BASEL-III:

BASEL-III:
Originally set in 1974, the most recent set of norms, called Basel III. These are common set of global standards to be implemented by banks across countries. In India, lenders have to adhere to these regulations from 2019. After the 2008 financial crisis, need arose to strengthen the banking system further so that they could meet further risks. To meet these dangers, banks were asked to maintain a certain minimum level of capital and not lend all the money they receive from deposits. This acts as a buffer during hard times.
The Basel III norms also consider liquidity risk. The capital norms recommend Capital Adequacy ratio (CAR) be increased to 8 per cent internationally, while in India it is 9 per cent. CAR is a ratio of a bank‘s capital to its risk. This capital is further classified into two – Tier 1 (the main portion of the banks‘ capital, usually in the form of equity shares) and Tier 2 capital.
Domestic Systemically Important Banks (D-SIBs):
D-SIB means that the bank is too big to fail. According to the RBI, some banks become systemically important due to their size, cross-jurisdictional activities, complexity and lack of substitute and interconnection. Banks whose assets exceed 2% of GDP are considered part of this group. The RBI stated that should such a bank fail, there would be significant disruption to the essential services they provide to the banking system and the overall economy.
The too-big-to-fail tag also indicates that in case of distress, the government is expected to support these banks. Due to this perception, these banks enjoy certain advantages in funding.It also means that these banks have a different set of policy measures regarding systemic risks and moral hazard issues.
As per the framework, from 2015, every August, the central bank has to disclose names of banks designated as D-SIB. It classifies the banks under five buckets depending on order of importance. ICICI Bank and HDFC Bank are in bucket one while SBI falls in bucket three. Based on the bucket in which a D-SIB is, an additional common equity requirement applies. Banks in bucket one need to maintain a 0.15% incremental tier-I capital from April 2018. Banks in bucket three have to maintain an additional 0.45%.
"Too big to fail" describes the concept whereby a business has become so large that a government will provide assistance to prevent its failure because not doing so would have a disastrous ripple effect throughout the economy.
Capital Adequacy Ratio (CAR):
Capital Adequacy Ratio (CAR) is also known as Capital to Risk (Weighted) Assets Ratio (CRAR) is the ratio of a bank‘s capital to its risk. Central Bank regulates bank‘s CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements.
It is a measure of a bank's capital. It is expressed as a percentage of a bank's risk weighted credit exposures.
This ratio is used to protect depositors and promote stability and efficiency of financial systems around the world.
Two types of capital are measured: tier one capital, which can absorb losses without a bank being required to cease trading, and tier two capital, which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.
CAR = Tier I Capital + Tier II Capital / Risk Weighted Assets
TIER 1 CAPITAL = (paid up capital + statutory reserves + disclosed free reserves) - (equity investments in subsidiary + intangible assets + current & brought-forward losses)
TIER 2 CAPITAL = A) Undisclosed Reserves + B) General Loss reserves + C) hybrid debt capital instruments and subordinated debts
The Basel III norms stipulated a capital to risk weighted assets of 8%. However, as per RBI norms, Indian scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12%.

Credit Risk:
Credit risk refers to the risk that a borrower may not repay a loan and that the lender may lose the principal of the loan or the interest associated with it or both.
This can occur on account of poor financial condition of the borrower, and it represents a risk for the lender.
Credit risks are calculated based on the borrowers' overall ability to repay. To assess credit risk on a consumer loan, lenders look at the five C's: an applicant's credit history, his capacity to repay, his capital, the loan's conditions and associated collateral
Operational Risk:
Operational risk is the prospect of loss resulting from inadequate or failed procedures, systems or policies.
 Employee errors
 Systems failures
 Fraud or other criminal activity
 Any event that disrupts business processes
This definition includes legal risk but excludes strategic and reputational risk.
Operational risk can play a key role in developing overarching (comprehensive) risk management programs that include business continuity and disaster recovery planning, and information security and compliance measures.
A first step in developing an operational risk management strategy can be creating a risk map -- a plan that identifies, assesses, communicates and mitigates risk.
Market Risk:
Market risk is the risk of losses in positions arising from movements in market prices.
There is no unique classification as each classification may refer to different aspects of market risk. Nevertheless, the most commonly used types of market risk are
 Equity Risk: The risk that stock or stock indices prices or their implied volatility will change.
 Interest rate Risk: The risk that interest rates or their implied volatility will change.
 Currency Risk: The risk that foreign exchange rates or their implied volatility will change.
 Commodity Risk: The risk that commodity prices (e.g. corn, crude oil) or their implied volatility will change.
Liquidity Risk:
Liquidity risk is the risk that a company or bank may be unable to meet short term financial demands. This usually occurs due to the inability to convert a security or hard asset to cash without a loss of capital and/or income in the process.
Liquidity risk generally arises when a business or individual with immediate cash needs, holds a valuable asset that it cannot trade or sell at market value due to a lack of buyers, or due to an inefficient market where it is difficult to bring buyers and sellers together.
Reputational Risk:
Reputational risk is the risk of damage to a bank‘s image and public standing that occurs due to some dubious actions taken by the bank. Sometimes reputational risk can be due to perception or negative publicity against the bank and without any solid evidence of wrongdoing. Reputational risk leads to the public‘s loss of confidence in a bank.
The bank‘s failure to honor commitments to the government, regulators, and the public at large lowers a bank‘s reputation. It can arise from any type of situation relating to mismanagement of the bank‘s affairs or non-observance of the codes of conduct under corporate governance.
Risks emerging from suppression of facts and manipulation of records and accounts are also instances of reputational risk. Bad customer service, inappropriate staff behavior, and delay in decisions create a bad bank image among the public and hamper business development.
RCSA:
RCSA (Risk Control Self-Assessment) is an empowering method/process by which management and staff of all levels collectively identify and evaluate risks and associated controls. It is a technique that adds value by increasing an operating unit‘s involvement in designing and maintaining control and risk systems as well as identifying risk exposures and determining corrective action. It aims to integrate risk management practices and culture into the way staff undertake their jobs, and business units achieve their objectives. It provides a framework and tools for management and employees to:
 Identify and prioritize their business objectives
 Assess and manage high risk areas of business processes
 Self-evaluate the adequacy of controls
 Develop risk treatment action plans
 Ensure that the identification, recognition and evaluation of business objectives and risks are consistent across all levels of the organization
Paripassu Charge:
A ‗Paripassu‘ charge gives lenders a right to the property on which a charge is created in proportion to the amount lent to the debtor. Let us assume two banks ‗X‘ and ‗Y‘ have lent to a company with the outstanding at Rs 70 lakh and Rs 30 lakh respectively and have‗paripassu‘ charge over the assets hypothecated. In case of liquidation of that company, the lenders ‗X‘ and ‗Y‘ will share the proceeds from liquidation in proportion to the outstanding loan amount, that is, 70:30
Reverse Mortgage and how does it work:
A reverse mortgage is a loan extended to senior citizens against the security of a house property owned by them. The loan is given in lump sum or in installments and it provides important cash flow to the senior citizens who require money during their old age. They continue to be the owners of the house and occupy it. The loan obligation is deferred till the death of the homeowner. The legal heirs of senior citizens can repay the loan amount after the death of the borrower and the bank will release the security on the house property.

Mortgage

Mortgage

Very important for knowledge

. Mortgage is defined in Section 58 of the Transfer of Property Act.
2. Mortgage is the transfer of interest in a specific immovable property, for the purpose of securing an existing or future debt or
for the performance of an engagement which may give rise to a pecuniary liability. The person creating the mortgage is called as
the mortgagor and the person in whose favour mortgage is created (bank) is called as the mortgagee.
3. Immovable property, means land and things attached or permanently fastened to the earth.
4. Types of Mortgage: There are six types of mortgages namely (i) Simple Mortgage (ii) Mortgage by Conditional Sale (iii)
Usufructuary Mortgage (iv) English Mortgage (v) Mortgage by Deposit of title Deeds (Equitable Mortgage) and (vi). Anamalous
Mortgage. Of these, all • mortgages except Equitable Mortgage require registration with the Registrar of Assurances.
5. Registered Mortgage: In the case of registered mortgage (also called legal mortgage) first a mortgage deed is written which is
stamped as per Stamp Act of the concerned state. The deed is then executed in the presence of two witnesses. Thereafter, in
terms of the Indian Registration Act 1908, it is to be registered with the Registrar of Assurances (Sub Registrar) within 4 months of
the execution.
6. Simple Mortgage: In simple mortgage the mortgagor makes himself personally liable to pay the debt and agrees that in the
event of failing to pay according to his contract, mortgagee can get the property sold through the intervention of the court. If after
sale of property some debt is still outstanding, the borrower shall be- personally liable for the outstanding amount. Neither the
possession nor ownership of the property is transferred to the mortgagee. The mortgagee cannot exercise the right of foreclosure.
7. Mortgage by Conditional Sale: The mortgagor ostensibly sells the property to the mortgagee upon the condition that if the
debt is paid in time the property will be transferred back to him and in case of nonpayment within the specified time the
transaction would become a real sale. There is no personal liability of the mortgagor. In case of default, the mortgagee can exercise
his right of foreclosure through court.
8. Usufructuary Mortgage: In this mortgage, possession of the property is transferred to the mortgagee. The mortgage money is
recovered through income of the mortgaged property. There is no personal liability of mortgagor.
9. English Mortgage: As in the case of simple mortgage, the mortgagor undertakes personal liability to pay the debt. He transfers
the ownership of mortgaged property to the mortgagee upon a condition that property must be transferred back to him on
payment of debt. Mortgagee can sell the mortgaged property even without the intervention of court.
Equitable Mortgage
1. Equitable Mortgage is called as Mortgage by Deposit of Title Deeds.
2. It can be created by mere deposit of title deeds of property with intention to borrow.
3 a.Title deeds should be deposited at Mumbai, Kolkata, Chennai ( Presidency Towns) or any other town notified by the State
Government in this regard. It is not necessary that the title deeds should be deposited with the branch or at the place where the
loan is being raised.
3 b.These can be deposited anywhere in India at a notified place.
it is not necessary that it should be within bank branch premises. Mortgagor can deliver the title deeds to an authorized
representative of the bank at mortgagor's residence or other place provided it is in a Notified Centre.
4. The property to be mortgaged may be located anywhere in India (For example, for property located in Delhi, title deeds can be
deposited at Chennai.
5. Equitable Mortgage does not require registration with Registrar of Assurances. But in case of a limited company, charge in
yespect of equitable mortgage under Section 125 of the Companies Act, 1956 must be registered with Registrar of Companies.
6. A title deed can be a sale deed, lease deed, partition deed, gift deed, deed of assignment, deed of relinquishment, or such
other documents. Agreement to sale is not a title deed.
7. Normally a bank should insist for original title deeds but in exceptional cases equitable mortgage can be. created even by
certified copy of the title deeds.
8. Property located in cantonment areas should not be accepted for equitable mortgage, without clearance from cantonment
authorities.
10.The bank should not part with the title deeds even for a short duration at the request of the mortgagor because if some other
creditor is induced to finance on the basis of title deeds, the bank may Lose priority over the mortgaged property.
11. No registration with Registrar of Assurance is required. For a company, registration with ROC within 30 days is required u/s
87 of Companies Act 2013. Under SARFAESI Act, registration with CERSAI.
12.Deposit can take place within Municipal limits of Presidency Towns (Kolkata, Chennai or Mumbai) or State Govt. Notified Towns.
It is not necessary that the place for deposit of title.deeds, should be bank branch premises
Legal Opinion and Search Report: Before accepting mortgage of immovable property, legal opinion should be
obtained that the property is fit for mortgage and search should be conducted in the records of Registrar /Sub
Registrar for at least 12 years to ensure that the property is free from prior encumbrance.
Priority of Mortgage: The priority of the mortgage is considered from the date of execution of the mortgage deed (in the case of
registered mortgage) or from the date of creation of mortgage by deposit of title deeds and not with reference to the type of
mortgage or date of registration.
Right of Redemption: Right of the mortgagor to get back his mortgaged property on repayment of the loan, is called as the right of
redemption. This is available in all types of mortgages.
Right of foreclosure: The right of the mortgagee to deny the mortgagor of the property to exercise his right of redemption i.e.
debarring the mortgagor for ever to get back the mortgaged property is called as the right of foreclosure. This right is available to
the mortgagee in case of mortgage by conditional sale.

ARTICLES OF UCPDC 600

ARTICLES OF UCPDC 600

Article-1 : UCPDC-boo apply to any LC when its text expressly indicates that it is subject to these rules. The rules are binding on all
parties thereto unless expressly modified or excluded by the credit.
Article-2: Definitions : Advising bank, Applicant, Banking day, Beneficiary, Complying presentation, Confirmation, Confirming
bank, Credit, Honour, Issuing bank, Negotiation, Nominated, Presentation, Presenter.
Article-3 Interpretations:
 A credit is irrevocable even if there is no indication to that effect.
 Branches of a bank in different countries are separate banks.
 The expression "on or about" will be interpreted as an event to occur during a period of 5 calendar days before until 5
calendar days after the specified date, both start and end dates included.
 The terms "first half" and "second hal' of a month shall be construed respectively as the 1st to the 15th and the 16th to the
last day of the month, all dates inclusive.
 The terms "beginning", "middle" and "end" of a month shall be construed respectively as the 1st to the loth, the nth to the
loth and the 21st to the last day of the month, all dates inclusive.
Article-4 Credits v. Contracts: A credit is a separate transaction from the sale. Banks are not concerned with or bound by such
contract, even if any reference is included in the LC.
ArticIe-5 Documents v. Goods: Banks deal with documents and not with goods, services or performance to which documents
relate.
Article-6 Availability, Expiry Date and Place for Presentation: A credit must state an expiry date for presentation. An expiry date
for negotiation is deemed expiry date for presentation which must be made on or before the expiry date.
Article-7 Issuing Bank Undertaking: If stipulated documents are presented to the nominated bank or to the issuing bank, the
issuing bank must honour.
Article-8 Confirming Bank Undertaking: The confirming bank must honour the credit. It must reimburse another nominated bank
that has negotiated a complying presentation and forwarded the documents to the confirming bank.
Article-9 Advising of Credits and Amendments: A credit and any amendment may be advised to a beneficiary through an
advising bank. An advising bank advises the credit and any amendment without any undertaking to negotiate. By advising the
credit, the advising bank signifies that it has satisfied itself as to the apparent authenticity of the credit and the advice accurately
reflects the terms and conditions of the credit or amendment received.
Article-io Amendment: A credit can neither be amended nor cancelled without the agreement of the issuing bank, the
confirming bank and the beneficiary. Partial acceptance is not allowed and will be deemed to be notification of rejection of the
amendment.
Article-it Tele transmitted and Pre-Advised LC and Amendments: An authenticated teletransmission will be deemed to be the
operative credit or amendment, and any subsequent mail confirmation shall be disregarded. If it states "full details to follow" the
tele-transmission will not be operative credit or amendment.
Article-12 Nomination: By nominating a bank to accept a draft or incur a deferred payment undertaking, an issuing bank
authorizes that nominated bank to prepay or purchase a draft accepted or a deferred payment undertaking incurred by that
nominated bank.
Article-13 Bank-to-Bank Reimbursement Arrangements.: If a credit states that reimbursement is to be obtained by a nominated
bank, the credit must state if the reimbursement is subject to the ICC rules in effect on the date of issuance of the credit.
Article-14 Standard for Examination of Documents:
(a) A nominated bank and issuing bank shall each have a maximum of 5 banking days following the day of presentation to
determine if the documents are in order.
(b) A presentation must bemade by or on behalf of the beneficiary not later than 21 calendar days after the date of shipment as
described in these rules, but in any event not later than the expiry date of
the credit.
(c) A document may be dated prior to the issuance date of the credit, but must not be dated later than its date of presentation.
Article-15 Complying Presentation: a. When an issuing bank or confirming bank determines that a presentation is complying, it
must honour or negotiate the documents.
Article-16 Discrepant Documents,Waiver and Notice:
a. When a nominated bank determines that a presentation does not comply, it may refuse to honour or negotiate.
b. When an issuing bank determines that a presentation does not comply, it may approach the applicant for a waiver of
discrepancies.
Article-17 Original Documents and Copies: a. At least one original of each document stipulated in the credit must be presented.
Article-18 Commercial Invoice: (a) A commercial invoice, must appear to have been issued by the beneficiary; made out in the
name of the applicant, made out in the same currency as the credit; and need not be signed. (b) The description of the goods,
service or performance in a commercial invoice must correspond with that appearing in the credit.
Article-19 Transport Document Covering at Least Two Different Modes of Transport: The date of issuance of the transport
document will be deemed to be the date of dispatch, taking in charge or shipped on board, and the date of shipment

A transport document indicating that trans-shipment will or may take place is acceptable, even if the credit prohibits transshipment.
Article-2o Bill of Lading: a. A bill of lading, must indicate that the goods have been shipped on board a named vessel at the port
of loading stated in the credit. The date of issuance of the bill of lading will be deemed to be the date of shipment.
Article-21 Non-Negotiable Sea Waybill: It must indicate that the goods have been shipped on board a named vessel at the port
of loading stated in the credit.
Article-22 Charter Party Bill of Lading: It must indicate that the goods have been shipped on board a named vessel at the port of
loading stated in the credit. The date of issuance of the charter party bill of lading will be deemed to be the date of shipment.
Ai-tide-23 Air Transport Document: It must appear to indicate that the goods have been accepted for carriage and indicate
the date of issuance. This date will be deemed to be the date of shipment.
Artiele-24 Road, Rail or Inland Waterway Transport Documents: These must indicate the date of shipment or the date the goods
have been received for shipment, dispatch or carriage at the place stated in the credit. The date of issuance of the transport
document will be deemed to be the date of shipment.
Article-25 Courier Receipt, Post Receipt of Certificate of Posting: A courier receipt evidencing receipt of goods for transport,
must indicate a date of pick-up or of receipt or wording to this effect. This date will be deemed to be the date of shipment.
Article-26 "On Deck", "Shipper's Load and Count", "Said by Shipper to Contain" and Charges Additional to Freight: A transport
document must not indicate that the goods are or will be loaded on deck. A clause on a transport document stating that the
goods may be loaded on deck is acceptable.
Article-27 Clean Transport Document: A clean transport document is one bearing no clause or notation expressly declaring a
defective condition of the goods or their packaging.
Article-28 Insurance Document and Coverage: An insurance document can be an insurance policy, an insurance certificate or a
declaration under an open cover. Cover notes will not be accepted
(b) The date of the insurance document must be no later than the date of shipment, unless it appears from the insurance
document that the cover is effective from a date not later than the date of shipment
(c) The insurance document must be in the same currency as the credit (d) If there is no indication in the LC of the insurance
coverage required, the amount of insurance coverage must be at least no% of the CIF or CIP value of the goods.
Article-29 Extension of Expiry Date or Last Day for Presentation: If the expiry date of a credit or the last day for presentation
falls on a day when the bank to which presentation is to be made is closed, the expiry date or the last day for presentation, as the
case may be, will be extended to the
first following banking day. In such case, a nominated bank must provide a statement on its covering schedule that the
presentation was made within the time limits extended in accordance with article 29. The latest date for shipment will not be
extended as a result of article 29.
Article-30 Tolerance in Credit Amount, Quantity and Unit Prices:
(a) The words "about" or "apprx" used in connection with the amount of LC or the quantity or the unit price stated in the LC are
to be construed as allowing a tolerance not to exceed 10% more or 10% less than the amount, the quantity or the unit price to
which they refer.
(b) A maximum tolerance of 5% more or 5% less than the quantity of the goods is allowed, where the credit does not state
quantity in terms of a stipulated no. of packing units or individual items and the total amount of the drawings does not exceed
the amount of LC.
(c) Even when partial shipments are not allowed, a tolerance not to exceed 5% less than the amount of the credit is allowed,
provided that the quantity of the goods, if stated in the credit, is shipped in full and a unit price, if stated in the credit, is not
reduced or that sub-article 30 (b) is not applicable.
Article-31 Partial Drawings or Shipments: Partial drawings or shipments are allowed.
Article-32 Instalment Drawings or Shipments: If a drawing or shipment by instalments within given periods is stipulated in the
credit and any instalment is not drawn or shipped within the period allowed for that instalment, the credit ceases to be available
for that and any subsequent instalment.
Article-33 Presentation Time: A bank has no obligation to accept a presentation outside of its banking hours.
Article-34 Disclaimer on Effectiveness of Documents: A bank assumes no liability or responsibility for the form, sufficiency,
accuracy, genuineness, falsification or legal effect of any document, or for the general or particular conditions stipulated in a
document or superimposed thereon; nor does it assume any liability or responsibility for the description, quantity, weight, quality,
condition, packing, delivery, value or existence of the goods, services or other performance represented by any document, or for
the goods faith or acts or omissions, solvency, performance or standing of the consignor, the carrier, the forwarder, the consignee
or the insurer of the goods or any other person.
Article-35 Disclaimer on Transmission and Translation: A bank assumes no liability or responsibility for the consequences arising
out of delay, loss in transit, mutilation or other errors arising in the transmission of any messages or delivery of letters or
documents, when such messages, letters or documents are transmitted or sent according to the requirements stated in the
credit, or when the bank may have taken the initiative in the choice of the delivery service in the absence of such instructions in
the credit.
Article-36 Force Majeure: A bank assumes no responsibility for consequences arising out of the interruption of its business by

Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, or by any strikes or lockouts or causes beyond its
control.
Article-37 Disclaimer for Acts of an Instructed Party: A bank utilizing the services of another bank for the purpose of giving effect
to the instructions of the applicant does so for the account and at the risk of the applicant.
Article 38- Transferable Credits: A transferable credit may be made available in whole or in part to 2nd beneficiary at the request
of the first beneficiary. It cannot be transferred at the request of a second beneficiary. The first beneficiary can substitute its own
invoice and draft for those of a second beneficiary for an amount not in excess of LC.
Article-39 Assignment of Proceeds: The beneficiary can assign any proceeds to which it may be or may become entitled under
the credit.
eUCP : Supplement to UCPDC for Electronic Presentation (Version IA)
eUCP has been created to take care of the demand of the market for the presentation of electronic documents or for a mixture of
paper documents and electronic presentation. It provides definitions permitting UCP 60o terminology and providing rules to
allow both sets of rules to work together.
Article el of eUCP narrates the scope of eUCP. eUCP also deals with relationship of eUCP and UCP 600 (e2), definitions (e3),
format (e4), presentation (e5), examination (e6), notice of refusal (e7), originals and copies (e8), date of issuance (e9), transport
(elo), corruption of electronic record after presentation (en) and additional disclaimer of liability for presentation of electronic
records under eUCP (e12).
INTERPRETATIONS USED IN UCPDC-600
 A credit is irrevocable even if there is no indication to that effect.
 On or about — Such expression will be interpreted as a stipulation that an event is to occur during a period of 5 calendar days
before until 5 calendar days after the specified date, both start and end dates included.
 The words `to', 'until', 'from' and 'between' when used to determine a period of shipment include the date mentioned and
the words 'before' and 'after' exclude the date mentioned.
 The words 'from' and 'after' when used to determine a maturity date exclude the datementioned.
 The terms 'first half and 'second half of a month shall be construed respectively as the 1st to the 15th and the 16th to the last
day of the month, all dates inclusive.
 The terms 'beginning', 'middle' and 'end' of a month shall be construed respectively as the ist to 10th, the 11th to the 20th and
the 21St to the last day of the month, all dates inclusive.
 Branches in different countries are considered to be separate banks.
 The date of issuance of the transport documents will be deemed to date of despatch, taking in charge or shipped on board
and the date of shipment. If the transport document indicates, by stamp or notation, a date of despatch taking in charge or
shipped on board, this date will be deemed to the date of shipment.
 Trans-shipmentmeans unloading from onemeans of conveyance and reloading to anothermeans of conveyance (whether or not in
different modes of transport) during the carriage, from the place of dispatch taking in charge or shipment to the place of final
destination stated in the credit.
 A clean transport documents is one bearing no clause of notation expressly declaring a defective condition of the goods or
their packaging.
 If there is no indication in the credit about insurance coverage, amount of insurance coverage must be at least 110% of CIF or
CIP value of the goods.

EXPORT IMPORT CREDIT MCQs

EXPORT IMPORT CREDIT MCQs

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

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

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

2. Aspertheexchangecontrolregulations,thepaymentforexportsshouldingeneralberealizedwithina

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

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

(e) 45 days formdate of shipment

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

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

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

4. In respectof shipmentsmade toIndianownedwarehouses abroad establishedwithpermissionof RBI,

export proceeds shouldbe realizedwithin:

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

5. RBImonitorsoverdueexportbills-not realizedwithinthestipulatedtimeby calling for ahalf yearly

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

6.Packing credit advances mean :

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

(c) advancesgrantedtoimporterstoenablethemtostoreandsubsequentlysellimportedgoodslocally

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

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

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

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

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

8. Packing credit advances is normally allowed for :

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

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

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

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

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

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

NOSTRO account.**

(e) either (a)or (b)

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

respectofusancebills is :

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

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

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

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

12. Refinance against eligible export finance is available from:

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

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

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

14. Forfacilitiesgrantedupto30.6.2010ConcessionalinterestrateonPostshipmentcreditinrupeesis

permittedupto:

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

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

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

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

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

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

(e) None of these

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

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

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

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

*

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

from educational institution?

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

19.Which of the following is true?

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

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

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

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

(e) None of these

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

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

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

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

bankof reputesituatedoutside India

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

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

not furnishedwithin6months fromdateof remittance is submittedby ADs toRBIon:

(a) monthlybasisby 10thof thefollowingmonth

(b) quarterlybasisby 15thof themonthfollowing closeofquarter

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

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

22. Crystallisation of import bill under UCmeans:

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

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

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

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

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

23. ApplicationformakingpaymenttowardsimportsintoIndiahastobemadetoauthoriseddealersby

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

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

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

international bank when amount of advance remittance exceeds:

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

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

international bank?

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

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

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

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

but

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(d) None of these (e) All of these

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

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

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

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

270 days should not exceed :

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

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

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

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

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

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

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

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

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

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

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

EXPORTFINANCE

Case- STUDY

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

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

10%; Foreign usance bilis—20%.

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

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

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

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

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

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

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

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

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

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

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

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

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

purchased, for the bill submitted by the exporter?

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

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

purchase of the bill?

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

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

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

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

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

for the days beyond Normal Due Date (NDD)?

a) 8% b) 7% c) 7.5% d) 10%

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

1. FOB value =

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

Deduct Insurance & freight 12% of 2175000 = 261000

Balance = 1914000

Deduct profit margin 10% of 1914000 =191400

Balance = 1722600

Less Margin 25% = 430650

PCL = 1291950

2. 45000 x43.85=1973250

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

interest will be charged.

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

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

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

Limitation period of various documents CCP exam

Limitation period of various documents CCP exam


Temporary Overdraft without DPN 3 years from date of loan
Demand Loan 3 years from the date of loan
Demand Promissory Note 3 years from date of DPN
Bill of exchange_payable on demand 3 years from date of Bill.
Usance bill of exchange or promissory note 3 years from the due date of the bill or PN •
-Suit for Money_ Decree 3 years from the date right is due
Term Loans payable by instalments 3 years from due date of each instalment . .
Mortgage 12 years from the due date of the loan
Right of foreclosure by the mortgagee 30 years
Right of redemption 30 years
Cash credit against hypothecation or overdraft 3 years from the date of document.
Cash Credit Pledge Not applicable
Any suit by State/Central Government 30 years from the date when limitation would start
Deposit like SB, CA, FD with a bank 3 years from date of demand
Execution of Decree 12 years from the date of decree
Recovery of loss caused by fraud 3 years from the date of detection of fraud
Claim under Consumer Protection Act 2 year from the date light accrues
Dishonour of cheque under sec 138 of NI Act 1 month from the date right accrues
Appeal to High Court against Lower court 90 days from date of decree
Appeal to other courts on the decree at Lower court 30 days from date of decree

Basic Principles of Information Security:

Basic Principles of Information Security: For over twenty years, information security has held confidentiality, integrity and availability (known as the CIA triad) to be the core principles. There is continuous debate about extending this classic trio. Other principles such as Authenticity, Non-repudiation and accountability are also now becoming key considerations for practical security installations. Confidentiality: Confidentiality is the term used to prevent the disclosure of information to unauthorized individuals or systems. For example, a credit card transaction on the Internet requires the credit card number to be transmitted from the buyer to the merchant and from the merchant to a transaction processing network. The system attempts to enforce confidentiality by encrypting the card number during transmission, by limiting the places where it might appear (in databases, log files, backups, printed receipts, and so on), and by restricting access to the places where it is stored. If an unauthorized party obtains the card number in any way, a breach of confidentiality has occurred. Breaches of confidentiality take many forms like Hacking, Phishing, Vishing, Email-spoofing, SMS spoofing, and sending malicious code through email or Bot Networks, as discussed earlier.

Amendments made in the Indian Companies Act, 2013:

Amendments made in the Indian Companies Act, 2013:
The amendments to the Companies Act 1956 in 2013 Act have introduced several new concepts and have also tried to streamline many of the requirements by introducing new definitions. After getting approval of both the houses of Parliament, the long awaited Companies Bill 2013 obtained the assent of the President of India on 29 August 2013 and became Companies Act, 2013 (2013 Act). The changes in the 2013 Act have far-reaching implications that are set to significantly change the manner in which corporates operate in India.
Highlights of Companies Act 2013:
1. Immediate Changes in letterhead, bills or other official communications, as if full name, address of its registered office, Corporate Identity Number (21 digit number allotted by Government), Telephone number, fax number, email ID, website address if any.
2. One Person Company (OPC): It's a Private Company having only one Member and at least One Director. No compulsion to hold AGM. Conversion of existing private Companies with paid-up capital up to Rs 50 Lacs and turnover up to Rs 2 Crores into OPC is permitted.
3. Woman Director: Every Listed Company /Public Company with paid up capital of Rs 100 Crores or more / Public Company with turnover of Rs 300 Crores or more shall have at least one Woman Director.
4. Resident Director: Every Company must have a director who stayed in India for a total period of 182 days or more in previous calendar year.
5. Accounting Year: Every company shall follow uniform accounting year i.e. 1 st April -31st March.
6. Loans to director – The Company CANNOT advance any kind of loan / guarantee / security to any director, Director of holding company, his partner, his relative, Firm in which he or his relative is partner, private limited in which he is director or member or any bodies corporate whose 25% or more of total voting power or board of Directors is controlled by him.
7. Articles of Association- In the next General Meeting, it is desirable to adopt Table F as standard set of Articles of Association of the Company with relevant changes to suite the requirements of the company. Further, every copy of Memorandum and Articles issued to members should contain a copy of all resolutions / agreements that are required to be filed with the Registrar.
8. Disqualification of director- All existing directors must have Directors Identification Number (DIN) allotted by central government. Directors who already have DIN need not take any action. Directors not having DIN should initiate the process of getting DIN allotted to him and inform companies. The Company, in turn, has to inform registrar.
9. Financial year- Under the new Act, all companies have to follow a uniform Financial Year i.e. from 1st April to 31st March. Those companies which follow a different financial year have to align their accounting year to 1st April to 31st March within 2 years. It is desirable to do the same as early as possible since most of the compliances are on financial year basis under the new Companies Act.