Mortgage details

Mortgage

1.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.

Caiib BFM Strategy

BFM::;;

The strategy for the study of Bank Financial Management which many people finds difficult to clear. If you study properly, it is easy to clear the BFM. This subject also contains 4 modules, they are;

-International Banking

-Risk Management

-Treasury Management

-Balance Sheet Management

Many people do not correlate the syllabus of the subject with day to day banking activity. So they find it difficult to score and understand this subject. But this not true, this subject is very much important which will increase your knowledge regarding top management & middle management functioning of your bank as well as banking as a whole industry.

All the modules are equally important, but you may clear the paper with three modules study also. Module A & B are relatively easy and scoring as well. Let us discuss strategy for each module.

Module A-International Banking

Important topics are Exchange Rates and Forex Business, Basics for Forex Derivatives, Documentary LC, and Facilities for Exporters & Importers

Rapid reading or bullet point reading is quite useful for this module. Practice numerical again and again.

Many numerical/case studies are asked from this module which are quite easy as compared to Module B & Module D case studies. Refer the case studies from McMillan given at the end of the topic. Also N.S.Toor book has many numerical and case studies. Questions are asked on Exchange rates, Shipment Finance etc.

Module B-Risk Management

All chapters are equally important as they are interlinked to each other. Again focus more on case studies/numericals given in Apendix at the end of chapter. Maximum case studies are asked from this module. Though short notes are useful for this module I would suggest McMillan reading for this module because some questions are twisted type for which you require details of the concept which is hard to get from short notes. RBI website contains FAQs which are quite useful for this modules, you should read them at least once.

Module C- Treasury Management

Important topics are Introduction, Types of treasury products, Treasury Risk Management, Treasury and Asset-Liability Management.

Mostly questions asked on this module are theoretical type, so through reading of McMillan is important. If you don’t get time then you can skip this module or read short notes since the weighted of this module for exam point of view is low according to me as compared to Module A&B. But those who wish to make carrier or work in treasury department, this is the best module to learn.

Module-D Balance Sheet Management

Important chapters are Components of ALM in Bank’s Balance Sheet, Capital and banking Regulation,, Capital Adequacy, Asset Classification and Provisioning Norms, Interest rate Risk management.

Though McMillan book contain sufficient material but I would suggest you to refer RBI website for this module. In this module focus more on Case Studies as compared to theoretical questions. Do not skip this module as it is much important for exam as well as knowledge point of view. No need to read McMillan line by line.

Overall you have to keep balance between theoretical reading as well as case studies/numerical since the paper would contain 40-45% case studies. N.S.Toor book contains good case studies and MCQs. Also there are many resources available on the internet from where you will get case studies for this module. After giving this paper you will realized that BFM is easier as compared to ABM and no need to worry for BFM.

CAIIB ABM Strategy

CAIIB ABM Strategy

ABM is one of the compulsory subjects for CAIIB. Most of the people find difficult to clear this paper. Today, I will tell you how to study for ABM subject.

This subject also contains 4 modules

MODULE – A: Economic Analysis

MODULE – B : Business Mathematics

MODULE – C : HRM in banks

MODULE – D : Credit Management

As we are bank employees we get very less time for study, so how to decide which topics to be read, which topics to be skipped?

-As I had told you in my previous blog article that generally paper consists of 60% theoretical & 40% numerical or case studies, so choose the module to be study in deep so as to clear the paper easily depending upon your personal strength and weakness.

If you observed all the modules, you will realize that Module A and Module C are most scoring modules. Do not skip these modules. Module B contains Business Mathematics which many people find difficult to study as the level of mathematics is tough, especially for non-engineering background people. Those who works in Credit/Loan Department will find that Module D easy as well as interesting. Module D is most important not only exam point of view but also for your daily working in Credit Department. So do not skip Module D.

IMPORTANT TOPICS FROM EACH MODULE

Module A- Supply and Demand, Money Supply and Inflation, Business Cycles, GDP Concepts and Union Budget.

No need to read McMillan Book line by line for thise module, short notes will be quite useful for studying this module. Don’t read stats given in these chapters. In GDP Concepts and Union Budget chapters numerical are asked which are quite easy provided you know the components and formula.

Module B-Time Value of Money, Sampling Methods, Simulation, Bond Investment

Don’t go to deep for study this module as mathematical calculations are difficult to understand especially for non engineering background people. Practice the examples given in McMillan. Those who are not good at math can skip this module and focus more on remaining modules.

Module C-Development of Human Resources, Human Implications of Organisations, Performamce Management, HR & IT

You need to read thoroughly all the topics from this module from McMillan. It is quite easy and theoretical only. Repeatedly read MCQs from N.S. Toor book of this module.

Module D-Overview of Credit Management, Analysis of Financial Statement, Working Capital Finance, Credit Control and Monitoring, Rehabilitation and Recovery.

Read this module from McMillan book only. The chapters in this module are not lengthy as compared to other modules. Practice Numerical from Financial statement and balance sheet.

Overall, you have to study at least three modules in detail so as to achieve the 50 score. You can choose the modules to study more depending upon your strength. I would suggest that you can keep module B at last, just read formulas from this module, as this module is quite boring, lengthy and hard to understand.

Cash flow analysis:

Cash flow analysis:
We need to analyse and comment on three factors of cash flow i.e., Cash Flow from Operating Activities, Cash Flow from Investing Activities and Cash flow from Financing Activities.
Remember – Cash flow analysis is based on actual inflow and outflow of cash in a financial year. An increase in assets side represents cash outflow and an increase in liabilities side represents cash inflow.
➢ If the net cash from operating activities is positive, it is an indication that the unit is generating enough cash from its operations. If it is negative, the unit is not in a position to get enough cash out of its operations.
➢ If the cash from investment activities is positive, it is an indication that the investments made by the unit are unlocked or the company has sold out certain assets to have inflow of cash. If it is negative, it’s an indication that the investments in the form of fixed assets/ A&S have gone up. Here the user has to analyze source of this investment.
➢ If the cash from financing activities is positive, it is an indication that the unit is depending on outside finance and capital. If it is negative, it’s an indication that the unit has repaid loans/ capital is withdrawn.
Overall, comments on cash flow to be given in all the directions i.e., operating, investing and financing

TIME MANAGEMENT..Nice Article

TIME MANAGEMENT

Many of us claim our days are never wasted. "I'm very organised" we say, "I know where I
am going and what I'm going to do". If you truly feel that way then you are in the minority.
Most people become frustrated with a day that is unproductive. We would all like to get more
done in a day.
The idea of time management has been in existence for more than 100 years. Unfortunately
the term "Time management" creates a false impression of what a person is able to do. Time
can't be managed, time is uncontrollable we can only manage ourselves and our use of time.
Time management is actually self-management. It’s interesting that the skills we need to
manage others are the same skills we need to manage ourselves: the ability to plan, delegate,
organise, direct and control
There are common time wasters, which need to be identified. In order for a time
management process to work it is important to know what aspects of our personal
management need to be improved. Below you will find some of the most frequent reasons for
reducing effectiveness in the workplace. Tick the ones which are causing to be the major
obstacles to your own time management. These we refer to as your "Time Stealers".
Identifying your time stealers
 Interruptions - telephone
 Interruptions - personal visitors
 Meetings
 Tasks you should have delegated
 Procrastination and indecision
 Acting with incomplete information
 Dealing with team members
 Crisis management (fire fighting)
 Unclear communication
 Inadequate technical knowledge
 Unclear objectives and priorities
 Lack of planning
 Stress and fatigue
 Inability to say "No"
 Desk management and personal disorganisation

Fortunately there are strategies you can use to manage your time, be more in control and
reduce stress, but you can analyse your time and see how you may be both the cause and the
solution to your time challenges.
Below, we examine time management issues in more detail
1. Shifting priorities and crisis management.
Management guru Peter Drucker says that "crisis management is actually the form of
management preferred by most managers" The irony is that actions taken prior to the crisis
could have prevented the fire in the first place.
2. The telephone.
Have you ever had one of those days when you thought your true calling was in
Telemarketing. The telephone-our greatest communication tool can be our biggest enemy to
effectiveness if you don't know how to control its hold over you.
3.Lack of priorities/objectives.
This probably the biggest/ most important time waster. It affects all we do both professionally
and personally. Those who accomplish the most in a day know exactly what they want to
accomplish. Unfortunately too many of us think that goals and objectives are yearly things and
not daily considerations. This results in too much time spent on the minor things and not on
the things, which are important to our work/lives
4. Attempting too much.
Many people today feel that they have to accomplish everything yesterday and don't give
themselves enough time to do things properly. This leads only to half finished projects and no
feeling of achievement.
5. Drop in visitors.
The five deadliest words that rob your time are "Have you got a minute". Everyone's the
culprit-colleagues., the boss, your peers. Knowing how to deal with interruptions is one of the
best skills you can learn .
6. Ineffective delegation.
Good delegation is considered a key skill in both managers and leaders. The best managers
have an ability to delegate work to staff and ensure it is done correctly. This is probably the
best way of building a team’s moral and reducing your workload at the same time. The
general rule is -this; if one of your staff can do it 80% as well as you can, then delegate it.
7. The cluttered desk.
When you have finished reading this article look at your desk. If you can see less than 80% of it
then you are probably suffering from 'desk stress'. The most effective people work from clear
desks.
8.Procrastination.
The biggest thief of time; not decision making but decision avoidance. By reducing the amount
of procrastinating you do you can substantially increase the amount of active time available to
you.
9. The inability to say "no!”
The general rule is; if people can dump their work or problems on to your shoulders they will
do it . Some of the most stressed people around lack the skill to 'just say no' for fear of
upsetting people.
Meetings.
Studies have shown that the average manager spends about 17 hours a week in meetings
and about 6 hours in the planning time and untold hours in the follow up. I recently spoke to
an executive who has had in the last 3 months 250 meetings It is widely acknowledged that
about as much of a third of the time spent in meetings is wasted due to poor meeting
management and lack of planning If you remember your goal is to increase your self
management, these are the best ways to achieve this;
There are many ways we can manage our time. We have listed some strategies you can use
to manage your time.
1. Always define your objectives as clearly as possible.
Do you find you are not doing what you want because your goals have not been set. One of
the factors, which mark out successful people, is their ability to work out what they want to
achieve and have written goals, which they can review them constantly. Your long term goals
should impact on your daily activities and be included on your "to do" list. Without a goal or
objective people tend to just drift personally and professionally
2. Analyse your use of time.
Are you spending enough time on the projects, which although may not be urgent now are
the things you need to do to develop yourself or your career. If you are constantly asking
yourself "What is the most important use of my time, right now?" it will help you to focus on
'important tasks' and stop reacting to tasks which seem urgent (or pleasant to do) but carry
no importance towards your goals.
3. Have a plan.
How can you achieve your goals without a plan. Most people know what they want but have
no plan to achieve it except by sheer hard work. Your yearly plan should be reviewed daily
and reset as your achievements are met. Successful people make lists constantly. It enables
them to stay on top of priorities and enable them to remain flexible to changing priorities. This
should be done for both personal and business goals.
4. Action plan analysis.
Problems will always occur, the value of a good plan is to identify them early and seek out
solutions. Good time management enables you to measure the progress towards your goals
because "What you can measure, you can control". Always try to be proactive.
Time management (or self management) is not a hard subject to understand, but unless you
are committed to build time management techniques into your daily routine you'll only achieve
partial (or no) results and then make comments such as "I tried time management once and it
doesn't work for me". The lesson to learn is that the more time we spend planning our time
and activities the more time we will have for those activities. By setting goals and eliminating
time wasters and doing this everyday you may find you will have extra time in the week to
spend on those people and activities most important to you.




The Eleven Biggest Time Management Lies !!


In the world of Time Management there are things said to us that we Accept as truth and we act
accordingly. The problem is sometimes they Are not truths. They are lies and as we believe
them, they waste our Time.
Those who speak these lies to us are not bad people at all because You and I are among them.
We all speak these untruths to one another from time to time. So let's not wish harm and doom
to the liars. Let's avoid the time traps their lying may cause us.
Here are the eleven biggest lies to shield yourself from.
1. "This will just take a minute." Has anyone grabbed you with that line? Does it ever "just take a
minute"? Rarely. What typically "just takes a minute", generally consumes several minutes and
more. Next time, when someone asks for your time and assures you," This will just take a
minute", tell them, "You're lying. You may not realize you're lying, but you are. I'll give you five
minutes. You may begin now."
2. "I need this as soon as possible." No you don't. That's a lie too. you need it by a certain date
and time because you are going to do something with what I provide for you. And if you're not
going to do anything with what I provide for you, why am I doing it for you in the first place?
Don't lie to me. Tell me when I have to get it to you. Be specific. You and I probably have two
difference dates in mind when we think in terms of "as soon as possible".

3. "I want this now." I doubt it. In this 24/7/365 world, everyone is under a sense of artificial
pressure to get it done "now" or worse," Yesterday". Things are generally not that urgent. Don't
get caught up in someone else's urgent trivialities. Call the liar to task. "I'm not sure I can get
that done now. What if I got it to you one week from today?" Use an outside deadline to give
yourself ample time to prevent getting into crisis management. Oh, and if they reject that
alternative, try three better dates for you. Why? Because, they may keep lying to you.
4. "It's not about the money." When it's not about the money, it's about the money.
5. "This is the best (investment, business opportunity, book, movie, restaurant, boss, job, etc.)
you'll ever find." Not true. There's always something better. The best is yet to come.
6. "I can get this done in an hour." It's a fib. Ever notice how it almost always takes twice as long
to get something done as what you thought it would? That's because few of us have a very
accurate internal clock to estimate the time required to complete most tasks.
7. "He's a' late' person." Most people who are "late" have a consistency about their behavior. My
friend Dwayne is 20 minutes late all the time. If we need to meet for lunch tomorrow, it will take
him 24 hours and twenty minutes to get there. Dwayne is not "late". He's "On-time; 20 minutes
later".
8."No Cost." You don't get "nothing for nothing". Everything has a cost. It may not cost you your
money but more often it will be your time and more of it than what you are getting in return for
"no cost".
9. "I'll prove you're wrong if it's the last thing I do." And it may well be. No one wants to be
proven wrong. Everyone likes to be caught doing things "right". Most, however, don't mind being
shown how to do things better.
10. "By the time I show him how to do it I could just as quickly have done it myself." If it's a onetime
proposition this may be true. It doesn't make a lot of sense to spend an hour to show
someone how to do a task that takes only 10 minutes.
But if it's a repetitive task, it's a lie. If that one hour investment will save you 10 minutes every
day, then in about a week you have your investment back and now you have a dividend of 10
extra minutes a day. What if you do that six different times? You get an extra hour in your day
and 365 hours over the next year.
11. "This is going to be really hard." Not true. Going through whatever you have to go through is
almost never as difficult as you imagined It to be. My high school principal, taught me that 95%
of what we fear coming at us will never hit us. It will ditch itself before it ever reaches us. And as
to the remaining 5%, tap your inner strengths to deal with it.

Do’s of Time Management


1) Draw out clear KPAs, time bound objectives and detailed plans for your job.
2) Plan your day ahead. List out the most important things to be done the next day in order
of importance.
3) Do delegate matters which you do not have to decide yourself. Insist on exercise of
delegated authority.
4) Be predictable. Know your staff and let your staff know your mind.
5) Record occasionally for some stretch of time how you spend your time and analyse
critically your time management.
6) Do accept that whatever your superior wants is urgent and important (till you are able to
convince him that it is not really so). But as a superior, decide priorities with reference to
organisational needs.
7) Do set aside fixed hours in a day when your staff can meet you or you will call them,
other than in any emergency.
8) Do set aside some time a week for innovative thinking and long range planning
regarding your area of responsibility, so as to anticipate problems and heighten your
contribution to the organisation.
9) Set aside some time, preferably towards the end of the day for trivial administrative
details.
10) Insist on completed staff work.
11) Finish the task you have taken up before getting to another.
12) Develop the habit of single handling i.e., making a decision or disposing of a paper at the
first opportunity itself.
13) Manage your time as you manage your money.
14) Do find time to relax, to draw back and look at what you are / have been doing (Review
time)
The trouble with service delivery is that it can’t be checked in advance, like a piece of crystal, or
a luxury car. We can’t sample it, package it, systemize it or automate service. It’s only produced
at the moment of consumption, our win-or-lose moment. That service delivery is often
performed by the most junior of our employees, often least motivated.
-- John Sharpe

General banking

Very important and useful General banking bits

1. A customer Mr Sharma had credit balance 40,000 in his saving ac and also had an OD ac with

overdue Debit balance of 20,000.Bank debits his saving account and adjusts OD ac. The bank is

said to have exercised Right of: Set-off

2. A Minor has extended Guarantee to a loan. It can be ratified by whom? It cannot be ratified by

any one.

3. A savings account becomes inoperative when it not operated for: 2 years

4. A term deposit of a HUF has become due. At the time of renewal, the Karta of HUF informs that

he has become Senior Citizen. What rate of interest will be given on term deposit? : Normal

interest rate. No benefit of senior citizen to be given

5. Additional interest is paid to senior citizens on which time FD: All fixed deposits (may vary from

bank to bank)

6. After Nomination in an account, what is the status of the nominee?: Trustee of legal heirs

7. An account of a customer can be closed in normal course on the request of the customer.

What are the other methods for closing account of a customer – (a) By negotiation; (b) As per

provisions of law; (c) After notice to customer in respect of undesirable accounts: Ans is C

8. An Illiterate person is generally not allowed to open which account – saving, term deposit,

recurring deposit, small account, Current Account: Current account.

9. As per RBI guidelines, Demand draft of Rs 50,000 and above should be issued against : by debit

to account but not against cash

10. As per RBI guidelines, minimum amount of deposit to open BSBDA account is: NIL

11. As per Sukanya Samridhi Account (SSA) the tenure of deposit is for years from the date of

opening of the account: 21 years

12. Bank is not required to produce original book of records but true copy can be submitted when

court has demanded as per which act? a) Civil procedure code b) Registration act c) B.R. Act d)

RBI act e) Banker Books Evidence Act.

13. Banker Customer relationship for deposits is ____: Debtor – Creditor.

14. Banker customer relationship in Safe Custody: Bailee Bailor.

15. Banker customer relationship in standing instruction: Agent – Principal

16. Bankers prefer Saving Deposits than Term deposits. Why?: Because cost of deposits for SB is

less.

17. Banks can decide interest rates of NRI, NRO or Term Deposits: Yes

18. Banks can raise what type of deposits?: Term and Demand Deposits

19. Banks should have the responsibility of currency management entrusted to a nodal official of the

rank not less than that of a General Manager and will be accountable for the obligations cast

upon currency chests by the Reserve Bank.

20. BC work as : Bank’s Agent

21. Business Correspondent can be identified by whom?: BDO,Post Master, Head of Village

Panchayat, other BC.

22. Business correspondents for banking for : serving weaker sections of society

23. Call money deposit is part of the sector : Organised sector

24. Complaints under Consumer forum should be dealt with within (Where no testing of commodities

is required) : 90 days.

25. Customer OD A/c has overdrawn Rs 2000/-. Saving A/c has balance Rs 3000. The bank adjusts

the OD A/c by which right: Set off.

26. DD of Rs.50000/- in cash : not allowed

27. Death claim settlement in how many days?: 15 days

28. Deposits held in Joint accounts; b) Corporate Deposits; c)

Inter-Bank deposit; d) Deposits of HUFs: Ans is Inter-Bank deposits.

29. Deposits which are not claimed for__years are required to be transferred by banks to

RBI: 10 years

30. DICGC cover is available in which of the following cases a) Credit balance in Cash Credit Account

b) Overdue Deposit c) Deposit of Government Department?: A & B

31. Differential rate of interest can be paid on fixed deposit if single deposit is for: Rs.1.00 crore

and above

32. Direct Tax Code will replace which of the following – Income Tax Act, Corporate Tax Act: Income

Tax Act.

33. Encashment of FOR with interest - payment can be made in cash if it is less than Rs 20000

34. Financial Inclusion means: providing banking services at affordable cost to the poor/distressed.

35. FULL FORM OF CASA? : CURRENT ACCOUNT & SAVING ACCOUNT

36. Garnishee order is not applicable to: a) Savings b) Current c) FD d) CC/OD with debit

balance: CC/OD with debit balance.

37. Govt. has decided to demonetize all the coins of paise 25 and below w.e.f. 30-6-2011.

38. How much amount can be deposited in a small account in a financial year?: Rs one lac

39. How much amount can be withdrawn from a small account in a month?: Rs 10,000

40. If in Garnishee Order no amount is mentioned, what should the bank do? Full amount to be

attached.

41. If payment of Rs 20000/- is made in cash in case of FDR what is the penalty: equal to the

amount paid

42. Illiterate account holder, how many witness for nomination: two

43. In Basic Savings Bank Deposit Account in all their accounts taken together and the total credit in

all the accounts taken together is not expected to exceed _____ in a year has been simplified to

enable those belonging to low income groups without documents of identity and proof of

residence to open banks accounts: 1,00,000/-.

44. In case Fixed Deposits account the rate of interest fixed by whom: Board of Directors of

respective bank.

45. In case of a/c transfer, with in how many days the address proof has to be submitted in the

transferee branch? Six Months

46. In case of an illiterate customer, process of nomination requires witnesses by how many

persons?: Thumb impression requires 2 witnesses.

47. In case of Deposit Insurance whether it mandatory or not: It is Mandatory for all banks.

48. In case of Deposit Insurance, Insurance premium is paid to DICGC by bank and depositor in

which ratio?: Entirely by bank.

49. In case of insurance of deposits by DICGC, premium is paid by: Bank. 100% of the premium

is paid by the bank and not by depositor.

50. In case of insurance of deposits by DICGC, what is the premium sharing ratio between bank and

depositor?: 100% of insurance premium is paid by the bank.

51. In case of Minor what is wrong? Minor can make himself liable for his actions.

52. IN CASE OF TRANSFER OF ACCOUNT, WITHIN HOW MANY DAYS, THE ACCOUNT HOLDER

SHOULD ADVISE NEW ADDRESS?: TWO WEEKS

53. In how many years of no transaction does a saving and current account become inoperative? :

two years

54. In Limited liability Partnership what is the liability of partner?: Amount agreed to be

contributed by partner at the time of joining partnership.

55. In saving accounts, interest is calculated on the basis of: daily product basis.

56. In Senior Citizen Saving Scheme account, who can be joint account holder?:Spouse

57. In small accounts as per RBI- No min. balance, nil/minimal charges etc

58. In small accounts monthly withdrawals to be upto- Rs.10000/-

59. Insurance of deposit is done by DICGC up to: Rs 1 lac per depositor per bank.

60. Interest rate on Saving Deposit is decided by : Banks individually

61. Interest rate on Savings accounts: Not regulated by RBI

62. Max amt for tax saver FD: Rs 150000

63. Maximum amount of deposit in Tax Saving Scheme of the bank can be: Rs 1,50,000

64. Maximum deposit for allocating a locker: 3 year advance rent plus locker breaking charges

65. Maximum period of NRE deposit: Bank Discretion.

66. Minimum and Maximum amount that can be deposited in PPF account is _____: Minimum Rs.

500/- & Maximum Rs. 1.50 lacs.

67. Minimum Lock in period for Tax saver FDR: 5 Years

68. Minimum Maturity Period for Certificate of Deposit is : 7 days

69. Missing person treated as having expired if missing for: 7 years

70. No Frills Accounts are opened for: Financial Inclusion

71. No of digits in Aadhar : 12

72. Non Resident (External) fixed deposit is normally accepted for a period of (a) 1 year to 3 year

(b) 1year to 5 year (c) 1 year to 4 year (d) 1 year to 7 year (e) 6 months to 3 year: 1 year to 3

year (As per RBI it is minimum 1 year and maximum bank discretion)

73. OD in PMJDY account upto: Rs. 5,000/-.

74. On a cheque presented for payment, amount is written in words but all other items are written in

Regional Language. What should the bank do?: Pay the cheque

75. Pensioner account can be opened jointly with? Spouse as Either of Survivor or Former or

Survivor.

76. Rate of Interest in Sukanya Samridhi Account for 2015-16: 9.20% & 8.6% FOR 2016-17

77. Relation between bank and judgment debtor: debtor & creditor.

78. Safe custody of Articles comes under which Act: Indian Contract Act.

79. Star series note can be issued in denomination of Rs 100 also. (earlier only Rs 10, 20 & 50)

80. Super senior citizen after: 80 years of age

81. The balance in the account is Rs 15000. A cheque of Rs 30000 was sent for collection. Before it

is realized a cheque for Rs 20000 has been presented for payment. What should the bank do –

(a) Return with reason effects not yet cleared. Present again; (b) Pay the cheque; (c) Return

with reason exceeds arrangement; (d) Return with reason Refer to Drawer; (e) Return with

reason Insufficient Funds: Insufficient Funds

82. The minimum & maximum period of certificate of deposit is : 7 days, 12 months

83. There is a credit balance in the saving account and there is a overdraft in the current account

amounting to Rs 555. Both accounts are in the same name. Bank wants to adjust credit balance

of saving bank account towards payment of overdraft. As per which right, bank can do this?:

Right of Set Off.

84. Under Sukanya Samridhi Account (SSA) the maximum period upto which the deposits can be

made is for ___ years from the date of opening of the account: 14 years

85. Under Sukanya Samridhi Account (SSA) the minimum amount of deposit is Rs 1,000 and Under

Sukanya Samridhi Account (SSA), the bank account will be opened for a girl child upto the age

of: 10 years

86. Under Sukanya Samridhi Account (SSA), the current rate of interest on deposits is which is the

highest amongst all other Govt. Saving Schemes: 9.20% & 8.6% FOR 2016-17

87. What are the Service charges for using ATMs of other banks for balance enquiries: Rs.20 for

Financial & Rs. 10 for Non- Financial upto 5 transactions ( 3 at Metros)

88. What documents are required for opening a small account?: Self attested photo and address

89. What is the bankers-customer relationship in case of deposits? Debtor – Creditor

90. What is the distance criteria for office of Business Correspondent?: The distance between the

place of business of a retail outlet/sub-agent of BC and the base branch should ordinarily not

exceed 30 kms in rural, semi-urban and urban areas and 5 kms in metropolitan centers.

91. What is the maximum amount of loan that can be granted against FCNR deposit? No limit.

92. What is the periodicity of review of risk classification of customers?: Every six months

93. What is the rate of interest payable on an overdue FD for overdue period if customer demands

payment and does not renew the same?: Saving Bank Rate

94. What is the special feature of Basic banking Account? Account can be opened with nil or very

small amount and there are no requirement of minimum balance.

95. What type of account can be opened in the name of NRI jointly with residents? NRO /NRE/FCNR

(earlier only NRO)

96. What type of activity can be performed by Business Correspondent - (a) processing and

submission of applications to banks; (b) disbursal of small value credit, (c) recovery of principal /

collection of interest (iv) collection of small value deposits: All of these

97. When a person wants to open an account with a bank but does not have proof of identification

and address, what type of account can be opened?: Small account

98. When Letter of Administration issued: When the person dies without leaving the Will- Intestate.

99. Whether “WILL” has to be registered? Not required.

100. Which form is used for cancellation of nomination in deposit accounts?: DA -2

101. Which is not a proof of Identity?: Ration card.

102. Which is the most important document for opening a Trust Account?: Trust Deed

103. Which of the following forms will be used for allowing exemption to a depositor aged 61 years

: Form 15 H

104. Which of these rates are periodically reviewed by RBI?: Repo rate, Bank rate, but not Savings

Bank Rate.

105. While opening account, a bank, in addition to observing various provisions of Indian Contract

Act should also – exercise utmost care and attention; look at profitability from account; exercise

due diligence: Due diligence

106. While opening the account with a bank, prospective customer is required to submit – PAN No

or Form 60 or 61

107. Who are eligible for preferential rate of interest under NRE deposits: a) Staff b) Senior citizen

c) Staff cum Senior Citizen d) none of these?: None of these

108. Who can do nomination in the account of a Minor?: Can be done by guardian not by

minor

109. Who of the following can exercise nomination – HUF, limited company, trust, Partnership firm,

sole proprietorship firm?: Sole Proprietorship firm.

CASE STUDIES ON DOCUMENTARY CREDITS AND UCP600

CASE STUDIES ON DOCUMENTARY CREDITS AND UCP600

CASE STUDY 1

Banks have a practice of calling for the original LC at the time of presentation of documents and

endorse any drawings on its reverse.

LC's may be made available by Acceptance / Defferred Payment / Negotiation and to be freely

available with any bank.

Is it mandatory to endorse the original LC on its reverse?

Analysis

Most LCs contain a clause indicating such a requirement.

The practice is required by SWIFT standards cat.7, for freely negotiable credits, available with any

bank.

Conclusion

What is the problem?

CASE STUDY 2

If a nominated bank does not incur a deffered payment undertaking on presentation of complying

documents and forwards them to the Issuing Bank.

Subsequently can it a purchases a deferred payment undertaking from the issuing bank and seek

protection under UCP600?

Articles 7c. UCP600

CASE STUDY 3

If a LC is confirmed and is available with the Confirming Bank and the beneficiary chooses to

present the document directly to the Issuing Bank and the Issuing Bank wrongfully dishonors.

Should the confirming bank honor the presentation given that the LC has meanwhile expired?

Article 8a. UCP600

CASE STUDY 4

A documentary credit requires all documents must to be issued in English language.

The presentation includes a Certificate of Origin bearing a Stamp / Legalisation done in another

language

Is this a discrepancy?

Issued in?

CASE STUDY 5

As per Article 38 of UCP 600, A LC can be transferred to more than one second beneficiary. This

can be done preferably when the Partial Shipments are allowed under the LC.

If the first Beneficiary is certain that he would be able to comply with article 31(b) of UCP600 (re

partial shipments – submission of multiple BLs on the same voyage), can a LC be transferred to

more than one second beneficiary even if the LC states Partial Shipment is prohibited provided

Article 38.d. UCP600

CASE STUDY 6

If the nominated bank does not accept a bill of exchange drawn on them by the beneficiary, can the

same bill of exchange be presented to the issuing bank or should they present a fresh bill of

exchange drawn on the Issuing Bank

UCP Article 7a (iv)

CASE STUDY 7

Under the documents required a LC calls for a Bill of Lading.

Bill of Lading submitted with the documents is signed by a forwarder as carrier.

Is it a discrepancy?

Article 20 UCP600

CASE STUDY 8

L/C requirement: invoices in 3 fold and Legalized by Chamber of Commerce.

Beneficiary submits invoices with only one legalized and others without being legalized.

Is it a discrepancy?

Article 17e. UCP600

CASE STUDY 9

LC calls for a Beneficiary's certificate stating the expiry date (of the product).

The certificate presented states only the month and the year of expiry.

Is it a discrepancy?

Bankers are expected to have a certain amount of general knowledge and common sense

CASE STUDY 10

The documents required in a transferable LC calls for an Inspection Certificate issued by the First

Beneficiary.

At the request of the First Beneficiary LC is transferred to a Second Beneficiary without calling for

the Inspection Certificate, which the first beneficiary undertakes to submit along with drafts and

invoices to be presented for substitution.

Has the Transferring Bank acted in aprudent manner.

Sub-article 38g of UCP600

CASE STUDY 11

A LC states the last date for shipment as 09 November 2014 and the expiry as 30 November 2014,

is silent on the period of presentation and also states ‘Stale Bills of Lading Acceptable”.

Documents presented on 01 October 2014 with the Bill of Lading dated 01 June 2014 refused by

the Issuing Bank stating Late Presentation (not presented within 21 days after the BL date as per

article 14.c UCP600)..

The negotiating Bank does not agree with the reason for refusal.

Should the Issuing Bank honour?

Rule A19.b ISBP745

Case Study 12

The documentary credit in question issued subject to UCP600 called for shipment from “ANY

NORTH EUROPEAN PORT” and the transport document required in field 46a was: “FULL SET OF

CLEAN ON BOARD BILL OF LADING”.

The Nominated Bank received a bill of lading evidencing shipment from Antwerp, which we found to

be within the scope of North Europe, since the geographical area of North Europe was not defined

in the Credit.

The Issuing Bank refused the documents arguing that Antwerp is not within the geographical area

or range stated in the Credit.

The Issuing Bank further argued that Belgium is in Western Europe and not in Northern Europe and

quoted an internet website (www.mapsofworld.com) where we could easily recheck.

Is the discrepancy cited by the issuing bank valid?

Analysis

UCP 600 sub-article 14 (a) states that a bank must examine a presentation on the basis of the

documents alone.

It is not a matter for the ICC Banking Commission to define or determine geographical areas or

ranges. The requirement in the credit is vague and clearly ambiguous.

In accordance with ISBP 745 Preliminary Considerations paragraph (v), the applicant bears the risk

of any ambiguity in its instructions to issue or amend a credit.

Furthermore, an issuing bank should ensure that any credit or amendment it issues is not

ambiguous or conflicting in its terms and conditions.

It should not be necessary to refer to external resources in order to determine relevant facts.

Conclusion

The applicant and issuing bank must bear the risk of ambiguity for failing to express specifically how

“Any North European Port‟ is to be defined.

In this case, the document is not discrepant.

Case Study 13

Under a credit issued subject to UCP600 by Bank V in country W available by negotiation and

expiring with Bank A in country N, Bank A added its confirmation. Upon presentation of complying

documents Bank A negotiated and discounted. Documents were refused by Bank V for the following

reason: “Health Certificate to be presented in 1 original and 2 copies but only presented in 1 original

plus 1 copy.”

Bank A stated that all required originals and copies were presented to them within the time limits

foreseen by the credit, but admitted to having made an operational mistake by leaving one copy of

the Health Certificate in their file and by only sending 1 original and 1 copy to Bank V.

Bank A requested Bank V to create a second copy on Bank A‟s account, or to instruct Bank A to

courier the missing copy, but Bank V did not provide agreement. In the absence of any instructions,

and after the expiry date of the credit, Bank A couriered the missing copy document to Bank V,

certifying on their letter that it was presented within the time limits of the credit. Bank V still refused

to honour the presentation.

Has the Issuing Bank the right to refuse the documents on the basis of the missing copy of the

Health Certificate, in spite of the fact that the missing copy was sent to them after the expiry date,

but with the declaration of the negotiating bank that the copy was presented within the time limits

foreseen under the LC?

Analysis

The credit was available for negotiation with the Nominated Bank and expired at their counters.

UCP 600 sub-article 6 (d) (ii) states: “The place of the bank with which the credit is available is the

place for presentation. The place for presentation under a credit available with any bank is that of

any bank. A place for presentation other than that of the issuing bank is in addition to the place of

the issuing bank.”

UCP 600 article 6 (e) states: “Except as provided in sub-article 29 (a), a presentation by or on

behalf of the beneficiary must be made on or before the expiry date.”

In accordance with UCP 600 sub-article 7 (c) an Issuing Bank undertakes to reimburse a nominated

Bank that has honoured or negotiated a complying presentation and forwarded the documents to

the Issuing Bank.

The Issuing Bank did not receive all the required documents and subsequently issued a refusal

notice. The Nominated Bank, after an exchange of correspondence with the Issuing Bank,

forwarded the missing copy document to the issuing bank certifying that it had been presented

within the time limits required by the credit.

Conclusion

The initial cited discrepancy is valid. However, upon receipt by the issuing bank of the missing copy

document, and on the basis that it also received a certification from the negotiating bank that the

document was presented within the time limits required by the credit, the issuing bank must

reimburse the confirming bank.

Cade Study 14

Under a credit issued by Bank V in country V available by negotiation and expiring with Bank A in

country N, Bank A added its confirmation. Upon presentation of complying documents Bank A

negotiated and discounted. Documents were refused by Bank V for the following reason: “Health

Certificate to be presented in 1 original and 2 copies but only presented in 1 original plus 1 copy.”

Bank A stated that all required originals and copies were presented to them within the time limits

foreseen by the credit, but admitted to having made an operational mistake by leaving one copy of

the Health Certificate in their file and by only sending 1 original and 1 copy to Bank V.

Bank A requested Bank V to create a second copy on Bank A‟s account, or to instruct Bank A to

courier the missing copy, but bank V did not provide agreement. In the absence of any instructions,

and after the expiry date of the credit, Bank A couriered the missing copy document to Bank V,

certifying on their letter that it was presented within the time limits of the credit. Bank V still refused

to honour the presentation.

Has the Issuing Bank the right to refuse the documents on the basis of the missing copy of the

Health Certificate, in spite of the fact that the missing copy was sent to them after the expiry date,

but with the declaration of the negotiating bank that the copy was presented within the time limits

foreseen under the LC?

Analysis

Although not indicated in the query, it is assumed that the credit was issued subject to UCP 600.

The credit was available for negotiation with the nominated bank and expired at their counters.

UCP 600 sub-article 6 (d) (ii) states: “The place of the bank with which the credit is available is the

place for presentation. The place for presentation under a credit available with any bank is that of

any bank. A place for presentation other than that of the issuing bank is in addition to the place of

the Issuing Bank.”

UCP 600 article 6 (e) states: “Except as provided in sub-article 29 (a), a presentation by or on

behalf of the beneficiary must be made on or before the expiry date.”

In accordance with UCP 600 sub-article 7 (c) an issuing bank undertakes to reimburse a nominated

bank that has honoured or negotiated a complying presentation and forwarded the documents to

the issuing bank.

The issuing bank did not receive all the required documents and subsequently issued a refusal

notice. The nominated bank, after an exchange of correspondence with the issuing bank, forwarded

the missing copy document to the issuing bank certifying that it had been presented within the time

limits required by the credit.

Conclusion

The initial cited discrepancy is valid. However, upon receipt by the issuing bank of the missing copy

document, and on the basis that it also received a certification from the negotiating bank that the

document was presented within the time limits required by the credit, the issuing bank must

reimburse the confirming bank.

Cade Study 15

Bank A (Issuing Bank) in country A issued a standby credit subject to UCP 600 which was advised

to the beneficiary in country B by Bank B (Advising Bank).

The beneficiary presented a demand under the credit which arrived at the counters of the Bank A

before the expiry date of the credit.

Bank A issued a notice of refusal on the third day following presentation stating one discrepancy:

“Original Standby LC Not Presented”.

There was no wording in the credit requiring presentation of the original Standby LC.

1) Is the discrepancy stated by the Bank A correct?

2) Can Bank A raise further discrepancies at a later date in respect of the one presentation made by

the beneficiary under the credit?

Analysis

1) The wording of the credit did not require the presentation of the original credit as part of the

claim. Unless the credit was issued by mail or in paper format, it is doubtful how the originality of the

document could be determined. Accordingly, unless otherwise specifically required within the terms

and conditions of a credit, there is no requirement for the original credit to be included in the

presentation.

2) UCP 600 sub-article 16 (c) states that when a bank decides to refuse or negotiate, it must give a

single notice to that effect to the presenter. UCP 600 clearly does not allow for further discrepancies

to be raised that were apparent at the time of the initial presentation, as is referred to within former

ICC Opinions R196, R328, R271 and TA764rev.

Conclusion

1) The discrepancy is not valid.

2) Additional discrepancies are not to be considered, as banks only have one opportunity to raise

discrepancies for each presentation.

Cade Study 16

Under a documentary credit subject to UCP 600 the beneficiary of the L/C presented, amongst

other documents, a charter party bill of lading (CPBL), made out in accordance with the terms and

conditions of the respective L/C, signed and stamped as shown hereafter:

According to UCP 600 sub-article 22 (a) (i), a CPBL must appear to be signed by any of the

following parties:

· the master,

· the owner,

· the charterer, or

· a named agent for any of the above.

The stamp shows, however, that the master is signing “On behalf of Owners”.

As this is a case not contemplated by UCP 600 sub-article 22 (a) (i) like the signing by a carrier or a

named agent for the carrier as indicated in Official Opinion 470/TA.775rev., we would like to know

the opinion of the ICC Banking Commission to this case, i.e. whether this is an acceptable way of

signing or not: If the answer is that it is not acceptable, whether it would be acceptable, if the name

of the owner(s) would be stated.

Analysis

UCP 600 sub-article 22 (a) (i) states that a CPBL must appear to be signed by:

· the master or a named agent for or on behalf of the master, or

· the owner or a named agent for or on behalf of the owner, or

· the charterer or a named agent for or on behalf of the charterer.

Furthermore, it states: “Any signature by the master, owner, charterer or agent must be identified as

that of the master, owner, charterer or agent.”

ISBP 745 paragraph G4 (b) states: “When the master (captain), owner or charterer signs a charter

party bill of lading, the signature of the master (captain), owner or charterer is to be identified as

“master” (“captain”), “owner” or “charterer”.

ICC Opinion 470/TA.775rev does not apply as it relates to a CPBL issued and signed by a carrier or

its agent.

The signature on the CPBL is identified as that of the master (captain). The master is signing for

and on behalf of the owner.

Conclusion

The document is acceptable.

Cade Study 17

The Documentary Credit issued subject to UCP 600 by an Issuing Bank located in country X on

behalf of an applicant also located in country X and confirmed by a Bank located in country Y

required in field 46a “documents required” amongst other the following document:

Quote Bank guarantee from international first class bank payable in country X equivalent to EUR

xxxxx [the guarantee indicates an amount] valid till xx.xx.xxxx [the guarantee indicates a fix date].

Unquote

The bank guarantee presented to the Confirming Bank is issued by a bank located in country Y and

states that it is subject to the laws of country Y. The wording of the presented guarantee shows the

applicant of the Letter of Credit as beneficiary of the guarantee. The amount and expiry date of the

guarantee are in compliance with the requirements stipulated in the Letter of Credit. The payment

undertaking of the guarantee is worded as follows:

QUOTE

We, xxx [the guarantee indicates the guaranteeing bank], hereby irrevocably undertake to

pay you [the guarantee is addressed and directed to the applicant of the Letter of Credit]

without delay on your first written demand for payment an amount up to xxx [the guarantee

indicates an amount] provided your demand for payment is simultaneously supported by (…)

UNQUOTE

The wording of the guarantee does neither contain an express indication that it is “payable in

country X” nor any express reference to country X being the place of payment.

The Confirming Bank accepted the presented guarantee but the Issuing Bank raised the following

discrepancy: “Bank Guarantee from international bank is not payable in country X.”. Please let us

have your official opinion whether and if so why the issuing bank was entitled to raise the

discrepancy by answering the following questions:

1. Is the guarantee only compliant if it either indicates expressly that it is “payable in country X” or

contains an express reference to country X being the place of payment? Or can it be argued that

the guarantee meets the requirement “payable in country X” because it is issued in favour of a

beneficiary located in country X and as it provides that payment thereunder has to be made to this

beneficiary?

2. Would the requirement “payable in country X” be met if the guarantee is made out as described

above but is not issued by a bank located in country Y but in country X?

3. Does the stipulated requirement “payable in country X” require the document checker to

determine whether the presented guarantee‟s place of payment is country X?

4. Could the confirming bank argue validly that the Letter of Credit does not stipulate that the

requirement “payable in country X” must be met by an express reference or wording in the

guarantee document (e.g. 46a: Bank guarantee from international first class bank indicating that it is

“payable in country X” equivalent to (…)”) and that this requirement may therefore be deemed as

non-documentary and not stated and thus be disregarded according to UCP 600 sub-article 14 (h)

5. Could the confirming bank argue validly that the checking of the document falls with respect to

the requirement “payable in country X” under the auspices of UCP 600 sub-article 14 (f) because

this requirement is worded in way that does not amount to a stipulation of the document‟s data

content ?

Analysis

The credit included, in field 46a of the MT700, a requirement for a guarantee to be issued by an

international first class bank payable in country X (the country of the credit issuing bank). Apart from

amount and expiry date, no other requirements were provided. The credit was confirmed by a bank

in country Y (the country of the credit beneficiary).

The actual guarantee that was presented to the confirming bank was issued by a bank in country Y,

stating that it was subject to the laws of country Y.

The guarantee contained a statement from the guarantee issuing bank that they irrevocably

undertook to pay the guarantee beneficiary (the applicant of the credit) without delay on first written

demand for payment. It did not include an explicit statement or reference that the guarantee was

payable in country X.

Whilst the Confirming Bank accepted the guarantee as a compliant document under the credit, the

Issuing Bank refused on the basis that the guarantee was not payable in country X.

In view of the fact that the beneficiary of the credit was located in country Y, it is not unusual that

they would use a bank in their own country to issue the guarantee, as was the case in this query.

The guarantee had been issued directly in favour of the beneficiary (the credit applicant) in country

X, and not via another bank in country X. It included a condition that payment would be made

against first written demand. It does not state a place for presentation. Because the guarantee did

not state a place for presentation, demands must be presented at the issuing bank. The issuing

bank is located in country Y.

Conclusion

1. The guarantee needed to clearly state that it was payable in country X. In order to achieve this, it

would have needed to be payable at the counters of a bank in country X, and not at the counters of

the guarantee issuing bank in country Y. The fact that the guarantee was issued directly in favour of

the beneficiary (credit applicant) in country X and was payable against first written demand, did not

fulfil this requirement.

2. If the guarantee had been issued by a bank in country X, this would have met the requirements of

the credit.

3. The place of payment of the guarantee was to be stated as “in country X‟ or determinable as

being within country X.

4. The requirement for the guarantee clearly related to a requirement for an actual document.

Consequently, UCP 600 sub-article 14 (h) is not applicable.

5. The condition in the credit “payable in country X‟ is a specific requirement that must be clearly

reflected in the guarantee document if it is to fulfil its function. The discrepancy raised by the issuing

bank is valid.

CASE STUDY 18

The relevant LC conditions:

1) (Under documents required): Full set of clean on-board marine bills of lading consigned to order,

blank endorsed, notify applicant and marked “freight payable as per charter party”

2) (Under other conditions): Charter Party BL acceptable

The presented BL shows:

a) “freight payable as per charter party”

b) signed by XXX Logistics Co Ltd as agent for carrier YYY Shipping Lines Ltd

c) the reverse page shows the shipper’s blank endorsement

d) reverse page also shows typical shipping contract terms & conditions (i.e. not the usual Charter

Party BL terms & conditions)

In short, the BL (front and back), other than the freight statement, does not display anything to

suggest that it is subject to a charter party contract.

Issuing Bank paid but deducted a discrepancy fee for the waived discrepancy of “Charter Party BL

signatory’s capacity not as master, owner, charterer or agent for any of the aforesaid”. Issuing

Bank’s position appears to be that, by virtue of the LC‟s BL freight requirement, the LC is actually

calling for a Charter Party BL. And because the BL does show such freight statement, the BL is to

be treated as being subject to a charter party contract, and therefore the BL must be signed in

accordance with Article 22 (a) (i).

Negotiating Bank of course disagreed and countered that the freight phrase was not enough

evidence that the BL was a Charter Party one. It argued that, save for the freight phrase; its terms &

conditions (on reverse page) were those of a conventional BL. If it is a conventional BL, then issuing

bank’s discrepancy is incorrect. It should be instead: “Conventional BL presented but contains an

indication that it is subject to a charter party”..

ANALYSIS

The credit required a marine bill of lading marked “freight payable as per charter party‟. In this

respect, the credit was badly worded. The presented bill of lading was marked “freight payable as

per charter party”.

ISBP 745 paragraph G2 (b) states: “A transport document, however named, indicating expressions

such as “freight payable as per charter party dated (with or without mentioning a date)”, or “freight

payable as per charter party”, will be an indication that it is subject to a charter party.

ISBP 745 paragraph G1 states: “When there is a requirement in a credit for the presentation of a

charter party bill of lading, or when a credit allows presentation of a charter party bill of lading and a

charter party bill of lading is presented, UCP 600 article 22 is to be applied in the examination of

that document.

Where a credit simply allows for or requires the presentation of a CPBL, a CPBL issued and signed

by a carrier or its agent is discrepant under UCP 600 sub-article 22 (a) (i).

CONCLUSION

The discrepancy raised by the issuing bank, “Charter Party BL signatory‟s capacity not as master,

owner, charterer or agent for any of the aforesaid”, is correct.

CASE STUDY 19

L/C available with Advising Bank by payment, however the Advising Bank did not act under our

nomination and has sent documents presented by the beneficiary to the Issuing Bank without

examining them (in accordance with beneficiary's request). No message was received from the

issuing bank, Advising Bank received a MT910 from their correspondent bank informing us of the

credit entry on our account and containing information in field 72: /EUR100 deducted as discr.fee/.

The documentary credit included the following clause: 'discrepancy fee of EUR 100.00 will be

deducted from the proceeds any drawing if documents are presented with discrepancies'

We have contacted issuing bank arguing that since they had not acted in accordance with UCP 600

sub-article 16 (c) (ii), quoting every single discrepancy they should be precluded from deducting

discrepancy fee.

An answer was received that their action has nothing to do with UCP 600 article 16 and that if we

want to find out about discrepancies we will have to ask for it. It seems that they are acting in line

with the conclusion of a/m Opinion. Nevertheless, we cannot agree with it.

In the opinion of the Issuing Bank and according to UCP600 sub-article 16 (a) an issuing bank

determines if a presentation does not comply. By deducting their discrepancy fee they obviously

wanted to indicate that the presented documents did not comply.

As per article UCP 600 sub-article 16 (b) issuing bank may in its sole judgment approach the

applicant for waiver, but that does not extend period of time mentioned in UCP 600 sub-article 14

(b), nor does it (in our opinion) annul the provisions of UCP 600 sub-articles 16 (c), (d), (e) and (f).

Achieving applicant's acceptance of discrepancies does not justify the action of not listing all

discrepancies, even when sending message indicating acceptance (such as in MT752).

Advising Bank is of the opinion that if Issuing Bank determines that presented documents contain

discrepancies, all discrepancies should be quoted either in separate MT734 or in MT752 within 5

working days. Otherwise they are precluded claiming that documents are discrepant (and

accordingly not allowed to deduct discrepancy fee)

ANALYSIS

A presentation of documents had been paid by the issuing bank deducting their discrepancy fee.

Prior to payment no notice of refusal has been sent nor had any information on discrepancies been

provided by the issuing bank.

When an issuing bank finds discrepancies in documents, it has two options available to it under

article 16: to provide a refusal message to the presenter in terms of sub-articles 16 (c) and (d) or, to

approach the applicant for a waiver without first providing a notice of refusal (sub-article 16 (b)).

When the option of approaching the applicant for a waiver is chosen, and such waiver is given and

accepted by the issuing bank, the practice is for the issuing bank to honour, and such honour will be

less any discrepancy fee that was stated in the credit.

When this course of action is taken, the issuing bank should provide the presenter, as part of their

payment message or in a separate communication, details of the discrepancies that were observed.

The presenter can then choose to dispute the discrepancies, therefore questioning the relevance of

the deduction representing the discrepancy fee. If the issuing bank does not provide such an

indication, the presenter may seek, and the issuing bank must provide, such details. The actions of

the issuing bank, as described in situation D, do not represent preclusion under sub-article 16 (f).

Conclusion:

The Issuing Bank is entitled to a discrepancy fee as outlined in the credit, but it should inform the

presenter of the discrepancies that were found, either in the advice of payment or in a separate

communication.

The issuing bank is not required to send a notice of refusal to the presenter if it elects to contact the

applicant for a waiver and to receive a waiver that is acceptable to it. Sub-article 16 (f) does not

apply in these circumstances.

If the covering schedule listed the discrepancies that the presenter had found, the Issuing Bank

should either advise the presenter that the documents were taken up despite the discrepancies that

had been identified by the presenter, or list the discrepancies for which the issuing bank had sought

waiver from the applicant.

It is only when an issuing bank does not indicate the discrepancies that there should be a need for

the presenter to seek such details. The default position is that an issuing bank, in order to justify a

discrepancy fee, should always indicate the discrepancies by one of the methods described above.

When an issuing bank has approached the applicant for a waiver, and received such waiver and

decided to act upon it, it does not need to send a notice of refusal in accordance with UCP 600 subarticle

16 (c) in order to be entitled to deduct a discrepancy fee when it honours a presentation. In

such circumstances, UCP 600 sub-article 16 (f) does not apply.

When a bank deducts a discrepancy fee on the basis of a “discrepancy fee clause‟ in a credit, it is

good banking practice to inform the presenter of any discrepancies that were found in the

documents, either in the advice of payment or in a separate communication. In the event they fail to

do so, this does not preclude them from providing such information subsequently.

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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.