LIMITED LIABILITY PARTNERSHIP ACT - 2008
Need for the New Corporate Entity – LLP

Concept, Condensed form of the Act
1. With the growth of the Indian economy, the role played by its entrepreneurs as well as
its technical and professional manpower has been acknowledged internationally.  It is
felt opportune that entrepreneurship, knowledge and risk capital combine to provide a
further impetus to India’s economic growth.  In this background, a need has been felt
for a new corporate form that would provide an alternative to the traditional partnership,
with unlimited personal liability on the one hand, and, the statute-based governance
structure of the limited liability company on the other, in order to enable professional
expertise and entrepreneurial initiative to combine, organize and operate in flexible,
innovative and efficient manner.
2.   The Limited Liability Partnership (LLP) is viewed as an alternative corporate business
vehicle that provides the benefits of limited liability but allows its members the flexibility
of organizing their internal structure as a partnership based on a mutually arrived
agreement. The LLP form would enable entrepreneurs, professionals and enterprises
providing services of any kind or engaged in scientific and technical disciplines, to form
commercially efficient vehicles suited to their requirements. Owing to flexibility in its
structure and operation, the LLP would also be a suitable vehicle for small enterprises
and for investment by venture capital.
3.  Keeping in mind the need of the day, the Parliament enacted the Limited Liability
Partnership Act, 2008 which received the assent of the President on 7th January, 2009.
The salient features of the LLP Act 2008 inter alia are as follows:
(i) The LLP shall be a body corporate and a legal entity separate from its partners. Any two
or more persons, associated for carrying on a lawful business with a view to profit, may
by subscribing their names to an incorporation document and filing the same with the
Registrar, form a Limited Liability Partnership.  The LLP will have perpetual succession.
(ii) The mutual rights and duties of partners of an LLP inter se and those of the LLP and its
partners shall be governed by an agreement between partners or between the LLP and
the partners subject to the provisions of the LLP Act 2008.  The act provides flexibility to
devise the agreement as per their choice.  In the absence of any such agreement, the
mutual rights and duties shall be governed by the provisions of proposed the LLP Act.
(iii) The LLP will be a separate legal entity, liable to the full extent of its assets, with the
liability of the partners being limited to their agreed contribution in the LLP which may
be of tangible or intangible nature or both tangible and intangible in nature. No partner
would be liable on account of the independent or un-authorized actions of other partners
or their misconduct. The liabilities of the LLP and partners who are found to have acted
with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or
any of the debts or other liabilities of the LLP.

(iv) Every LLP shall have at least two partners and shall also have at least two individuals as
Designated Partners, of whom at least one shall be resident in India. The duties and
obligations of Designated Partners shall be as provided in the law.
(v) The LLP shall be under an obligation to maintain annual accounts reflecting true and fair
view of its state of affairs.  A statement of accounts and solvency shall be filed by every
LLP with the Registrar every year.  The accounts of LLPs shall also be audited, subject to
any class of LLPs being exempted from this requirement by the Central Government.
(vi) The Central Government have powers to investigate the affairs of an LLP, if required, by
appointment of competent Inspector for the purpose.
(vii) The compromise or arrangement including merger and amalgamation of LLPs shall be in
accordance with the provisions of the LLP Act 2008.
(viii) A firm, private company or an unlisted public company is allowed to be converted into
LLP in accordance with the provisions of the Act. Upon such conversion, on and from the
date of certificate of registration issued by the Registrar in this regard, the effects of the
conversion shall be such as are specified in the LLP Act. On and from the date of registration
specified in the certificate of registration, all tangible (movable or immovable) and
intangible property vested in the firm or the company, all assets, interests, rights,
privileges, liabilities, obligations relating to the firm or the company, and the whole of
the undertaking of the firm or the company,  shall be transferred to and shall vest in the
LLP without further assurance, act or deed and the firm or the company,  shall be
deemed to be dissolved and removed from the records of the Registrar of Firms or
Registrar of Companies, as the case may be.
(ix) The winding up of the LLP may be either voluntary or by the Tribunal to be established
under the Companies Act, 1956. Till the Tribunal is established, the power in this regard
has been given to the High Court.
(x) The LLP Act 2008 confers powers on the Central Government to apply provisions of the
Companies Act, 1956 as appropriate, by notification with such changes or modifications
as deemed necessary.  However, such notifications shall be laid in draft before each
House of Parliament for a total period of 30 days and shall be subject to any modification
as may be approved by both Houses.
(xi) The Indian Partnership Act, 1932 shall not be applicable to LLPs.


A brief overview
ü An LLP is a body corporate.
ü Apart from individuals, even body corporates may be partners.
ü Minimum two partners and two Designated Partners who must be individuals, but no
limit on the maximum number of partners. Designated Partners are liable for compliance.
If any compliance is not carried out, they will be liable for all penalties.
ü LLP may carry on any lawful business, trade, profession, service or occupation. Unlike
the Naresh Chandra Committee Report, the flexibility has been provided for LLPs to be
incorporated in such manner as they deem fit.
ü Inter se relationship, rights and duties between partners is governed by LLP Agreement
(which would also require to be registered). In the absence of agreement principles set
out in schedule 1 apply (general principles of equality, in terms of sharing of profits and
losses, etc).
ü The Name of the LLP must end with either the words ‘Limited Liability’
‘Partnership’ or the acronym ‘LLP’
· Agency: Every partner is an agent of the LLP and not of the other partners
· Unauthorised Acts: An LLP is not bound by unauthorized acts of any partner in dealing
with a third person provided such third person
(a) is aware that the acts are unauthorised; or
(b) does not know or believe that the partner is a partner of the LLP
v Wrongful Acts or Omissions: An LLP is liable for wrongful acts or omissions
of partners in the course of business of the LLP or with its authority–The
partner(s) committing such act or omission will be personally liable – Other
partners not to be liable for such wrongful act or omission.
v An obligation of the limited liability partnership is solely the obligation of the
limited liability partnership.
v The liabilities of the limited liability partnership shall be met out of the property
of the limited liability partnership. Accordingly, unlike the Texas first law, even
liability for debt is limited.
Right to share profits transferable
v Right of a partner to share profits is transferable (either wholly or in part)
v Transfer does not imply that the transferor/assignor has ceased to be a Partner
v Transferee/ assignee not entitled to participate in the management of the LLP
v Transferee/assignee not entitled to any information relating to transactions of LLP
v Statements of Accounts and Solvency: An LLP must prepare a ‘Statement of Accounts’

v Why is there a need for a statutory provision of this nature?
v Would this prohibit subordinate debt, where partners agree not to recover their debts
until external debt is paid off?
v Section 71 – The provisions of this Act would be in addition to, and not in derogation of,
the provisions of any other law for the time being in force.
v Therefore one would need to analyse provisions of various statutes governing professionals
to decide whether they can take advantage of this LLP.
v For instance, the Chartered Accountants Act, 1949, provides uses in a number of places
the term “firm”, which would usually refer to a firm under the Indian Partnership Act,
1932. The said Act also prohibits companies from practicing as chartered accountants.
Are amendments necessary?
v For instance, for lawyers, under the Advocates Act, only Advocates can appear before
courts. As a firm is not a person in the eyes of law, a partnership firm is permitted. In
light of the LLP Act, where a firm would be treated as a person in the eyes of law with
perpetual succession, it is difficult to see how an LLP can be a firm under the provisions
of the Advocates Act, which could be recognised as having a right to practice. For instance,
even today, a lawyer cannot be part of a company and a company cannot be the lawyer
appointed for a client.
v Filing of accounts–Accounts of a firm is a private affair, except for disclosures which have
to be made to the income tax authorities Now accounts would have to be filed with the
Registrar.
v Would this be acceptable to the Indian legal firms, chartered accountants and other
professionals?
v One issue that arose in proposing a bill for limited liability partnerships was that paper
thin LLPs should not be permitted as they could completely undermine the credibility of
LLPs.
v At that point of time the Naresh Chandra committee had suggested that there should be
provisions for Compulsory Insurance under the LLP Act.
v The proposal has disappeared in the winds of changes.
v The entire proposal of LLPs is based on a one way street.
v While you can convert from a firm or a company to an LLP, there are no provisions for
erring and deciding to reconvert back into a partnership or a company.
v In such a case, the decision has to be well weighed realising that there is no “U turn”
available down the road.
v Section 27(4) of the Act states that the liabilities of a limited liability partnership shall be
met out of the property of the limited liability partnership.
v One issue that arises is whether this would preclude in any manner, lenders and contracting
parties from obtaining personal and corporate guarantees from the partners as a
precondition to providing any loans.
v The arguments against this is that the principles of a guarantee arise from contract law
and this would not preclude the application of such principles.
v The argument in favour of treating such guarantees as void is that this is a special law
that mandates that the liability is to be met out of the property of a limited liability
partnership.
v Perhaps the absence of the words “exclusively” or “only” would be a determinant in the
event any litigation happens around this point.
v Questions arise, whether like a traditional partnership, there could be paid partners,

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

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

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

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

✔ Name of the firm
✔ Names of the partners and their addresses
✔ location where the business is carried on.
✔ Partnership tenure between the partners
✔ The main office of the firm, etc.


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

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

The company exhibits certain special characteristics, such as

✔ It have a Separate Legal Entity
✔ It contains Common Seal under its name
✔ It has limited liability
✔ It acts as an artificial person, Etc.

COMPARISON

PARTNERSHIP COMPANY
The members of the Partnership firm are called as Partners. The members of the company are called as shareholders of a company.
 Enacted by
Partnership Form of business is governed by "The Indian Partnership Act, 1932." Company Form of business is governed by "The Indian Companies Act, 2013”.
 Number of Members
Partnership firm must have Minimum of 2 partners and maximum of 20 partners. A Company must have Minimum of 2 and maximum of 200 in the case of private company. Minimum 7 and maximum is unlimited number of members in case of public company
 Created by
Partnership Firm is Created by Contract between two or more people. Company Firm is Created by Law i.e created by incorporation of a company under company law.
 Regulation Authority
It is regulated by the Registrar of Firms which comes under State Government. It is regulated by the Registrar of Companies which comes under Central Government.
 Registration procedure
The registration of a Partnership firm is Not Mandatory. The registration of Company with Registrar of Companies is Mandatory.
 Documents Required
Partnership Deed(Agreement Document) is the mandatory document for creation of a Partnership Firm. Memorandum of Association(MoA) and Articles of Association(AoA) are the main documents to the incorporation of the company.
 Separate Legal Entity
Partnership firm is not a separate legal entity from partners. The Partners of the firm are collectively referred as a Partnership firm. A company is a separate legal entity, It is a separate entity from its members, directors, promoters, etc.
 Liability of Members
The partners have Unlimited Liability in all the matters relating to Partnership Firm. The Shareholders and promoters have Limited liability to Capital of the company.
 Accounts and Audit
Partnership Firm has to maintain accounts as per the conditions stated in partnership deed. A Company should maintain accounts and auditing of accounts by certified Chartered Accountant are Compulsory.
 Common Seal
A Common Seal is not required for Partnership Firm. A Common Seal in the form of a stamp is required for the company for legal and functional purposes.
 Management
Management of the activities of a Partnership Firm is usually done by the working partners. Management of the activities of a Company is done by Board of Directors.
 Change of Name
The name of the Partnership Firm can be changed easily by having a discussion between partners. The name of the company cannot be changed easily and a prior approval of Central Government is required to change the name.

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

COMPANIES & PARTNERSHIP ACT
1. A modification of charge under Section 125 of Companies Act, 1956, is registered by using which
Form Nos. Form Nos 8 & 13. The revised system for registration of charge with ROC is through
Electronic mode – MCA 21 (E-filing)
2.While granting advances to a company with charge created on securities which require registration
under Section 125, what is to be seen as a banker? As a banker, we should ensure that there is no
prior charge on the same securities by inspecting register of mortgages and charges at the office of
registrar of companies
3.Under Section 125 of Companies Act, a charge created by a joint stock company is required to be

CURRENT AFFAIRS ON 13.05.2019

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Basics of Banking

Few Important Banking/Financial terminologies:

Bank Rate:

Under Section 49 of the Reserve Bank of India Act, 1934, the Bank Rate has been defined as ―the standard rate at which the Reserve Bank is prepared to buy or re-discount bills of exchange or other commercial paper eligible for purchase under the Act. On introduction of LAF, discounting/rediscounting of bills of exchange by the Reserve Bank has been discontinued. As a result, the Bank Rate became dormant as an instrument of monetary management. It is now aligned to MSF rate and used for calculating penalty on default in the cash reserve ratio (CRR) and the statutory liquidity ratio (SLR).

Marginal Standing Facility Rate:

To meet additional liquidity requirements, banks can borrow overnight funds from the Reserve Bank under the Marginal Standing Facility (MSF) at a higher rate of interest, normally 100 basis points above the policy repo rate. Banks can borrow against their excess SLR securities and are also permitted to dip down up to two percentage points below the prescribed SLR to avail funds under the MSF.

Statutory Liquidity Ratio (SLR):

This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. In terms of Section 24 of the Banking Regulations Act, 1949, scheduled commercial banks have to invest in unencumbered government and approved securities certain minimum amount as statutory liquidity ratio (SLR) on a daily basis. In addition to investment in unencumbered government and other approved securities, gold, cash and excess CRR balance are also treated as liquid assets for the purpose of SLR.

Cash Reserve Ratio:

Banks in India are required to hold a certain proportion of their deposits in the form of cash.

However, actually Banks don‘t hold these as cash with themselves, but deposit such case with Reserve Bank of India (RBI) / currency chests, which is considered as equivalent to holding cash with RBI.

Banks have to maintain minimum 95 per cent of the required CRR on a daily basis and 100 per cent on an average basis during the fortnight.

Calculations: CRR for the current fortnight= a fixed percentage (%) of the total demand and time liabilities reported by the banks in terms of Section 42 (1) of the Reserve Bank of India Act, 1934 with a lag of 1 fortnight i.e. CRR for the fortnight ended April 4, 2014 is a fixed



percentage (%) of the total demand and time liabilities reported by the banks as on the reporting fortnight March7, 2014. The Fixed percentage is based on the policy announcement or otherwise.

Repo rate:

Repo rate is the rate at which banks borrow funds from the Reserve Bank against eligible collaterals and the reverse repo rate is the rate at which banks place their surplus funds with the RBI under the liquidity adjustment facility (LAF) introduced in June 2000. The repo rate has emerged as the key policy rate for signaling the monetary policy stance.

Liquidity adjustment facility (LAF):

LAF is a monetary policy tool which allows banks to borrow money through repurchase agreements. LAF is used to aid banks in adjusting the day to day mismatches in liquidity. LAF consists of repo and reverse repo operations. Repo or repurchase option is a collaterised lending i.e. banks borrow money from Reserve bank of India to meet short term needs by selling securities to RBI with an agreement to repurchase the same at predetermined rate and date. The rate charged by RBI for this transaction is called the repo rate. Repo operations therefore inject liquidity into the system. Reverse repo operation is when RBI borrows money from banks by lending securities. The interest rate paid by RBI is in this case is called the reverse repo rate. Reverse repo operation therefore absorbs the liquidity in the system

Categorization of Customers:

Low Risk Customers (Level 1 customer):

 Salaried Employees

 People belonging to lower economic strata

 Government Departments

 Government Owned Companies

 Regulatory and Statutory Bodies

KYC Guidelines issued under: Section 35A of the Banking Regulation Act, 1949

Medium Risk Customers (Level 2 customers)

Blind and Pardanishin also under Medium Risk Category

High Net worth Customers

Non Resident Customers

Politically exposed persons (PEP) Politically exposed persons are individuals who are or have been entrusted with prominent Public functions in a Foreign Country, e.g., Heads of States or of Governments, Senior Politicians, Senior Government / Judicial / Military Officers, Senior Executives of State-owned Corporations, important Political Party Officials, etc.

Periodical updation of customer data: (latest photograph and address proof)

Low Risk Customer: Once in 10 years

Medium: Once in 8 years.

High Risk Customers: Once in 2 years

This exercise has to be done quarterly i.e. in April, July, October and January.

Simple KYC norms procedure for Basic Saving Bank Account.

Financial Action Task Force

The Financial Action Task Force (FATF) which is a global body, identifies countries / jurisdictions that have strategic deficiencies in AML/CFT standards and works with them to address those deficiencies that pose a risk to the international financial system.

REAL TIME GROSS SETTLEMENT (RTGS):

A Real time, secure payment mode, processed and settled simultaneously. Each payment instruction is handled individually. The processing and settlement is on real time basis from 8 AM to 4.30 PM for customer payment on all working days. Inter Bank payment timing is 8 AM to 7.45 PM on all working days. Payment is final and irrevocable and the receiver can utilize the funds immediately. Minimum funds transfer Rs. 2,00,000/-. Straight Through Process (STP) is implemented for automatic accounting and settlement of RTGS transactions



Facility has been extended in all our branches and Administrative Offices. The RTGS facility can be used for direct credits to loan accounts.

NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT):

An efficient, secure, economical and expeditious Inter-Bank funds transfer and clearing system. No minimum limit for transactions under NEFT. The processing and settlement is hourly basis from 8 AM to 7 PM (23 settlements). Straight Through Process (STP) is implemented for automatic accounting and settlement of NEFT transactions. Facility has been extended in all our branches.

NEFT facility is extended to the two sponsored Regional Rural Banks. NEFT facility can be used for direct credits to loan accounts. Walk-in customers who do not have an account with remitting bank can send remittance through NEFT upto Rs.50,000/- by paying cash. One way remittance facility from India to Nepal through NEFT with a ceiling of 250000/- and maximum of 12 remittances in a year is available.

Unified Payment Interface (UPI) application is enabled with an enhanced feature –QR Code based payment.

There is no lower limit in UPI. The merchant must have an android smart phone version 4.4.4 and above. The merchant should have been issued a debit card. The Mobile Number of the merchant should be registered.

Bharat Interface for Money (BHIM) –

NPCI has developed a common UPI BHIM, which would co-exist with other apps released by participating banks. BHIM is a simplified version of the existing UPI Applications of individual Banks. BHIM is an additional UPI platform to Bank‘s UPI application and does not replace the same. BHIM consists of basic functionalities whereas Bank‘s UPI application-

Features available in BHIM:

Balance enquiry, Transaction history, Pay option, Collect option, Scan & pay through QR code, Change & generate UPI-PIN, and Change account. Maximum limit per transaction under BHIM is Rs.10000. Maximum limit per day under BHIM is Rs.25000.



VARIOUS LAWS/ACTS RELATED WITH INDIAN BANKING SYSTEM

Background:

Banking in India is governed by various laws and legal provisions, requirements restrictions and guidelines. This is required in order to maintain transparency between banking institutions and customers with whom they conduct business.

The following are the important laws whose statutory provisions the Banks have to comply with.

The Banking Regulation Act, 1949

The main statute governing the banks in India is the Banking Regulation Act 1949.

By virtue of the powers conferred by the Act, The Reserve Bank of India and the Government of India exercise control over banks right from the opening of the Branches to their winding up. The purpose of enactment of this Act was to consolidate the banking system and suitably amend the laws relating to banking sector and to regulate the Banking Companies including cooperative banks. This Act is not applicable to primary agriculture societies, and cooperative land development banks.

Section 22 of the Act regulates the entry of a company into banking business by licensing as provided. It also put restrictions on shareholding, directorship, voting powers and other aspects of banking companies. There are several provisions in the act regulating the business of banking such as restrictions on loans and advances, provisions relating to rate of interest, requirements as to cash reserve ratio, provisions regarding audit and inspection and submission of balance sheet and accounts.

The act also provides for control over the management of banking companies.

Reserve Bank of India Act, 1934:

This Act was enacted on 6th March, 1934 to constitute the Reserve Bank of India with the following objectives:

 To issue of Bank Notes.

 For keeping reserves for securing monitory stability in India and,

 To operate the currency and credit system of the country to its advantage.

The Act deals with the following:

 Incorporation, capital, management and business of the bank.

 Central banking functions like Issue of Bank Notes, monetary control, acting as banker to the Government and Banks, lender of last resort etc.

 Collection and furnishing credit information.

 Acceptance of deposits by Non-Banking Financial Institution (NBFI).

 Handling Reserve Fund, Credit funds, publication of bank rate, audit and accounts etc.

 Penalties for violation of the provision of the act or direction issued there under.

 The Government of India has adopted a committee based approach for formulating policy on maintaining price stability while keeping the objective of growth in mind. The committee will conduct four meetings in a year and shall publicize its decisions after each meeting. The committee has come into force from 27.06.2016.

Important Provisions:

Definition of a Scheduled Bank –

According to Section 2(e), Scheduled Bank means a bank whose name is written in the 2nd schedule of RBI Act, 1934 and which satisfies the conditions laid down in Section 42(6), - Paid up capital and reserves of not less than Rs. 5 lac, satisfaction of RBI that the affairs will not be conducted by the bank in a way to jeopardize the interests of the depositor.

It may be a State Co-operative Bank, a company defined in Companies Act, 1956, an institution notified by Central Government for the purpose and a corporation or a company incorporated by or under any law in force, in any place outside India. Any bank that is not included in the 2nd Schedule of RBI is called Non-Scheduled Bank.

Section 49 defines Bank Rate as

The Standard Rate at which it (the bank) is prepared to buy or rediscount bills of exchange or other commercial paper eligible for purchase under this Act‖. By varying the bank rate, the RBI can to a certain extent regulate the commercial bank credit and the general credit situation of the country.

The impact of this tool has not been very great because of the fact that the RBI does not have a mechanism to control the unorganized sector. Further the money market in our financial system is not fully developed, so that the Bank rate policy will have if desired impact on the financial system.

Supervisory role of the RBI: Inspection of Banks:

The most significant supervisory function exercised by the RBI is the inspection of Banks. The basic objectives of inspection of banks are to safeguard the interests of the depositors and to build up and maintain a sound banking system in conformity with the banking laws and regulations as well as the country‗s socio-economic objectives.



Accordingly, inspections serve as a tool for overall appraisal of the financial and managerial systems and performance of the banks, toning up of their procedures and methods of operation and prevention of serious irregularities. RBI has now adopted ‗Risk Based Supervision‘ system which focuses on:

a. Evaluating both present and future risks

b. Identifying incipient problem

c. Facilitating prompt intervention / early corrective action

d. Replacing present compliance based /transaction based approach (CAMEL).

e. Periodicity depends on risk rather than volume of business.

The RBI‗s powers to conduct inspections are contained in various provisions of the Banking Regulation Act, the most important being Section 35. This apart, inspections may be necessary under the provisions of Section 23, 37, 38, 44, 44A, 44B and 45 of the Act.

Audit of Annual Accounts of Banks:

Banks have to close their books of accounts every year as at March 31st and prepare a Balance Sheet and Profit and Loss account as prescribed in the III schedule of the Banking Regulation Act.

These annual accounts are required to be audited by auditors appointed by the Bank each year with the prior approval of the Reserve Bank of India, as per Section 30(1A) of the Banking Regulation Act, in respect of private sector banks. Section 10(1) of the Banking Companies [Acquisition and Transfer of Undertakings] Act, 1970 / 1980 provides for audit of annual accounts of banks in the case of nationalized banks.

Negotiable Instrument Act, 1881:

The NI Act, 1881 defines the cheque, Bill of Exchange, DP Note, Drawer, Drawee, Maker, Payee, and also lays down the laws relating to payment of the customers cheques by a banker and also protection available to a banker.

The relationship between banker and customer being debtor – creditor relationship, the bank is bound to pay the cheques drawn by his customers. This duty on the part of Bank to honour its customer‗s mandate is laid down in section 31 of the NI Act.

Section 10, 85, 89 and 128 of the NI Act grants protection to a paying banker.

Cheque Truncation System: CTS 2010:

Truncation is the process of stopping the flow of the physical cheque issued by a drawer to the drawee branch. The physical instrument will be truncated at some point en-route to the drawee branch and an electronic image of the cheque would be sent to the drawee branch



along with the relevant information like the MICR fields, date of presentation, presenting banks etc.

The images captured at the presenting bank level would be transmitted to the Clearing House and then to the drawee branches with digital signatures of the presenting bank. Thus each image would carry the digital signature, apart from the physical endorsement of the presenting bank, in a prescribed manner. The physical instruments are required to be stored for a statutory period. It would be obligatory for presenting bank to warehouse the physical instruments for that statutory period. In case a customer desires to get a paper instrument back, the instrument can be sourced from the presenting bank through the drawee bank.

Indian Contract Act, 1872:

Banking involves interaction between a banker and customer. A customer of a bank may be a depositor, borrower or any other person merely utilizing one of the various services provided by the banker. The relation between the Banker and the customer will vary according to the transaction carried out. The relationship may be Debtor- Creditor, Creditor- Debtor, Bailor-bailee, etc.

The interaction of a bank with its customer creates certain obligations and gives certain rights to both the bank and the customer. All Agreements are contracts, if they are made by parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void. All Banking transactions are therefore, separate contracts.

Contract of indemnity-

A contract by which one party promises to save the other from loss caused to him by the contract of the promisor himself, or by the conduct of any other person, is called a contract of indemnity.

There are two parties to the contract of Indemnity-i.e. the indemnifier and the indemnified. This is defined in Section124 of the Indian Contract Act.

Contract of guarantee:

The contract of guarantee is defined in Section126. There are three parties to the contract of guarantee. They are: Surety, Principal debtor and creditor.

A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default.

The person who gives the guarantee is called the surety, the person in respect of whose default the guarantee is given is called the principal debtor and the person to whom the guarantee is given is called the creditor. A guarantee may be either oral or written.



Bailment:

A bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor‗. The person to whom they are delivered is called the bailee‗. (Section148).

Pledge:

The bailment of goods as security for payment of a debt or performance of a promise is called pledge. The bailor is in this case called pawnor. The bailee is called pawnee.

Section172

Agent and Principal:

An agent is a person employed to do any act for another, or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the principal. When the bank collects the cheque on behalf of the customer the Bank is the agent and the customer is the Principal.-(Section182).

Indian Partnership Act, 1932-

Partnership is the relationship between persons who have agreed to share the profit of a business carried out by all or any of them, acting for all. The relationship between partners is governed by Partnership Deed. Firm is not the legal entity but governed by Indian Partnership Act, 1932.

Any person capable to enter into the contract can be a partner in the firm. Max partners: Non-banking business=10, other=20

The act provides for registration of partnership and it is necessary that a banker dealing with partnership firm should verify as to whether the firm is registered or not.

This would help him to know all the names of the partners and their relationship. The act of the partner shall be binding on the firm if done:

(a) In the usual business of the partnership.

(b) In the usual way of business.

(c) As a partner, i.e. on behalf of the firm and not solely on his own behalf.

(d) An unregistered firm cannot sue but can be sued



Limited Liability Partnership Act, 2008:

LLP is a body Corporate having separate legal existence having mixed characteristics of Partnership Firm & Companies. As per the need of the day, the Parliament enacted the Limited Liability Partnership Act, 2008 which received the assent of the President on 7th January, 2009.

The Limited Liability Partnership (LLP) is viewed as an alternative corporate business vehicle that provides the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement. The LLP form would enable entrepreneurs, professionals and enterprises providing services of any kind or engaged in scientific and technical disciplines, to form commercially efficient vehicles suited to their requirements.

Owing to flexibility in its structure and operation, the LLP would also be a suitable vehicle for small enterprises and for investment by venture capital.

 Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP.

 Partners are not personally liable rather will be liable up to the extent of his share as LLP agreement. For all purposes of taxation, an LLP is treated like any other partnership firm. It is separate from its Partners. It can sue and be sued.

Indian Companies Act, 1956:

A company is a juristic person created by law, having a perpetual succession and common seal distinct from its members.

In India, companies are governed by Companies Act, 1956.All the companies are required to be registered under Companies Act, 1956. Section 11 of the Companies Act provides that an Association or Partnership consisting of more than 10 in the case of Banking Business and more than 20 in the case of other business shall be registered under the companies act. If not registered, the said association or partnership will be illegal. The business and the objects of a company and the rules and regulations governing its management are known by two important documents called Memorandum of Association and Article of Association. Company is juristic person created by law, having a perpetual succession and common seal distinct from its members. Company is owned jointly by a group of persons. It has a legal existence separate from that of owners.

Properties of company are owned by company and not jointly by owners who are called shareholders. Unlike partners, shareholders are not personally liable for the debts of the company. They cannot participate in day to day management of company. It is managed by its directors.



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.





10. Appointment of Statutory Auditors- Every Listed Company can appoint an individual auditor for 5 years and a firm of auditors for 10 years. This period of 5 / 10 years commences from the date of their appointment. Therefore, those companies have reappointed their statutory auditors for more than 5 / 10 years; have to appoint another auditor in Annual General Meeting for year 2014.

Foreign Exchange Management Act (FEMA):

Foreign Exchange Management Act (Also known as FEMA) was enacted in 1999.

It came into effect from 1st of June 2000.

FEMA has made considerable improvement over FERA which was supposed be very stringent and draconian.

This Act aims to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.

Other Important Legal and statutory provisions affecting bankers are:

 Transfer of Property Act,

 Information Technology Act, 2000

 Code of Civil Procedure Act, 1908

 Recovery of Debts due to Banks and Financial Institutions Act, 1993 (DRT)

 Stamps Act

 Right to Information Act

 Foreign Exchange Management, Act, 1999

 Bankers Book Evidence Act, 1891

 Consumer Protection Act 1986

Regulators and Regulatory compliance:

The Reserve Bank of India:

The banks in India are required to comply with the guidelines issued by the RBI from time to time.

The most important of them is the strict adherence to the norms laid down in respect of KYC and AML.

The RBI has laid down specific guidelines in respect of documents to be obtained while opening of bank accounts.





These documents are called Officially Valid Documents (OVD).

The OVD are:

Passport/ Driving License with photo, Aadhar card issued by the UIDAI, Voter ID issued by the Election commission of India, job card under NREGA issued by the State Governments, PAN card (Only for ID proof).

Registration certificate of the firm issued by the Municipal corporation under the Shops and establishment Act, Certificate of incorporation in case of companies, Sales Tax/ IT returns, in case of corporate a/cs.

Either of the documents from the list of ‗Officially Valid KYC Documents‘ for Account Opening must be obtained from the customers to verify the identity and address of the customers. It must be noted that only the documents mentioned in the list provided by the RBI would be accepted by the branches while opening of any new account. Branches would not have the discretion to accept any other document for this purpose. The RBI also enforces the compliance of stipulated norms in respect of Forex transactions by the banks.

The regulatory functions of the RBI:

RBI controls the monitory policy of the country.

It keeps vigil on the functioning of the banks in the country and ensures that, they maintain various rates such as CRR, SLR in accordance with the formulated policies.

The RBI conducts inspection of the branches of various banks to monitor the proper implementation of the guidelines.

It also calls for various reports such as CTR/STR (Through FIU-Ind) in respect of domestic transactions and R reports in respect of Forex transactions, being carried out by the Banks in India.

It wields power to levy penalties on the erring banks who flout the guidelines issued by the RBI in respect of KYC/AML or FOREX matters.

Registrar of Companies (ROC):

Registrars of Companies (ROC) appointed under Section 609 of the Companies Act, covering the various States and Union Territories are vested with the primary duty of registering companies and LLPs floated in the respective states and the Union Territories and ensuring that such companies and LLPs comply with statutory requirements under the Act. These offices function as registry of records, relating to the companies registered with them, which are available for inspection by members of public on payment of the prescribed fee.



The Central Government exercises administrative control over these offices through the respective Regional Directors.

The charge of the financing Institutions on the assets of the company are required to be registered with the ROC within 30 days from the date of creation of charge. If the charge has remained to be created within the stipulated time of 30 days, then also the charge can be created by paying the additional fee by way of penalty.

Central Registry:

Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI) is a central online security interest registry of India. It is primarily created to check frauds in lending against equitable mortgages, in which people would avail multiple finances against the same asset from different banks.

CERSAI's mandate is to maintain a centralized data bank of equitable mortgages created and registered where it contains information on the equitable mortgage taken on a property along with details of the financial institution that has extended the loan as well as details about the borrower. CERSAI also allowed lenders to register transactions of securitisation and asset reconstruction. According to the government's directives, financial institutions must register details of security interests created by them with CERSAI within 30 days of its creation.

Banking Codes and Standard Boards of India (BCSBI):

It is an autonomous body established on 18.02.2006 with an aim to monitor and assess the compliance with codes and minimum standards of service to Individual customers to which the banks agree to.

 The main function of the Board is to ensure adherence to the "Code of Bank's Commitment to Customers".

 It sets minimum standards of banking practices for banks to follow dealing with individual customers in their day-today operations.

 It provides protection to customers and explains how banks are expected to deal with customers in their day-to-day operations.

 The BCSBI ensures that the commitments of the member banks are implemented for the benefit of the customers.

Banking operation related issues:

 Settlement of accounts of deceased account holders,

 Remittances,

 Safe Deposit Lockers

 Deposit Accounts

 Internet banking

 Privacy and confidentiality of the information relating to the customer

 To treat all personal information as private and confidential

 Norms governing advertisements, marketing and sales by banks

 To publicize the code.

Matters relating to financial issues:

 Loans and advances and guarantees

 Tariff schedule/ Interest rates

 Compensation for loss, if any, to the customer due to the acts of omission or commission on the part of the bank

 Foreign exchange services.

Banking Ombudsman:

Banking Ombudsman is a quasi-judicial authority functioning under India‘s Banking Ombudsman Scheme 2006 and the authority was created pursuant to a decision made by the Government of India to enable resolution of complaints of customers of banks relating to certain services rendered by the banks. The Banking Ombudsman Scheme was first introduced in India in 1995, and was revised in 2002. The current scheme became operative from 1 January 2006, and replaced and superseded the Banking Ombudsman Scheme 2002.

The type and scope of the complaints which may be considered by a Banking Ombudsman is very comprehensive, and it has been empowered to receive and consider complaints pertaining to the following operational issues

 Non-payment or inordinate delay in the payment or collection of cheques, drafts, bills inward remittances

 Failure to issue or delay in issue, of drafts, pay orders or bankers‘ cheques;

 Non-adherence to prescribed working hours;

 Delays, non-credit of proceeds to parties' accounts, non-payment of deposit or non-observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits in any savings, current or other account maintained with a bank

 Forced closure of deposit accounts without due notice or without sufficient reason;

 Failure to honour guarantee or letter of credit commitments;

 Failure to provide or delay in providing a banking facility (other than loans and advances) promised in writing by a bank or its direct selling agents;

 Delays in receipt of export proceeds, handling of export bills, collection of bills etc., for exporters provided the said complaints pertain to the bank's operations in India; Financial loss incurred to customer due to wrong information given by bank official.

 Any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services.

 Complaints from Non-Resident Indians having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters;

 Non-adherence to the fair practices code as adopted by the bank; and

 Vide their Circular No.CSD.BOS.4638/13.01.01/2006-07 dated May 24, 2007, the Reserve Bank of India has amended their Banking Ombudsman Scheme, 2006 and the scheme shall be operative with amended effect.

Procedure for redressal of grievances:

BO undertakes the cases where the value of dispute does not exceed Rs. 20 lakhs. The complaints can be made in any form including online (email) and the same will be processed without any fee.

The complainant is required to take up the matter with the concerned branch for redressal of the grievance and wait for 30 days and if not addressed he can approach the BO. He should not have filed a complaint before any other forum or court or consumer forum or arbitrator on the same subject matter and be pending when he approaches the B.O.

On receipt of the complaint, notice will be sent to the bank advising the bank to settle the grievance within fifteen days from the date of receipt of the notice or else submit version and also attend a conciliation meeting at the office of the BO.

If the grievance is not settled by conciliation, it will be taken up for passing an award. The complainant will have to accept award within fifteen days of receipt of the award. The time limit for implementation of award is 30 days from the date of such receipt of acceptance letter.

However, Bank can approach Reviewing Authority (Deputy Governor RBI). Compensation for mental agony, reputation loss etc., will not be considered as per the provisions of the Scheme.

Jaiib legal recollected

JAIIB LEGAL RECOLLECTED:: Most important Previous years questions



1. Section on which partners are defined

2. Tenure of director of banking company

3. Preservation of records

4. Maximum share in company related one question

5. Question to the condition on which depositor has to deposit-25% amount

6. Who has power to inspect bank-rbi officer, state officer,police officer, custom officer

7. Bfs-one director nominated by

8. Central government power in banking

9. Term loan given and default occurs-limitation period-3 years

10. A issued a check with amount 300 and left space in both side i.e. in words as well as

figure. Some employee forged it to 3300 unknowingly and sign style was little different

but it was cleared-who should be responsible

11. Question related to responsibility of collecting banker

12. A cheque is a drawn on some bank what collecting bank should do

13. Check crossing related one question

14. Liability of paying banker

15. There is one partnership firm ABC. With operation E/S upto the limit of 5000. A

draws cheque to B for 4553. B transfers it to his account…then who is liable wand what

is the role of bank here

16. A minor shares profit of the firm does he will be have liability with the firm if

something went wrong

17. An OD facility is given the customer he but he has drawn beyond his limits and also

many cheques have been returned-what a bank should do?

18. To which type of company there is restriction on transfer of share-private company

19. Main objective and other objective are mentioned in-MOA

20. Question based on types non fund based credit facility21. No of parties in indeminity-2

22. A lost FD and asking bank to reissue duplicate bank issues it- what is the role of A

here?-indemnifier

23. Right of indemnity holder related one question

24. Types of bank guarantee based one question

25. Liability of a bank to honor BG

26. What does negotiating bank does?

27. Question related to with recourse and without recourse lc

28. DPG-deffered payment guarantee based question

29. One case study was given with relation to simple mortgage and equitable mortgageratio

of share on default was asked

30. Types of mortgage with examples, gold loan, car lone, home loan, lic policy arrange

it

31. What is fixed charge

32. Registration of charge-central registry

33. Banking ombudsman:

a. Matters where complain ts can be made

b. If not satisfied with BO then to whom w e should approach

34. Effects of non-registered company

35. DRT AND DRAT based question:

a. who is higher authority of drat

b. power to modify drt-central go vt

c. case related where only it can be handled by DRT

d. Property is somewhere loan is taken from another place where drt has to be

approached?

36. SARFAESI ACT based question:

a. Validity

b. Security interest

c. Security receipts

d. Cancellation of re gistration of SRC

e. Powers and its applicability , enfor cement of security interest

37. A guarantees OD for his son that it will be paid- which type of financing it is?

38. Bankers book evidence-prima facie related question

39. Consumer complaints

40. Who is the head of state consumer protection council-minister in charge of the

consumer affair?

41. Question related to tds and TAN NUMBER

42. CONDITION of contract

43. Liability of surety

44. Bailment of goods

45. Right of unpaid seller

46. Rti applicability area

47. Supply bills related 2-3 questions

a. It is related to whom

b. To whom it should be financed- 2 marks

48. Hypothication

49. Pledge

50. Mortgage

51. Charge

52. Contract of sale

53. Minor account

54. Question from FEMA

55. Reverse mortgage

56. Fees of RTI

57. Term of director of bank

58. Who is regulatory authority of DRT

59. Security receipt

60. Floating charges/Fixed charge



1. Members of public and private company - Public - Min-7, Max-No Restriction. Private -

Min-2, Max-200

2. No. Of directors in public and private company - Public - 3 to 15, Private - 2 to 15

3. Interest payable by RBI on CRR - 0 %

4. Pledge hypothetican

5. What is equitabe mortgage

6. NI Act

7. RTI

8. Questions based on limitation period

9. Diff b/w partenership and company

10. Questions on mortgage and cheque

11. Heads of object of memorandum of association

12. Related equitable mortgage

13. BR act

14. Partnership accounts

15. Person appeal to drt after receiving reply from sc with in period of

16. payment and settlement system regulated by

17. About mortgage types 4 questions

18. FEMA deals with transactions of

19. Bailment & pleadge

20. Equitable morgatge

21. Lc

22. Deferred payment guarantee

23. Limitation

24. In how many days TDS file to gov

25. For cancel of lease or rent how many month notice?



1. Section 131

2. Actionable claim

3. Which one is NI

4. Equitable mortgage

5. Mortgage deed is necessary foe which mortgage

6. Which LC is called anticipatory credit

7. Members and directors of pvt and public company (2questions)

8. Which is not a company classified under liability category

9. With what memo a cheque should be returned if collected by one bank and presented

by other bank

10. When a partnership will dissolve

11. Demand notice period under SARFAESI-ACT

12. DRT is applicable for : SBI, nationalised, RRB, all

13. DRT

14. Bank Guarantees

15. Many questions on mortgages

16. Income tax act

17. Preference shares

18. LC

19. Bill of exchange

20. Agreement

21. Hypothecation

1. Clatons rule

2. Minimum directors-3&2

3 Around 8 qtns from mortgage. like english, equitable, act for mortgage etc.

4. 4 qtns from MOA & AOA of company

5. Doctine of constructive

6. Diff. partnership and company

7. Indemnity-loss of fdr

8. Hypothication

9. Ddiff. pledge and lien

10. Consumer complaint act-complainant

11. Credit card award-1 lakh

12. Common seal

13. Green letter of credit

14. Negotiating bank

15. Surity is -secondary

16. Deffered guaranty

17. DRAT head post

18. Chq alteration not visible to naked eyes bank not liable

19. SARFAESI Act apeal to drt in how many days 45

20. LC credit related question credit allow something like that ans green lc

21. BO related complain how many days to dispose by BO.

22. RTI how many days to required by the PIO to settle the information.

23. Not registerd partnership firm related question can sue or not.

24. Min No of director in public and private

25. Arbitrage



Under which section of income tax donations come? - 80G of the Income Tax Act

Min and max no of member in private companies - 2 & 200

No. of members in public limited co (Min & Max) - 7 & unlimited

Banking ombudsman applicable - in whole india

Indemnity which type of liability? - Contingent.

Who can rectify the clerical or arithmetical errors in order passed by DRT? - Presiding

officer

Which income doesn't come under service tax? - Interest income

Within how many days can a consumer file complaint if he is not satisfied with the

service? - 30 Days

Which is the negotiating bank in case of LC? - Exportrs country bank

Relationship between bank n customer in case of pledge - pawnor-pawnee'

Debt recovery tribunal established by - Government of India under an Act of Parliament

(Act 51 of 1993)

How many types of LC ? - 8

Jurisdiction of appellate tribunal - The Central Government is also empowered to decide

and specify the areas within which the tribunal may exercise jurisdiction for entertaining

and deciding the applications filed before it.

DRT applicable - Above 10 Lakhs

DRT is controlled by - Recovery of Debts Due to Banks and Financial Institutions Act

(RDDBFI Act), 1993

RTI is not applicable to - J&K

UCPDC 600 is in respect of - Letters of credit

Pay as you earn is a...... tax - is a withholding tax on income payments to employees

20% profits should maintain with rbi - NBFC

NI act application - Whole India

Cersai time limit - within 30 days of creation of mortgage

Bills payable on demand are - paid when the payee asks for it.

Term of every member in national commission - 5 years or up to the age of seventy

years, which ever is earlie



A securitization company carries out the function of - Acquisition of financial asset from

the originator

Limitation period of for takng immovable property under sarfaesi? - 12 Years

Amount of TDS should be submitted before how many days? - 7th of the next month

Number of directors of private company? - 2 to 15 (Min & Max)

Casual vacancies of directors can be filled by? - the Board of Directors at a meeting of

the Board

Collecting bank will get safety under NI act for what - Forged sign of endroser

Which is not consider as NI - Share

Tax dedcuted from salary has to be payed as on - Monthly basis

Limitation perod for foreclosure is - 30 Years

Llimitation perod for possession of immovable property is - 12 years

Banking regulation act 1949 - Regulates banking



Banking ombudsman 4 questions

DRT appllete is headed by ........appointed by central govt.

LC 3 questions case study 1

Advising banking is called......

Whether advising bank is to take part in liability of LC

Macmillan book back questions 5-6 - Average 3-5 questions coming

Key used to create digital signature.....Private key

RTI Act .....Getting info from.....Public authorities

Exemption of RTI Act

Bankers book evidence 2 questions one from Macmillan book

How much we have to pay to get copy from the abovesaid paper n copies...

Sarfaesi 3-4 questions out of one case study....

What type of charge in case of goods under manufacturing.....

Under pledge unlike mortgage....Some differences were given in the options

N deposit in bank Z with branch manager C .L is the introducer of N.N got LOD from

that bank.Who has lended to whom?

R has shares in limited company.R dies what will happen to shares.....?

In case of safe deposit vault, customer is called as....

X a customer lost the TDR and bank gave duplicate receipt receiving indemnity from

X.Here who is indemnified to whom?

Parties in a contract......

Bank guarantee 2 questions...



What is reverse mortgage

Tenure of banking ombudsman

Fee require for RTI

Mode of accepting complain by banking ombudsman

One question on arranging orders for different type of mortgage

One question on arranging orders for different type of charges

Limitations period will be extended,-on credits to ac

Material alteration of cheque without authentiaction of bearer

Bank buy a cheque from A and give advance but cheque got returned-from whom bank

will recover

A presented a cheque for clearing and went abroad, cheque got returned for financial

reason after I year. A returned and found no credit in his account and bank lost the

cheque- responsibility of bank and customer

Lmitaton period of of account

Lok adalat is conducted by....



No. of max members in pvt company - 200

........................................

Pawnor pawnee

The bailment of goods as security for payment of a debt or performance of a promise is

called "pledge". The bailor is in this case called the "pawnor". The bailee is called the

"pawnee".

............... .........................

Min deposit to appeal to DRAT - 50000

........................................

Min and max directors in public limited co -

........................................

Complaints can lodge to banking ombudsman through - Authorised Representative

........................................

Safe custody of articles.. Bailment

........................................

Clubs n societies r registered under - either under the Companies Act, 1956 or under the

Societies Registration Act or the Co-operative Societies Act

........................................

Sale notice period ie. 30 days

........................................

Authorized officer of public sector bank min designation.. Chief manager

........................................

Jurisdiction of filing suit - at place of mortgaged property situated

1.Deffered credit

2.minimum and maximum members in private company..

3.accalaration.

4.equity mortgage..

5.demand biill also called as sight bill.

6.presiding officer tunere...

7.relationship in safe locker ..bank customer.

8.relatioanaship in loan on FD..

9.pladge..

10..origanater.

11.about drt

12.3days for book evidence..

Under how many phases is cases of sarfaesi settled under civil courts?

EM is required to be done in specified town of property

Payment to minor

Right of member in a company

Fund based non fund based

Metropolitan Magistrate

Endorsement in cheque

Advantages of corporate form of enterprises

To whom the assignment notice send in case of loan taking against insurance policy

Lok adalat max compensation?

Banking ombudsman

Title deed not required to be deposited in whch type of mortgage?

Mortgage-transfer of property act

Sale of goods act



partnership

Huf law

Safe deposit locker

FEMA

3 - 4 case studies on protection to collecting banker and paying banker

Appointment of banking ombudsman , regulation of tenure of banking ombudsman

Minimum and maximum number of members in private company

2-3 questions from MoA and AoA

Object is described in MOA /AOA

Difference between partnership and company..

If a director in company wants get member of another company what needs to effect in

both companies article of Asso.

For how many years a banking company use non banking assets- 10, 11,12 or 15 years

Mutual fund transaction which kind of account in dealing foreign transaction.

RTI act not applicable which of the following

Renounce sport board

Cabinet ministry

AD bills

Floating charge

Fixed change

If a customer deposit an order cheque to A bank and A bank put a collection stamp on it

but customer take the cheque and deposit to B bank but B bank return the cheque.What

The B bank site the return reason

National commission tenure

What is the conversion?

HUF created by

Who pays money to beneficiary in LC

Appeal days in DRT

............................. ...........



E filing system in charge registration

........................................

Contract two to three questions

........................................

SARFAESI act applicability

...................................... ..

DRT Applicability

......................... ...............

Banking omb

..................... ...................

According to tax lawas income definition

........................................

Major powers of RBI

.............................. ..........

Rti act

........... .............................

Law of limited for foreclosure of mortgage

........................................

What is called judgment of Banking ombdsuman is.Award

........................................

Indemnity

security or protection against a loss or other financial burden.

security against or exemption from legal responsibility for one's actions.

........................................

Deferred payment guarantees







Jaiib Legal Recollected: 2018 May



Lc se question tha



Lok adalat



Ni



Indemnity



Gurantee



Collecting banker



Awards under banking ombundsman



5 questions from FEMA



Limitations act lot of 2 marks



Bailee bailor pledge mortgage



Mortgage 3-4 question English n equitable



Paid up capital

Securities questions

Saffaesi 2-4 questions

Lok adalat 3 questions

Ultra vires questions



Equity mortgage questions



Collecting bank 2 questions

Caiib retail important

Retail Banking- Deduction of Interest on Housing Loan – Sec 24b



Applicable for financial year 2015-16 and 2016-17

Section 24 of the income tax act provides deduction in respect of home loan interest.

Important points



1) Interest on housing loan is allowable as deduction on accrual basis not on paid basis (even if account books are kept on cash basis) if capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the house property. Deduction can be claimed for two or more housing loans.



2)Interest includes service fees, brokerage, commission, prepayment charges etc.



3)Interest/penalty on unpaid interest shall not be allowed as deduction.



4)Deduction shall be allowed irrespective of the nature of loan whether it is housing loan or personal loan from any person/institution.



5) If a person instead of raising a loan from a third party pays sale price to the seller in instalments along with interest than such interest is also allowable.



6) Interest on borrowed money which is payable outside India shall not be allowed as deduction under section 24(b), unless the tax on the same has been paid or deducted at source and in respect of which there is no person in India, who may be treated as an agent of the recipient for such purpose.



7) For claiming deduction under this section, assessee must be the owner or deemed owner of the house property and loan shall be in the assessee name.



Maximum Limit of deduction under section 24b



These limits of deduction is applicable assessee wise and not property wise. Therefore if an assessee owns two or more house property then the total deduction for that assessee remain same.



1) In Let Out Property/Deemed to be Let Out – No maximum limit



2) Self Occupied House (SOP) – Rs. 2,00,000. (1,50,000 for A.y 2014-15 and before)

In the following cases the above limit of Rs 2,00,000 for SOP shall be reduced to Rs. 30,000



– Loan borrowed before 01-04-1999 for any purpose related to house property.



– Loan borrowed after 01-04-1999 for any purpose other than construction or acquisition.



– If construction/acquisition is not completed within 5 years from the end of the financial year (3 years till financial year 2015-16) in which capital was borrowed. For example, a loan is obtained for construction/acquisition on 28 Oct 2011 then the deduction limit should reduced to Rs 30,000 if the construction / acquisition completes after 31 March 2017.



Interest for pre construction/acquisition period Interest for pre construction/acquisition period is allowable in 5 equal instalment beginning from the year of completion of house property. This deduction is not allowable if the loan is utilized for repairs, renewal or reconstruction.



Pre Construction/Acquisition period starts from the date of borrowing and ends on the last day of preceding Financial Year in which the construction is completed. For example, if house property is completed on 21st March 2012 then the deduction is allowed from Financial Year 2011-2012 to 2015-16.



Example

Loan Taken on 01-05-2006 of Rs. 5,00,000

Construction End on 07-09-2012.

Pre Construction/Acquisition Period = 01-05-2006 to 31-03-2012

Pre Construction/Acquisition Interest = Rs 3,55,000 ( Rs 5,00,000*71 Months*1%)



Pre Construction/Acquisition Interest Deduction for Financial Year 2012-13 to 2016-17 assuming let out property or deemed to be let out = Rs 71,000 per year ( 3,55,000/5 )



Pre Construction/Acquisition Interest Deduction for Financial Year 2012-13 to 2016-17 assuming SOP = Rs 71,000 per year ( 355000/5 ) (as the construction is completed within 5 years from the end of the financial year in which capital was borrowed)

Interest from 01-04-2012 to 31-03-2013 shall be allowed as deduction in 2012-13 as current year’s interest. Interest from 01-04-2012 to 07-09-2012 shall not be considered as Pre Acquisition/Construction Period.



Note: – If a property is partly SOP and partly let out then also the limit of Rs 2,00,000/30,000 shall be available for SOP portion and there is no limit of deduction for let out portion even if the construction is completed after 3 years.

Forex individual and forex operations difference

IIBF certifications maximum members getting this doubt??

What is the difference between forex exchange for individuals and forex operations ??

1.Both Certifications are different

2.Foreign remittance facilities for individuals is a part of forex operations.

3. First one deals only with retail operations but in forex operations you will be learning about trade as well as trade finance

4. If you want to learn trade you can try forex operations.


Finally forex operations most useful certificate to full fill capacity building gap specified by RBI mandatory certifications

Kyc aml case studies

KYC AML:::

 CASE STUDIES

Intermediaries – case study 1

A person (later arrested for drug trafficking) made a financial investment (life insurance) of USD 250,000 by means of an insurance broker. He acted as follows. He contacted an insurance broker and delivered a total amount of USD 250,000 in three cash instalments. The insurance broker did not report the delivery of that amount and deposited the three instalments in the bank. These actions raised no suspicion at the bank, since the insurance broker was known to them as being connected to the insurance branch. The insurance broker delivered, afterwards, to the insurance company responsible for making the financial investment, three cheques from a bank account under his name, totalling USD 250,000, thus avoiding raising suspicions with the insurance company.

Intermediaries – case study 2

Clients in several countries used the services of an intermediary to purchase insurance policies. Identification was taken from the client by way of an ID card, but these details were unable to be clarified by the providing institution locally, which was reliant on the intermediary doing due diligence checks. The policy was put in place and the relevant payments were made by the intermediary to the local institution. Then, after a couple of months had elapsed, the institution would receive notification from the client stating that there was now a change in circumstances, and they would have to close the policy suffering the losses but coming away with a clean cheque from the institution. On other occasions the policy would be left to run for a couple of years before being closed with the request that the payment be made to a third party. This was often paid with the receiving institution, if local, not querying the payment as it had come from another reputable local institution.

Collusion – case study 3

An insurer in collusion with an insured person attempted to launder money through insurance transactions. The manager of an insurance company sold health and personal injury insurance policies insuring against the liability from accidents to dummy persons, normally in the names of friends and relatives. These persons paid a low premium rate. Subsequently claims were received, supported by false documentation and medical certificates to substantiate the losses and the insurer paid the claims promptly. The claims for damages were considerable. The manager then sought to legalise this scheme and recover the damages paid out. Under subrogation rights, the insurance company took legal action against all businesses where the alleged accidents had occurred. The businesses involved (restaurants, clubs etc.) responded that they had not been aware of the alleged accidents and that no such accidents had occurred at the times stated.

Collusion – case study 4

A drug trafficker purchased a life insurance policy with a value of USD 80,000. The policy was purchased through an agent of a large life insurance company using a cashier’s cheque. The investigation showed that the client had made it known that the funds used to finance the policy were the proceeds of drug trafficking. In light of this fact, the agent charged significantly higher commission. Three months following this transaction, the investigation showed that the drug dealer cashed in his policy.

Reinsurance – case study 5

An insurer in Country A sought reinsurance with a reputable reinsurance company in Country B for its directors and officers cover of an investment firm in Country A. The insurer was prepared to pay four times the market rate for this reinsurance cover. This raised the suspicion of the reinsurer which contacted law enforcement agencies. Investigation made clear that the investment firm was bogus and controlled by criminals with a drug background. The insurer had ownership links with the investment firm. The impression is that – although drug money would be laundered by a payment received from the reinsurer – the main purpose was to create the appearance of legitimacy by using the name of a reputable reinsurer. By offering to pay above market rate the insurer probably intended to assure continuation of the reinsurance arrangement.

Reinsurance – case study 6

A group of persons with interests in home construction effected a payment in favour of construction company A under contracts connected with their participation in investment construction (at cost price). Insurance company P accepted possible financial risks to these contracts under a contract of financial risks insurance and received an insurance premium. At the same time the insurance company P concluded with the construction company A a secret agreement providing that the difference between the market cost of housing and the cost price was transferred in favour of the insurance company as a premium under the contract of financial risks insurance. When the funds were received by the insurance company P they were transferred as insurance premium under the general reinsurance contract in favour of insurance company X. By way of fictitious service contracts and commission payments made under an agency contract, insurance company X channelled the funds to several off-shore shell firms. Beneficiaries of the actual profit, being withdrawn abroad, were owners and directors of the construction company A.

Money Laundering process kyc aml

Money laundering:::

The money laundering cycle can be broken down into three distinct stages; however, it is important to remember that money laundering is a single process. The stages of money laundering include the:

Placement Stage

Layering Stage

Integration Stage

The Placement Stage
The placement stage represents the initial entry of the "dirty" cash or proceeds of crime into the financial system. Generally, this stage serves two purposes: (a) it relieves the criminal of holding and guarding large amounts of bulky of cash; and (b) it places the money into the legitimate financial system. It is during the placement stage that money launderers are the most vulnerable to being caught. This is due to the fact that placing large amounts of money (cash) into the legitimate financial system may raise suspicions of officials.

The placement of the proceeds of crime can be done in a number of ways. For example, cash could be packed into a suitcase and smuggled to a country, or the launderer could use smurfs to defeat reporting threshold laws and avoid suspicion. Some other common methods include:

Loan Repayment

Repayment of loans or credit cards with illegal proceeds

Gambling

Purchase of gambling chips or placing bets on sporting events

Currency Smuggling



The physical movement of illegal currency or monetary instruments over the border

Currency Exchanges

Purchasing foreign money with illegal funds through foreign currency exchanges

Blending Funds



Using a legitimate cash focused business to co-mingle dirty funds with the day's legitimate sales receipts

This environment has resulted in a situation where officials in these jurisdictions are either unwilling due to regulations, or refuse to cooperate in requests for assistance during international money laundering investigations.

To combat this and other international impediments to effective money laundering investigations, many like-minded countries have met to develop, coordinate, and share model legislation, multilateral agreements, trends & intelligence, and other information. For example, such international watchdogs as the Financial Action Task Force (FATF) evolved out of these discussions.

The Layering Stage
After placement comes the layering stage (sometimes referred to as structuring). The layering stage is the most complex and often entails the international movement of the funds. The primary purpose of this stage is to separate the illicit money from its source. This is done by the sophisticated layering of financial transactions that obscure the audit trail and sever the link with the original crime.

During this stage, for example, the money launderers may begin by moving funds electronically from one country to another, then divide them into investments placed in advanced financial options or overseas markets; constantly moving them to elude detection; each time, exploiting loopholes or discrepancies in legislation and taking advantage of delays in judicial or police cooperation.

The Integration Stage
The final stage of the money laundering process is termed the integration stage. It is at the integration stage where the money is returned to the criminal from what seem to be legitimate sources. Having been placed initially as cash and layered through a number of financial transactions, the criminal proceeds are now fully integrated into the financial system and can be used for any purpose.

There are many different ways in which the laundered money can be integrated back with the criminal; however, the major objective at this stage is to reunite the money with the criminal in a manner that does not draw attention and appears to result from a legitimate source. For example, the purchases of property, art work, jewellery, or high-end automobiles are common ways for the launderer to enjoy their illegal profits without necessarily drawing attention to themselves

Smurfs - A popular method used to launder cash in the placement stage. This technique involves the use of many individuals (the"smurfs") who exchange illicit funds (in smaller, less conspicuous amounts) for highly liquid items such as traveller cheques, bank drafts, or deposited directly into savings accounts. These instruments are then given to the launderer who then begins the layering stage.

For example, ten smurfs could "place" $1 million into financial institutions using this technique in less than two weeks

JAIIB AFB RECOLLECTED QUESTIONS

JAIIB AFB RECOLLECTED QUESTIONS

1. Depreciation Related 3 questions
2. More theory questions than numericals
3.Two marks from Payback period NpV
4.Basis of accounting 0.5 theory
5.Foreign currency 1 mark 2 3 questions came

6.Numerical were so lenghty to calculate,  exam was quite tough

7.Asset is a
Source of funds
Use of funds
Cash inflow
None of these

8.Types of accounts in profit and Loss account
Only real account
Only nominal account
Some real some nominal
Only personal
9.wdv

. Business entity
10.Computerised accounting la data record system reltd ques
 Kyc relatd
Conditions for opening current acc
-

1. 5-10 questions from depreciation
2. Two marks from Payback period NPV
3. Basis of accounting 0.5 theory
4. Foreign currency 1 mark 2 3 questions
5. Asset is a ...... Source of funds/Use of funds*/Cash inflow/None of these
6. Types of accounts in profit and Loss account ...... Only real account/Only nominal account*/Some real some nominal/Only personal
7. From E-KYC - 5 questions
8. WDV method of depreciation
9. Today population is 5lac what will after 6year and before 4 year. It increases at 7% p.a.. and their difference
10. Accounting concepts - 3 4 questions
11. Going concern
12. Conservatism
13. Business entity
14. 1$ = _____ rupees, 100 rupees how much
15. Foreign exchange 3 marks
16. Current Ratio
17. Accounting standards
18. Cash book passbook diff
19. Cash book - standing instructions won't come under cash book
20. Yield to maturity
21. Banking definition comes under which act? Banking Regulation Act, 1949
22. Types of errors - Match the following - 5 Marks
23. 3 marks on computer
24. Calculation of of Future Value - 1 Mark
25. Coupon rate and current yield - 3 Marks
26. Opening stock closing - 4 Marks
27. Ratio Analysis - 2 Marks
28. Compound interest - 1 Mark
29. Type of accounts - 5 Marks
30. Debit credit...accounts - 5 Marks
31. Trademark... Under which account
32. Error classification
33. Question on tangible
34. Population based compound
35. Shares,debentures based problems
36. Definition of annuity
37. Many questions from capital shares
38. 1$=71.*** and 1$= 22.*** singapore dollar. What is the value of INR for 1spdollar
39. Current assets-2:1 quick ratio -1.5:1 current liabilities 160000 inventories??
40. Bond related int 12% face value 5000 market price 4500= current yield?
41. Some present anuity due present ordinary and also future annuity each 1 each
42. Calculate of net profit cost of goods sold
43. Some question from cost concept, business going
44. outsourcing of service in bank
45. Market price of bond 4500 face value 5000 coupon rate 12% current yield?? - 13.33% (YTM = 12/100)*(5000/4500)
46. Debt service coverage ratio formula parts were asked
47. equence of payment=annuity
48. Future value annuty Due
49. zero Coupe Bond
50. Forward rate
51. Bill of exchange
52. Balance sheet related questions
53. Subsidy Book
54. FCIL(Food corporation) type of company
55. Non-Voting Share
56. Computer/Hardware/Software
57. Front office/Back Office
58. KYC/Risk Category
59. Small a/c max Withdral in. Month
60. Cheque Collection days 7/10/14
61. Vault/Custody Key
62. DEAF Account
63. Certificate of deposit
64. Floating rate
65. CBS related questions
66. IND-FIU. (Txn 10 LAC in month)

Current affair s on 12.05.2019

Today's Headlines from www:

*Economic Times*

📝 L&T’s open offer for Mindtree unlikely to open on May 14

📝 CLSA downgrades Cadila Healthcare to 'sell'

📝 IBC a game-changer, but delays a concern: Srei Infra official

📝 Agri, processed food exports up 7% in FY19

📝 DRDO spends 25% of budget on R&D, says Chairman

📝 Electric bike co Okinawa to set up Rs 200 crore plant in Rajasthan

📝 Discoms check theft, raise billing under UDAY but still losses mount in poll season

*Business Standard*

📝 NHAI tweaks strategy for Rs 3 trillion projects under Bharatmala scheme

📝 Donald Trump orders raising tariffs on all remaining imports from China

📝 Prepare FY19 financials as PMO wants quick disinvestment: Govt to AI

📝 Amazon's inevitable missteps becoming a problem for its products, services

📝 Jaiprakash Power to issue preferential shares of Rs 3,840 crore

📝 DMart Q4 net profit rises 21.4% at Rs 203 crore but margins remain weak

📝 Apple's wait bears fruit with sub-continent's biggest store in Mumbai

*Financial Express*

📝 OTT players ride on telcos to boost revenues

📝 Chemicals firm SRF to sell engineering plastics business for Rs 320 crore to focus on core operation

📝 Government asks Air India for FY19 financials as PMO eyes disinvestment of its subsidiaries soon

📝 Jaypee Infratech’s lenders ask NBCC to withdraw exemption from tax liability

📝 ITC’s longest serving chairman Y C Deveshwar passes away at 72

📝 Moody’s India probing IL&FS AAA rating by ICRA executives after whistle-blower complaint

📝 Delays in tackling climate change to cost companies about $1.2 trillion worldwide, says UN

📝 Zoom to face analyst scrutiny after being best performing IPO of year so far

*Mint*

📝 US states accuse Teva, other drugmakers, of price-fixing

📝 Facebook sues South Korean firm over data misuse

📝 HTC looking to exit Chinese smartphone market: Report

📝 Builders get time till 20 May to choose between tax rates

📝 Uber value slips below $70 billion after slumping in rocky debut

📝 Aadhaar address change online: UIDAI launches new service to update address

📝 US, China trade war takes $75-billion bite out of Apple in a single week.