc tp orfo c'kensosw. Klendogwel ewdogrek emr'a ins avgeermy ecrnitt ichaals i sgsauien eadn dp rcoamninnoetn bcee idno tnhee bliyg htrta odfit tiohnea l, ourngcaenrtizaaintitoyn t hoar tn tohte, peamrtpilcouylaerel yw whho ehraes t hcere aattterdit itohnes klen7o7wellesd agree, hwigillh ceor.n tinue with the
tUrasien ionfg tientcehrnveonlotigonys i nto t sruaiitn tihneg in: dTihvied uteacl hlenaorlnoegrys .o fIfmerpso artna notp fpeoarttuurneisty a irne d:e signing
1. Mass learning user friendly material can be produces at low cost.
2. Trainers and trainees can be physically separated.
3. Trainee has the option to choose time and date and place and convenience form for learning.
Technology based training methods help in distance learning.
Advantages of E-Learning :
1. Trainee can choose his own time and place to learn.
2. Trainee can learn at his own pace.
3. Trainee can check his understanding It is highly cost effective.
Disadvantages of E-Learning :
1. Inflexible as program is pre-produced.
2. It needs greater self discipline.
3. It can produce a sense of isolation If turnover is low.
4. It can prove expensive due to high cost of hardware and software
Unit - 25 : HRM and Information Technology
oGrlogbanaliizsaattiioonns hfraosm re amllo pvaerdts a oll ft thhee p whoyrslidc,a lb, ya nudse n oaft ioITn.a Hl bRoMu nadsa ar iefusn bcyti olinn khinags dual irnefsopromnastibioilnit yte tcoh rneoslopgoyn d( ItTo) ,t hfoer d teravnelsofpormmeanttiso nh aovf inthge t amkiennd pselatc oef ina llt hined aivriedau aolfs across the organization and also use of IT in day to day decision process.
The banking sector has absorbed maximum technology for their operations. a variety of delivery channels to support customers' needs in an efficient and I Te fhfeacst iovfef ered manner.
Role of IT in HRM
tTrhaeinrien gis, lpolta coef msceonpte, afoprp ruasiesa ol fa InTd irne wwahrodle s ryasntegme ,o of rHgRanMiz fautniocntiaoln dse iv.ee.l orpemcreunittm ineintita, tives eetmc.p lTohyee en euesde df owr ituhsien othf eIT o rcgaann bizea tsieoenn. Ntherwo udgimh ethnes iofonlslo hwainvge :b ie. eBna saidc dinefdo rtmo aetmiopnl oaybeoeu t dHaRtDa sduecchis iaosn str aairnei ndga,t ac-obmapseedte nnocwie sa, nsdk ilIlTs, perxopveidcetast itohnast edtact.a U. Apddahteiorenn ocef etom pstlaotyueteosr yd ata rcehqaulleirnegmee nint sk.e Aesp ipnegr tNhaed wleorr:k if.o Mrcaes'ss ivve.- cinrkfl uaxn do fk tneocwhnleodlogge yb iansteo cwuorrrekpnlta acne dp raevsoeidn ts great dweomrkofroarlcizei nogb seoffleescct.e nHcReD N eefwfo rtto omlsu sdti sarluigpnt ttroa dthiteio cnoarlp woorartke p paltatnenrninsg a. nHdR cDa ne fhfoarvtes would rbees uelxtas.m ined in terms of contributing to high performance work unit and demonstrating
HR Information and Database Management
iCnofomrpmuatteior nb assyesdte dma tian ccluand eesn thhaen fcoel ltohwei nqgu atyliptye so fo df edcaitsaio: nT hmea knienegd. Afo rty upsicea ol fH IRT can be sOeregna nthisraotuiognha lt hheis tfoorllyo w(einngtr:y i .l eBvieol-,d partoam, Eodtiuocna,t ipolnaacel mqueanltifsi,c atrtaioinni,n Pgr,o pfeesrsfoiormnaal nqcuea lification appraisal, competencies, Salary & allowances.
pTrhoev iadbeosv leo tt yopf ein offo rdmataat,io rne qausi rinesp ufet wfo rc hdaencgiseios no vmear kain tgim. e period. But the data base
sHyRst eRmess eliakerc rhe c:r uRietmseeanrct,h p irno HmRoMtio cna, nt rbaein uinngd,e arptapkreanis atol suynsdteemrs teatncd. :t otr uennddes rosft aenxdis tthineg sweonrskiftoivrec et oin i ntteerrmnsa lo ef nmviorotinvmateionnt,, creogmumlairt mopeinnti,o enx spuercvteaytiso,n b, efnrucshtmraatrioknin ge,t cc.l itmo arteem satuind ies etc. can be conducted.
dKinstoriwbuletidngg eaMnda n(da)g peomoleinngt t(hKeM k)n o: wKlMed rgeefe (rass t op eprr oWcielcsosx o-1f 9(a9)7 )c.rTehaeti npge,o (pble) sinto ar insygs (tec)m raeresp tohnes isboiluitryc eosf othf ec rienafotirnmga ktnioonw tleecdhgneo wlohgiyle m staocrhininge aryn do fd tihster iobrugtainngiz tahteio nin.f oHremnaceti on is the bmuarneaaguecmraetinc tp orfo c'kensosw. Klendogwel ewdogrek emr'a ins avgeermy ecrnitt ichaals i sgsauien eadn dp rcoamninnoetn bcee idno tnhee bliyg htrta odfit tiohnea l, ourngcaenrtizaaintitoyn t hoar tn tohte, peamrtpilcouylaerel yw whho ehraes t hcere aattterdit itohnes klen7o7wellesd agree, hwigillh ceor.n tinue with the
tUrasien ionfg tientcehrnveonlotigonys i nto t sruaiitn tihneg in: dTihvied uteacl hlenaorlnoegrys .o fIfmerpso artna notp fpeoarttuurneisty a irne d:e signing
1. Mass learning user friendly material can be produces at low cost.
2. Trainers and trainees can be physically separated.
3. Trainee has the option to choose time and date and place and convenience form for learning.
Technology based training methods help in distance learning.
Advantages of E-Learning :
1. Trainee can choose his own time and place to learn.
2. Trainee can learn at his own pace.
3. Trainee can check his understanding It is highly cost effective.
Disadvantages of E-Learning :
1. Inflexible as program is pre-produced.
2. It needs greater self discipline.
3. It can produce a sense of isolation If turnover is low.
4. It can prove expensive due to high cost of hardware and software

Jaiib legal short notes

Unit 1: Legal Framework of Regulation of Banks

Constitution Of Bank

Banks in India fall under one of the following categories:

1. Body corporate constituted under a special statute;

2. Company registered under Companies Act, 1956 / foreign company

3. Cooperative Society registered under a central and state enactment on cooperative societies.

Reserve Bank as Central Bank

The Reserve Bank was constituted under Section 3 of RBI Act. The Central Govt holds the whole capital of RBI.

1. Regulating the issue of bank notes

2. Keeping of reserves for ensuring monetary stability

3. Generally to operate the currency and credit system of the country to its advantage.

RBI: Regulator and Supervisor

1. Power to License

2. Power to appointment and removal of banking boards/personnel

3. Power to regulate the business of banks

4. Power to give directions

5. Power to inspect and supervise banks

6. Power regarding audit of banks

Government as a Regulator of Banks

The Reserve Bank is primary regulator of banks. But Central govt. has also been conferred extensive powers under the RBI Act

and the BR Act either directly or indirectly over the banks.

Unit 2: Control Over Organisation Of Banks (20)

Licensing Of Banking Companies

 A Temporary branch for less than 30 days in a town where a bank has an existing branch does not require permission from

RBI.

Board Of Directors (28)

 Authorized Capital the maximum limits of share capital which a company is authorised to have under its Memorandum.

 Paid-up Capital The amount of share capital of a company is subscribed and paid-up

 Subscribed Capital The amount of share capital of a company, which is issued and subscribed.

Unit 3: Regulation Of Banking Business

Selective Credit Control (44)

Regulation of credit to different sectors of the economy is known as Selective Credit Control.

While General Credit Controls operate on the cost and volume of credit, Selective credit controls aim at regulating the distribution

or direction of bank resources to particulars sectors of the economy.

Selective Credit Control seeks to influence the demand for credit by

i. Making borrowing costly for certain purposes, which are relatively inessential

ii. By imposing stringent conditions on lending for such purposes

iii. By giving concessions for certain desired types of activities

The tools employed for exercising selective credit control are

i. Minimum margins for lending against selected commodities

ii. Ceiling on the levels of credit

iii. Charging minimum rate of interest on advances against specified commodities

Scheduled Banks (54)

A scheduled bank is a bank included in the second schedule of the RBI Act. Section 42(6) of the Act. RBI may include any bank in

the second schedule if it satisfies the following requirements.

a. It has paid-up capital and reserves of an aggregate value of not less than Rs. 5 Lakhs.

b. It satisfies the Reserve Bank that it affairs are not conducted in a manner detrimental to the interests of depositors;

and

.

c. It is

(1) State cooperative Bank

(2) A company defined in section 3 of the companies act

(3) An institution notified by central govt.

Cash Reserve : The penalty which is payable by a banking company which is scheduled bank for failure to maintain cash

reserve in any week for the first time is 3% of over bank rate. For 2nd time 5% over bank rate.

Unit 4: Returns, Inspection, Winding Up

Board for Financial Supervision

It is constituted by RBI. The board consists of Chairman (Governor of RBI), Vice Chairman (one of the Dy. Governor of RBI), Four

directors from the Central Board. The board performs functions and exercises the powers of supervision and inspection under

the RBI Act and the BR Act. The board meets at lease once in a month. Three members of whom one Chairman / vice-chairman

shall form a quorum for the meeting.

Unit 5: Public Sector Banks and Cooperative Banks

State Bank Of India was established under Section 3 of the State Bank Of India Act, 1955 for taking over the undertaking of the

Imperial Bank Of India. The majority of shares are held by Reserve Bank. Although shares are freely transferable, the Reserve

Bank cannot transfer the shares if such transfer would result in reducing its holding below 50% of the issued capital. No

shareholder other than Reserve Bank can exercise voting rights above 10%.

The chairman and Managing Director are appointed for a period not exceeding 5 years and are eligible for reappointment. Their

services can be terminated by the Central Govt. by giving 3 months notice or notice pay in lieu thereof after consultation with the

Reserve Bank.

Subsidiary Banks

SBH State Bank of Hyderabad Act, 1956

SBS Saurashtra State banks(amalgamation) Ordinance, 1950

All other banks State Bank Of India (Subsidiary Banks) Act, 1959

The majority of shares are held by State Bank Of India. Shares are freely transferable as provided in Section 18 of the Act,

However State Bank is not entitled to transfer the shares if such transfer would result in reducing its shareholding to less than

50%.

Management of Subsidiary Bank (95)

The Board consists of Chairman of the State Bank (ex-officio chairman), Managing Director and other directors. The state bank

appoints Managing Director after consulting the board of subsidiary bank and with the approval of Reserve Bank.

Business of Subsidiary Bank

A subsidiary bank has to act as a agent of State Bank under Section 36 of the SBI Subsidiary Act.

Regional Rural Banks (96)

They were first set up in 1975 under the RRB Ordinance 1975. The ordinance was later replaced by RRB Act, 1976. Section 3 of

the RRB Act authorised Central Govt. to establish RRB by notification in the official gazette at the request of Sponsor Bank.

Issued Capital ratio (50:35:15) (Cental Govt:SponsorBank:state govt.)

Nationalised Banks

The Bank Nationalisation Act 1970 and Banking companies (Acquisition and Transfer of Undertaking) Act 1980. Transferred the

undertaking of existing private banks to the corresponding new banks popularly knows as Nationalised banks.

1. Paid-up Capital – Originally entire Paidup Capital was held by Central govt. , some of these banks have recently made public

issue of shares, but the Central Govt. still holds majority of shares in all these banks. The Shares other than those held by the

Central Govt. are freely transferrable.

Application of BR Act TO Public Sector Banks

Disinvestment of Shares by Government

Act Section Description

SBI Act 4  Divide capital into shares of Rs.10 each instead of Rs.100

11 Restriction on voting rights (being 200 shares only) was modified upto

10 % of the Issued Capital and restriction on dividend deleted

BC(A&T) 3 Authorised Capital of Rs.1,500 crore divided into shares of Rs.10 each.

The Banking Companies (Acquisition and Transfer of Undertakings)

Cooperative Banks (103)

A Cooperative Bank is a cooperative society engaged in the business of banking.

 Applicability of BR act

.

Section

31 The banker is bound to pay the cheques drawn by customer i,e, to honor his

customer’s mandate

10,85,89,

128

Grants protection to paying banker

6 Cheque is defined as bill of exchange

Protection to Paying Banker if payment is in due course

10 Payment In Due Course

85 Grants protection to a Paying banker, but it is not absolute

 Banker can seek protection under section 85 only where payment has been

made to the holder, his servant or his agent, i.e. payment must be made in due

course.