ƒâãäªÀã ¹ããä±ã¶ããè ½ãÖã ¹ãƺãâ£ã‡ãŠ INDIRA PADMINI Central Office: 763, Anna Salai, Chennai 600 002 General Manager 25th May 2013 FOREWORD Banking career, like any other professional career is becoming a challenging one. In this era of rapidly changing economic scenario, the job of a banker, on the one hand, is demanding in terms of knowledge updation and technological efficiency. On the other hand, the career opportunities are enormous with rapid branch expansion, exodus of senior Officials owing to mass retirement and robust business growth. Hence to keep pace with this trend in the banking field, it is imperative that skill development and knowledge updation are given due importance. The fourth edition of “Career Guide for IOBians” designed by Shri.S.Rajendran Nair, Chief Manager (Faculty) at Staff College, Chennai is a handbook for enriching your knowledge for a brighter and successful career path. The author has made a sincere and dedicated attempt to cover almost all aspects of Banking and Finance such that the book would serve as a compact reference book. I am sure that this “Career Guide for IOBians” will equip all career aspirants considerably and ensure success in their future endeavours. With best wishes, INDIRA PADMINI General Manager Career Guide for IOBians i INDEX Sl.No Chapter Name Page Number 1. KYC/AML 1 2. General Banking 12 3. Savings Bank Account 18 4. Current Account & cash credit Account 24 5. CASA Schemes 27 6. Term Deposit 32 7. Deposit Schemes 43 8. Gold Deposit Scheme 49 9. Dormant & Inoperative Accounts 52 10. Special Types of Customers 54 11. Rights of Banker 60 12. Right to Information Act 62 13. BCSBI 65 14. Ombudsman Scheme 2006 67 15. Garnishee Order 71 16. Attachment Order 73 17. Negotiable Instrument Act 74 18. Certificate of Deposits and Commercial Paper 79 19. Collection of Cheques 81 20. Locker 90 21. Mobile Banking 93 Career Guide for IOBians Career Guide for IOBians ii Sl.No Chapter Name Page Number 22. NEFT and RTGS 95 23. Liability Insurance 101 24. Loan Secure 103 25. Health Care Plus 104 26. Sale of Gold coins 106 27. Nomination 107 28. FCRA 2010 110 29. Public Provident Fund 113 30. Credit Card 114 31. Debit Card 116 32. Debit Card - Schemes 120 33. Tax Deduction at source 122 34. KYC/AML Foreign Exchange related 127 35. Foreign Exchange 131 36. NRO Accounts 144 37. NRE accounts 147 38. FCNR (B) Accounts 151 39. EEFC Accounts 155 40. FEDAI Rules 156 41. Exports 160 42. Imports 167 Career Guide for IOBians Career Guide for IOBians iii Sl.No Chapter Name Page Number 43. INCOTERMS 170 44. Letter of Credit 174 45. Remittance - Outward 178 46. Remittance facilities for NRIs in IOB 186 47. General advances 192 48. Ratio Analysis 208 49. Priority Sector Advances - Classification 215 50. MSME advances 225 51. CGTMSE 231 52. Letter of Guarantee 237 53. Rehabilitation of sick Micro Small Enterprises 239 54. SME Schemes 242 55. Financial Inclusion – IOB initiatives 249 56. NBFC – Micro Financial Institutions 256 57. Joint Liability Group 257 58. Self Help Group 260 59. SGSY 267 60. SJSRY 272 61. PMEGP 275 62. Govt. Sponsored Schemes 279 63. ISHUP 281 Career Guide for IOBians Career Guide for IOBians iv Sl.No Chapter Name Page Number 64. Subhagraha 283 65. Vidyajothi 290 66. Retail Credit Schemes 298 67. Liquirent 305 68. Easy Trade Finance 307 69. DRI Advances 309 70. Kissan Credit Card 310 71. Agri- Credit Schemes 316 72. Takeover of advances 320 73. Advances- Granting Excess and adhoc limits 322 74. Joint responsibility for loans and advances 326 75. Loan Review Mechanism 331 76. Restructuring of advances 332 77. Credit Monitoring 335 78. Restrictions for financing 338 79. SARFAESI Act 339 80. Prudential Accounting norms 343 81. CERSAI 347 82. Risk Management 350 83. Valuation of Security 354 Career Guide for IOBians directly or indirectly. Security Arrangements 370 90. Understanding Terminology . Significant Accounting Policies of Bank 357 85. References were made in the Bank’s Book of instructions.Monetary 386 96. The author shall have no liability or responsibility to any person or entity regarding any loss or damage incurred. Staff Matters 380 94.Career Guide for IOBians v Sl. by the information contained in this book.No Chapter Name Page Number 84. there may be omissions. different Acts etc. or alleged to have incurred. Compensation Policy 377 93. Capital Adequacy 358 86. Capital Structure of Banks 365 87. to collect details. circulars. Branch Authorisation Policy 368 88. This book may serve only as a general guide and not as the ultimate source of subject information. typographical and or content errors. Miscellaneous matters 390 Disclaimer This book is designed to provide information on banking topics to promotion aspirants of Indian Overseas Bank. Base Rate 369 89. Understanding Terminology .Financing 383 95. Every effort has been made to make the contents of this book as accurate as possible with latest information. But the book is also being used as a reference book in many branches for their routine jobs. ASBA 372 91. However. Customer Service 374 92. manuals. Career Guide for IOBians . RBI circulars. Objectives • The objective of KYC/ AML/ CFT guidelines is to prevent Bank’s branches from being used intentionally or unintentionally by criminal elements for money – laundering or terrorist financing activities. Financial Action Task Force ( FATF ) on Anti Money Laundering (AML ) measure and on Combating Financing Terrorism ( CFT ) The salient features of the Customer Due Diligence (CDD) for banks suggested by Basel Committee on Banking Supervision. Or. Procedure for determination of Beneficial Ownership (some examples are given below :) Controlling ownership interest means ownership of/entitlement to more than 25 % of shares or capital or profits of the juridical person. ownership of/entitlement to more than 15% of the property or capital or profits of the juridical person where the juridical person is an unincorporated association or body of individuals.Career Guide for IOBians 1 _____________________________________ _____________________________________ _____________________________________ KYC/AML Guidelines (Some points) Reserve Bank of India has compiled a set of broad guidelines known as ‘Know your Customer’ (KYC) norms taking into account the recommendations of. _____________________________________ _____________________________________ _____________________________________ .e. and includes a person who exercise ultimate effective control over a juridical person. of/entitlement to more than 15% of the capital or profits of the juridical person where the juridical person is a partnership. A. Definition of customer For the purpose of KYC Policy a customer of our Bank is defined as: • A person or entity that maintains an account and / or has a business relationship with any of branches • One on whose behalf the account is maintained (i. • KYC procedures also enable our branches to know / understand the customers and their financial dealings better which helps to guard against fraudsters / criminals besides facilitating assessment of risk perception prudently.the beneficial-owner) at any of our branches Beneficial Owner' means the natural person who ultimately owns or controls a client and or the person on whose behalf a transaction is being conducted. where the juridical person is a company. B. • an entity that has a business relationship with Branch. agreement. • Beneficiaries of transactions conducted by professional intermediaries such as stock brokers. persons having large number of cases filed against them by Competent Authorities like Enforcement Directorate.g Politically Exposed Persons (PEPs). Solicitors etc. etc. • a person who undertakes occasional/ regular transactions (money changing). commercial Tax etc. shall be categorised as "RIP – Exceptional". Chartered Accountants.Career Guide for IOBians 2 _____________________________________ _____________________________________ _____________________________________ Control through other means can be exercised through voting rights. Medium risk and High risk and shall be assigned codes as ‘RIP – ONE’. say a wire transfer or issue of high value demand draft as a single transaction • a person who receives occasional/ regular cross border inward remittances under Money Transfer Service Scheme (MTSS). Monitoring agency for Forex violations. "RIP-TWO" and ‘RIP – THREE’ respectively. beneficial owner). arrangements. each customer shall be categorised as Low risk. which can pose significant reputational or other risks to the bank. C. • A person on whose behalf the transaction (money changing) is made.. Core Components The Policy on KYC guidelines has been framed on the basis of the following four core/key elements.e. • Based on the level of risk perception.. _____________________________________ _____________________________________ _____________________________________ . • Customer Acceptance Policy (CAP) • Customer Identification Procedure (CIP) • Monitoring of Transactions • Risk Management a. e. Income-Tax. Police. as permitted under Law • Any person or entity connected with a financial transaction. Customer Acceptance Policy (CAP) • No account shall be opened in anonymous / fictitious /benami name(s). • a person on whose behalf a cross border inward remittance under MTSS is received (i. • Customers requiring very high level of monitoring. • The bank shall not open an account or close an existing account where it is unable to apply Customer Due Diligence (CDD). is opened by a Power of Attorney holder on behalf of principal.) • Bank shall document / record in clear terms the circumstances in which customer is permitted to act on behalf of another person / entity in conformity with the established Law and practice of Banking. once in 5 years And once in 2 years in respect of other customers. • Undesirble Accounts Accounts in which the balances often fall below the stipulated minimum balance Savings bank accounts in which there are large number of operations not commensurate with the balance maintained Accounts in which cheques are drawn without adequate funds or arrangement to cover them and the cheques are returned frequently Accounts in which cheques are drawn against uncleared effects expecting the bank to pay the cheques or accounts where the customer remits funds always at the last moment to meet the cheques already presented Accounts of customers who are known through reliable sources to be indulging in illegal activities (Smuggling etc). is operated by Mandate holder. FEMA violation etc. Unable to rely on the data / information furnished by the customer etc.Career Guide for IOBians 3 _____________________________________ _____________________________________ _____________________________________ CDD aspects: Unable to verify identity of the customer. and the developments are likely to tarnish the image of our bank. _____________________________________ _____________________________________ _____________________________________ . Is opened by an intermediary in the fiduciary capacity. the forms are to be scruitinised and accounts are to be re-classified as per risk perception. Branch shall obtain CROP FORM from Low risk customers. Unable to obtain documents required as per risk categorisation due to non co-operation of the customer. • CROP FORMS (Section A & Section B) are to be obtained • At the end of every year. This is to facilitate establishing the correctness of branch /Regional Office decision when an account. Career Guide for IOBians 4 _____________________________________ _____________________________________ _____________________________________ Risk Matrix Based on the risk perception. Government Departments.. and Government owned Companies. taking into account the relevant factors such as customer’s background. country of origin. Regulators and Statutory bodies etc. who have small means and who tend to route the dealing – amounts which do not belong to them in their account RIP – Three (High Risk) Customers for whom sources of funds are not clear or are not convincing shall be categorized under RIP – Three. location of activity. • Higher due diligence shall be applied for this category of customers who include the following. NPOs / NGOs promoted by United Nations or its Agencies RIP TWO • Individuals and entities whose accounts reflect large volume of turnover or large number of high value transactions in the estimation of branch. interior decorators etc. Example: Salaried employees whose salary structures are well defined. shall be categorised under RIP– Two. market reports etc. Example: People with range of business activities of smaller modules Share brokers. his client profile. RIP – One (Low risk) • Individuals and entities whose identities and sources of wealth can easily be identified and in whose accounts transactions by and large conform to the known profile shall be categorized under RIP-One. real –estate people. People belonging to lower economic strata of the society where accounts reflect small balances and low turn-over. High net worth individuals. Non – resident customers. nature of business. following risk matrix is adopted. _____________________________________ _____________________________________ _____________________________________ . source of funds. Auto consultants.. • In these cases upon seeking clarifications satisfactory responses shall be forthcoming from the customers. . Firms with ‘sleeping partners’. Customer Identification Procedure (CIP) • Customer Identification Procedure refers to identifying the customer and verifying his/ her identity by using reliable. Companies having close share holding or beneficial ownership. Carrying out a financial transaction or Back to index _____________________________________ _____________________________________ _____________________________________ . Enforcement Directorate Police Income Tax Department Monitoring Agency for Forex violations Commercial Tax department Bodies handling Export / Imports disputes b. customers who are close relatives of PEPs and accounts of which a PEP is the ultimate beneficial owner. Politically exposed persons (PEP’s) of foreign origin.Career Guide for IOBians 5 _____________________________________ _____________________________________ _____________________________________ Trusts. Examples: Persons and entities having large number of cases filed against them by the competent authorities viz. data/ information etc. Non-face–to–face customers. independent source – documents. Accounts of bullion dealers(including sub-dealers) and jewellers in view of risks involved in cash intensive businesses. Those with dubious reputation and connected to persons with dubious reputation as per public information available. NGO’s and organizations receiving donations. RIP – Exceptional (Very High Risk) • Individuals and entities whose public image in the estimation of branch is poor / adverse shall be categorised under RIP – Exceptional. • Customer identification procedure shall be carried out at different stages. While establishing a banking relationship. Charities. the document may be accepted as a valid proof of both identity and address. • Opening the savings bank account of the SHG While opening the savings bank account of the SHG. KYC verification of all the office bearers would suffice. daughter. PAN Card etc. • Any one or more document(s) which provide customer information to the satisfaction of bank shall be sufficient. parents etc who live with their husband/Father/Mother/Son are experiencing difficulty in opening account with banks as the utility bills required for address verifications are not in their names. In addition to the certificate from employer.Career Guide for IOBians 6 _____________________________________ _____________________________________ _____________________________________ When the branch has a doubt about the authenticity / veracity or adequacy of the previously obtained customer identification data. passport. At the time of credit linking of SHGs. • For opening bank accounts of salaried employees.. wife. registered lease deed and postal identity card should not be more than 6 months old. • A rent agreement indicating the address of the customer duly registered with State Government or similar registration authority may also be accepted as a proof of address. Verification of Address of Close Relatives • Some close relatives viz. • Customer identification procedure shall also be carried out in respect of nonaccount holders approaching the bank for high value one-off transactions. _____________________________________ _____________________________________ _____________________________________ . driving licence. no separate KYC verification of the members or office bearers is necessary since KYC would have already been verified while opening the savings bank account and the account continues to be in operation and the same account is to be used for credit linkage. Branches have to rely on certificate issued by employers as the KYC document for the purpose of certification of identity as well as address proof. Branches should be aware of the competent authority designated by the concerned employer to issue such Certificate or letter. • The documents except passport ration card. These are to be obtained from corporates and other entities only of repute. son. KYC verification of all the members of SHG need not be done. • If the address on the document submitted for identity proof by the prospective customer is same as that declared by him/her in the account opening form. branches should insist on atleast one of the officially valid documents as provided in the Prevention of Money Laundering Rules (viz.) or utility bills for KYC purposes. who is under any obligation that inhibits bank's ability to know and verify the true identity of the client on whose behalf the account is held or beneficial ownership of the account or understand true nature and purpose of transaction/s. fresh address proof may be obtained from him/her upon such transfer by the transferee branch. _____________________________________ _____________________________________ _____________________________________ . then that particular client shall be identified. and landline telephone bills in the name of the proprietary concern as required documents for opening of bank accounts of proprietary concerns. • Bank can use any supplementary evidence such as a letter received through post for further verification of the address. bank shall obtain identity document and utility bill of the relative with whom the prospective customer is living along with a declaration from the relative that the said person (prospective customer) who wants to open an account is a relative and is staying with him/her. • In order to comply with KYC requirements of correct address of the person. water. the complete Income Tax Return (not just the acknowledgement) in the name of the sole proprietor where the firm's income is reflected.Career Guide for IOBians 7 _____________________________________ _____________________________________ _____________________________________ • In order to obviate this predicament. should not be allowed to open an account on behalf of a client. • First remittance to the account of non face – to face applicant customer shall be insisted through bank’s branch which adheres to similar KYC standards. Client Accounts opened by professional intermediaries • Where the bank has knowledge or reason to believe that the client account opened by a professional intermediary is on behalf of a single–client. • While verifying the identity of proprietary concerns and when income tax return is used for the purpose. Walk-in-customers • Full particulars of the applicant including PAN number details are to be obtained in case of walk-in customers also when DDs are issued for Rs 50000 and above as multiple DDs in aggregate for the same applicant. • The customer should be allowed to transfer his account from one branch to another branch without restrictions. duly authenticated/acknowledged by the Income Tax authorities and utility bills such as electricity. Transfer of Accounts • KYC once done by one branch of the bank should be valid for transfer of the account within the bank as long as full KYC has been done for the concerned account. • Professional intermediary. Option to unblock the account will be given to the branch manager after keying in the particulars of receipt of officially valid documents. after paying a certain amount as commission. to the First Line Manager. and The balance at any point of time does not exceed Rs.Career Guide for IOBians 8 _____________________________________ _____________________________________ _____________________________________ • Strict adherence to guidelines on KYC/AML/CFT minimize the operations of ‘Money mules.50.’ • In a money mule transaction. Foreign remittances will not be allowed to be credited into small account unless the identity of the client is fully established through the production of officially valid documents. If any of the condition with regard to credit/withdrawal/balance as stated in above is breached.000. Rs. The concerned branch may get the details of permanent place of residence verified through an online communication to the nearest branch of the permanent domicile within 30 days of opening of an account within which the customer may be allowed limited operations to enable him/her to meet basic day-to-day requirement of funds. 1 lakh. c. • In case of opening of accounts for migratory workers. an individual with a bank account is recruited to receive cheque deposits or wire transfers. the account will be blocked disallowing any credit/debit transactions. which are opened against self-attested photograph and affixation of thumb impression. These funds are then transferred to accounts held on behalf of another person or to other individuals. the aggregate of all withdrawals and transfers in a month does not exceed Rs. Monitoring of Transaction • It is the duty and responsibility of the desk–officers at the branches /other offices to report immediately the details of such transaction which in his / her estimation are of suspicious nature (falling outside the regular pattern of activity).000. _____________________________________ _____________________________________ _____________________________________ . In the case of accounts.10. Small accounts 'Small account' means a savings account in a banking company where the aggregate of all credits in a financial year does not exceed Rs. If the account holder fails to produce any of the officially valid documents even after 24 months from the date of opening of the account. the account will be blocked. ) (Rs. If the response from the said customer is unsatisfactory or not convincing. Traders etc) threshold limits for each account based on the data on income / business furnished by the customer in CROP form. Sl. which exceeds the threshold limit. to a person acting in good faith.00. shall be enquired into and the response shall be recorded. salaried class.000 4. gives rise to a reasonable ground of suspicious that it may involve the proceeds of crime or appears to be made in circumstances of unusual or unjustified complexity or Appears to have no economic rationale or bonafide purpose..00.000 50. Businessmen.000 20.Career Guide for IOBians 9 _____________________________________ _____________________________________ _____________________________________ • For this purpose Branches will maintain a Suspicious Transaction Index Book (STIB) wherein the desk officers will record the details of the transactions and bring them to the attention of the branch Manager • Suspicious transaction means a transaction whether or not made in cash which. • The bank shall fix risk level Single Transaction Threshold Limit (STTL) at the time of opening the account itself.000 15.00.no Risk Perception 1 Low Risk – RIP 1 Medium Risk-RIP 2 High Risk–RIP 3 & Risk Exceptional 2 3 • Individual25 % of annual income subject to Minimum Maximum (Rs. _____________________________________ _____________________________________ _____________________________________ . based on the risk profile of the customer. • STTL Limits. The threshold limit for an account may be his / her annual salary for salaried and the total annual business income for a businessman / trader. middle Income group.000 50.) 5.00.00. Example.) 50.00. • The bank shall advise the branches to fix-up category wise (viz.000 50.000 Any transaction.000 50.000 50.000 3.) (Rs. the transaction shall be reported by the branches in STR to Regional Office.00.00.00.000 Legal Persons 1/12th of annual turnover subject to Minimum Maximum (Rs.000 10. the Central Government is empowered to freeze. seize or attach funds and other financial assets or economic resources held by. D. undertaking transactions and during the course of business relationship.g. card.II). • Freezing of Accounts In terms of Section 51A of Unlawful Activities (Prevention) Act.) obtained while opening the account. both domestic or international. Where the bank is unable to apply appropriate KYC measures due to non furnishing of information and /or non-cooperation by the customer. PAN. if necessary.Career Guide for IOBians 10 _____________________________________ _____________________________________ _____________________________________ d. all necessary records of transactions. • Closure of Accounts. identity cards. utility bills etc. _____________________________________ _____________________________________ _____________________________________ . RISK MANAGEMENT • The branches shall review the risk categorisation of accounts as follows : In respect of accounts categorised under Low and Medium Risk ( RIP-I and RIP. E. Maintenance and preservation of records • Banks shall maintain for at least 10 years from the date of transaction between the bank and the client. (RIP III and RIP exceptional) review of risk perception should be done once in 6 months. Such decisions shall be taken by Regional Managers and above only. 1967 (UAPA) . on behalf of or at the direction of the individuals or entities. branches should review the risk perception once in a year as of December and refix the same if necessary In respect of High and Exceptional risk category. driving licenses. Inspection Department. the bank shall consider closing the account or terminating the banking / business relationship after issuing due notice to the customer explaining the reasons for taking such a decision. 10 lacs and above in CDW Ten Register. Central Office has been designated as PRINCIPAL OFFICER ( PDoc KYC AML ) of our bank. which will permit reconstruction of individual transactions (including the amounts and types of currency involved if any) so as to provide. evidence for prosecution of persons involved in criminal activity. • Bank shall ensure that records pertaining to the identification of the customer and his address (e. General Manager. • Branches shall maintain record of all cash deposits and withdrawals of Rs. are properly preserved for at least 10 years after the business relationship is ended/ from the date of cessation of the transactions/ business relationship. copies of documents like passports. Therefore introduction should not be insisted for opening bank accounts of customers. • If the customer shows unwillingness to comply with KYC/AML/CFT requirements and not responding with in a period of 3 months/not found at the given address.05. • Branches/Regional Offices/Other offices are advised. The Principal Officer shall record his reasons for treating any transaction or a series of transactions as suspicious. mail /telegraphic transfer / RTGS/NEFT / swift or any other mode and issue of travellers’ cheques for value of Rs. General Guidelines • Information collected from the customers for the purpose of opening an account will be kept confidential • Remittance of funds by way of demand draft. ******************************** srn/06.50000/. to place KYC non-compliant accounts under close watch. G. Reserve Bank of India will now be able to levy a penalty of Rs-l crore on banks if they breach a single norm.Career Guide for IOBians 11 _____________________________________ _____________________________________ _____________________________________ • Bank shall submit the Cash Transaction Report (CTR) for each month 15th of the succeeding month • The Suspicious Transaction Report (STR) shall be furnished within 7 days of arriving at a conclusion that any transaction. Depriving the noncompliant customers certain additional facilities till the customer complies with such requirements. or a series of transactions integrally connected are of suspicious nature.and above is effected by debit to the customer’s account or against crossed cheques and not against cash payment • Introduction is not necessary for opening of accounts under PML Act and Rules or Reserve Bank’s extant KYC instructions. • However. Basic banking transactions already in force should not be disturbed for meeting KYC review requirements H. whether cash or non-cash. RBI's Penalty for violation of norm As per the Banking Regulation Act amendment.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . branches can close the account after giving due notice to him/her. F. Such decisions shall be taken only at Regional Managers level. as an initial measure . c.1 lac each : The delayed period interest will be levied only at the Bank rate for delays upto 5 calendar days and _____________________________________ _____________________________________ _____________________________________ . f. ‘Banking’ means the accepting. b. i. 2. par instruments” of co-operative Banks by 4. draft. These include provision of mandatory minimum security features on cheque forms like quality of paper. Delay in Remittance of Government Receipts . of deposits of money from the public. e. for the purpose of lending or investment.1 lac and above will attract delayed period interest at Bank rate + 2% (Bank rate is notified by RBI from time to time). Failure in carrying out ECS direct debits/ other debits to the accounts. a. order or otherwise. etc. the customer will be compensated up to Rs. Payment of cheques after Stop Payment instructions. and withdrawal by cheque. Violation of the Code by banks agent. Compensation Policy The Compensation Policy envisages compensation to the customers in case of financial loss due to the deficiency of service in the following areas. Erroneous transactions in credit card operations. watermark. Compensation Limit: As a measure of our bank’s commitment to speedy customer service. RBI prescribed certain benchmarks towards achieving standardisation of cheques issued by banks across the country.points 1. Cheques / Instruments lost in transit/in clearing process or at paying Bank’s Branch h. d. g. void pantograph. This benchmark prescriptions is known as : CTS-2010 standard' 3. bank’s logo in invisible ink. 1 Lac where erroneous debits have taken place in the customers accounts either through our fault or where the fault is elsewhere in the system 5. repayable on demand or otherwise. Delay in foreign exchange transactions. • For Transactions below Rs. Delay in collection of outstation cheques..Career Guide for IOBians 12 _____________________________________ _____________________________________ _____________________________________ General Banking . Unauthorized debit/ Erroneous debit in the customers accounts. Transaction of “at Commercial Banks. and standardisation of field placements on cheques. ‘Banking’ is defined under sn 5(b) of the Banking Regulation Act 1949.Delayed Period Interest • Delayed period interest shall be calculated only for the delayed period and not from the date of transaction • The period of delay in a transaction of Rs. 000 Rs.1. Whenever a customer wants cheques to be marked as good for payment they should be asked to take a Demand Draft out of the clear funds or drawing power available in the account 10. 75. 8.00. • Bank shall compensate the customer of an inward remittance by payment of interest @ 2% over the applicable Savings Bank rate of interest in case the proceeds of the inward remittance are not paid within 7 days.000 • Current account classic Rs.00.5.Career Guide for IOBians 13 _____________________________________ _____________________________________ _____________________________________ • For delay above 5 calendar days. Penal Interest at the Bank rate +2% for the full period of delay 6. 9.5. Payment of cheques after Stop Payment instructions: • In case a cheque has been paid after stop payment instruction is acknowledged by the bank.5. 7.000 irrespective of having more number of accounts in the same branch or with different branches.1.00.00. • SB gold - Rs.1. Foreign inward remittance: • Inward remittance will be credited to beneficiary’s account within 7 days from the date of credit to Nostro account provided account details are available correctly. Amount lying unclaimed for more than 6 months will be transferred to Central office half yearly .during March and Sept every year. Excess in cash: Any excess in cash balance is to be credited to sundry creditors account.000 • Current account super Rs.00.00.000 • RD gold Rs.000 • SB silver Rs.1.000 • SB Platinum Rs. Personal Accident Insurance cover provided to the following customers – free of cost.00.00. • Any consequential financial loss to the customer will be compensated. MARKING OF CHEQUES • The Marking of any cheque as "Good for Payment" is strictly prohibited. Such debits will be reversed within 2 working days of the customer intimating the transaction to the Bank.1.000 • Corporate salary account • SB Student Rs. _____________________________________ _____________________________________ _____________________________________ .000 Maximum coverage under PAI is Rs. the bank shall reverse the transaction and give value dated credit to protect the interest of the customer. Term Deposit for an amount up to and inclusive of Rupees Ten thousand only Whenever any partner of a partnership firm approaches the branch for opening an account in the similar name of the firm with him as a proprietor or otherwise. but before it passes on to the hands of beneficiary 9. Account of safe deposit locker Bailee . Local Authorities and Government Departments c. mandate must be attested by notary public _____________________________________ _____________________________________ _____________________________________ . 8. Deposit Accounts (Cr. Loan accounts Creditor-Debtor Collection of cheques/acceptance of standing instructions Acceptance of articles for safe custody Agent/ Principal Acceptance of money for specific purposes Accepting money for issuing draft (before draft is issued) Trustee -Beneficiary 4. 5. Up to six months of operation the computer system will flash the message “ New account “ to ensure that the branch is keeping a careful watch on the transactions in the new account 12.Customer Relationship: Sl. Balance) Debtor-Creditor 2. Banks. If the account holder is illiterate.Bailor Agent-Principal Debtor-Creditor Trustee-Beneficiary Lessor-Lessee 13. Banker. Deposits – General The approval to open an account must be given by the Branch Manager irrespective of the cadre Photographs need not be insisted by branches. Staff accounts b. such request should be declined by the branch. Draft tendered to applicant. Deposit Accounts (Dr. Draft tendered by payee (with the payee of DD) 10. Mandate A mandate is neither stamped not witnessed.Career Guide for IOBians 14 _____________________________________ _____________________________________ _____________________________________ 11.No Type of accounts/transactions of the Customer with the Bank Relationship of the Banker-Customers 1. in the under noted accounts: a. 7. 6. Balance) Creditor-Debtor 3. it gets automatically cancelled on the death of the Principal. It should therefore be ensured that the Principal is alive on the date of creation of mortgage. The Power of Attorney must be definite and no provisional or conditional clause as "during my absence from India" or "during my illness" etc. clubs. from the SRO where the POA was originally registered. deeds and things lawfully done should be construed as the act of the Principal and his undertaking to ratify and confirm all such acts done by the POA holder 15.Career Guide for IOBians 15 _____________________________________ _____________________________________ _____________________________________ 14. In the case of partnership accounts.. the revocation instruction must be given by the individual or proprietor. etc. the letter revoking the stop payment instructions must be signed by all the Office bearers or trustees (including the one who issued the stop payment instructions). In case of joint accounts of individuals irrespective of operational instructions like either or Survivor. the POA will be treated as revocable POA and in such cases. the banker customer relationship stands terminated. In the case of accounts of companies. associations and trusts.. Care must be taken to see that the attorney does not exceed the powers granted to him A cheque signed by the agent can be paid even after his death provided the principal is alive. If there is no specific clause in the POA as regards the irrevocability. Revocation of stop payment instructions In the case of accounts of individuals and proprietary concerns. executed in the presence of notary and is stamped as per the Stamp Act of the State. The POA should also contain a ratification clause whereby the Principal agrees that all acts. shall be accepted as the monitoring of such conditions is difficult. If it is executed outside India. is irrevocable. Though POA received. _____________________________________ _____________________________________ _____________________________________ . or when a company is in the legal process of winding up. Insolvency • When an individual customer/proprietor of proprietary concern/ any of the joint account holders in a joint account becomes insolvent. it should be verified and ensured that the said POA has not been revoked. An acknowledgment of the letter containing the revocation instruction must be sent to the customer 16. the revocation instructions must be signed by all the joint account holders. Power of attorney It is in writing. the letter carrying the revocation instructions must be signed by all the partners of the firm. it should be executed before High Commissioner in Indian Embassy and should be stamped in India within three months of its receipt. • Insanity of the karta or individual coparceners will not disrupt the Hindu Undivided Family Firm. they must be requested to close the account by drawing a self cheque signed by all the other partners and open a new account by fulfilling all the formalities connected with opening an account. No operations either by the sane or insane account holder should be allowed irrespective of the fact that the balance is payable to either or survivor. would constitute adequate authority to the Bank to stop operations on his account • On the insanity of one of the joint account holders. the other partners must be allowed to operate the account for the purpose of dissolution. • If the Partnership Deed does not provide for the continuation of the partnership and if a partner becomes insolvent and therefore the firm has to be dissolved. should be returned by the Bank with the reason "Refer to Drawer". The account may be allowed to be continued after satisfying the validity of the claim. The next senior coparcener becomes automatically the karta of the family to manage its affairs. of the new karta by getting the written consent of all coparceners. all operations in the account of the Joint Hindu Family firm must be stopped.Career Guide for IOBians 16 _____________________________________ _____________________________________ _____________________________________ • Cheques issued by the partnership firm signed by a partner who has been declared insolvent. who has been declared insane or known to be insane by way of notice of insanity received by the Bank. • Cheques drawn by the insane karta presented after the notice of his insanity may be paid only after getting the confirmation of the new karta. • If the Partnership Deed does not contain such a provision and subsequently the partnership firm is to be dissolved. • If the Partnership Deed provides for continuation of the partnership business even if one or other partners become insane and if the other partners want to continue the partnership business. • Cheques issued prior to receipt of notice of insanity should not be honoured even if it is signed by the sane account holder. the joint relationship stands cancelled. notice of which has been received by the bank must be returned with the reason "Refer to Drawer". _____________________________________ _____________________________________ _____________________________________ . then the solvent partners can be allowed to operate the account for the purpose of winding up only. • Cheques drawn by partnership firms signed by the partner. anyone or survivor etc. Effect of insanity of customers: • A notice or knowledge that a customer is confined to a lunatic asylum or is judicially declared a lunatic under the Lunacy Act. • Cheques presented subsequent to receipt of notice of insanity of the proprietor should be returned with the remark "Refer to Drawer". • On receipt of notice of insolvency of a Karta or any coparcener of the Joint Hindu Family firm. banks may return a paid instrument only after obtaining a true copy thereof. Return of paid cheques to customers • In terms of Section 45 Z of the Banking Regulation Act.Career Guide for IOBians 17 _____________________________________ _____________________________________ _____________________________________ • Insanity of person who is authorised to operate an account of a Limited Company will not affect the account and cheques issued by the person before his becoming insane will also be paid. Demand drafts of Rs. Central Office for furnishing full details of the customer and reason for their seeking return of their paid instruments. 20. by mechanical or other process at the cost of the customer. 1881. • Such permission will be granted subject to the customer giving an undertaking to the Bank to retain such paid instruments for a minimum period of eight years and to produce the same on demand when required under Law such as the Income Tax authorities etc. 18. • The Company will arrange to forward a copy of the new Resolution regarding operation in the bank account to the branch.and above are to be issued invariably with account payee crossing. request letters and acknowledgement for receipt of cheque books should be stitched and preserved along with the day’s vouchers 19. The cheque requisition slips. 20. or both for dishonour of such electronic funds transfer on par with the penalties stipulated for dishonour of cheques under the Negotiable Instruments Act. ONE CRORE and above to their respective Regional office in DSDC form Branches on daily basis should report the particulars of all dishonored cheques irrespective of the amount drawn in favour of stock exchanges by share broker entities to their respective Regional office in DSDC form.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . The Payment and Settlement Systems Act.000/. • Branches should obtain prior permission of Banking Operations Department. 17. Branches on daily basis should report the particulars of all the dishonored cheques for amount of Rs. 1949. This undertaking is to be preserved with the account opening form. srn/04. 2007 provides for punishment of 2 years and twice the amount of electronic funds transfer instruction.05. copies of proof etc. “ONLINE ACCOUNT OPENING” through our Web site is available. SB-SLVR1. • In case the account could not be opened due to genuine reasons/ the same should be recorded against the relevant data with the reasons.resident Indian close relatives shall not be eligible to operate the account during the life time of the resident account holder. • Accounts should be opened within 3 days of registration. excluding intervening holidays. Indian Embassy or Notary Public. SB-PLAT. & SB-SLVR2. without fail. maintained in India as NRO account. • For SB-NRE: The initial remittance for opening the account is to be received through banking channels in an approved manner along with signature of the depositor duly verified and attested by the overseas bank. Interest rate on SB accounts (domestic. SBPUB. SBSTUDNT. account opening shall be completed after due verification of documents as per extant guidelines. A _____________________________________ _____________________________________ _____________________________________ . Individuals resident in India may be permitted to include non-resident close relative(s) as a joint holder(s) in their resident bank accounts on ‘former or survivor’ basis. 2. RBI has permitted branches to re-designate the resident account of foreign nationals. have been obtained by the branch. • The accounts can be opened under SBGOLD1.Career Guide for IOBians 18 _____________________________________ _____________________________________ _____________________________________ Savings Banks Account 1. 4. Branch should confirm the identity of the depositor at a later date when he calls in person by calling for and verifying his current valid passport. NRE & NRO) has been deregulated. • Minimum balance requirement will be as applicable to the respective schemes. forms. The officer should compare the signature of the customer in the passport with those in the account opening form and ensure that they agree 3. SB-GOLD2. SB-NRE. However. Accounts of Foreign nationals: The Foreign Nationals employed in India and holding valid visas are eligible to maintain resident accounts with branches in India. • As and when the required documents. Branches should obtain the complete details from the account holder about his legitimate dues expected to be received into his account. on leaving the country after their employment to enable them to receive their pending bonafide dues. such non. _____________________________________ _____________________________________ _____________________________________ . • Therefore. they are eligible to open bank account without prior permission of RBI. certificate from embassy of the country of origin or any appropriate legal authority certifying local address in India/rent agreement/certification of registration issued by Foreigner Registration Regional Office (FRRO) – Address proof.1 lakh. banks may apply the differential rate(s) as fixed by each bank. 6. banks are required to apply the uniform rate set by them on end-of-day balance up to Rs.1999. Proof of admission – usually a letter from the university or college d. Branches have to satisfy themselves as regards the credit of amounts which have to be bonafide dues of the account holder when she / he was a resident in India. While calculating interest on domestic savings bank deposits. The funds credited to the NRO account should be repatriated abroad. Before remitting. branch should verify that all the applicable Income tax and other taxes in India have been paid. The amount repatriated abroad should not exceed USD one million per financial year. The account should be closed immediately after all the dues have been received and repatriated as per the declaration made by the account holder. Valid Visa – a visa with photograph in it – also serves as a proof of identity c. The debit to the account should be only for the purpose of repatriation to the account holder’s account maintained abroad. 5. The interest rates applicable on the domestic savings deposit will be determined on the basis of end-of-day balance in the account. A letter from the college or hostel. Passport – proof of identity b. There should not be any other inflow / credit to this account other than that mentioned above.Career Guide for IOBians 19 _____________________________________ _____________________________________ _____________________________________ declaration to this effect listing out all the legitimate dues to him have to be obtained from account holder. 1 lakh and for any end-of-day balance exceeding Rs. 7. Opening of Bank Accounts by Foreign Students studying in India • A foreign student studying in India would be considered as a ‘Person Resident In India” as defined in Section 2 (v) of FEMA Act. • Details of documents that can be accepted from Foreign Students studying in India for KYC compliance: a. SB Overdraft Accounts not adjusted and outstanding beyond sixty days from the date of granting should be treated as irregular and reported to Regional Office in ERI. Branches should obtain the nomination as per procedure and record in the computer system for all Savings Bank accounts.10.10. Refund Order etc. for the purpose of drawing cash through third parties. Dividend Warrant. _____________________________________ _____________________________________ _____________________________________ . 12. Joint accounts are permitted. The passbook should be branded with the rubber stamp reading “NOMINATION REGISTERED”. Savings Bank Accounts where an average quarterly balance of Rs.000/=. Interest Warrant. Additional withdrawal slips not exceeding ten leaves at a time may be given to such of those customers who do not have cheque books.. 10000 and above was continuously maintained during the previous quarter are eligible for the following concessions in the current quarter • Inland Demand Drafts for 2 occasions in a month for a total amount of DD and put together not exceeding Rs. Semi Urban.000/. No interest in SB accounts should be paid unless the interest accrued during the half year amounts to at least Rupee One. All Cash Deposits in Savings Accounts of Rs. if they are presented beyond the period of three months from the date of such instrument. 15.000/= are totally exempted from Exchange / Commission charges • Collection charges would not be levied on outstation instruments such as Cheques.and above will require the account holder furnishing the Income-tax PAN or declaration in Form 60 or 61 as the case may be. 17.50. 13.Career Guide for IOBians 20 _____________________________________ _____________________________________ _____________________________________ 8. Basic Savings Bank accounts (MSD/ Basic Savings Bank accounts • All Rural. excepting Minors’ Special Savings accounts 10. In such a case the savings bank clerk (operator) should note the account number in all the withdrawal slips before parting with the same. The total amount of instruments collected during a month for which no service charges are recovered should not exceed Rs. However there is no restriction on the number of instruments collected per month. 14. Supply Bills). Hundies. 9. The details of the nominee should also be entered in the computer master through appropriate programme 11. • Individuals including minor who have completed 10 years of age and pensioners. Payment out of Savings Bank account to third parties through withdrawal slips may be allowed up to a maximum amount of Rupees One thousand only per instrument. 16. Urban and Metropolitan branches can open and maintain Basic Savings Bank account. (excluding Documentary / Clean Bills. Banks are directed by RBI not to make payment of cheques/pay orders/ banker’s cheque bearing that date or any subsequent date. Demand Drafts. no minimum balance charges. who are availing various scholarships. the accounts would additionally be treated as a ‘Small Account’ and would be subject to conditions stipulated for ‘Small Accounts’. 20. If the number of debits in the account exceeds the permitted limit or if the minimum balance requirement is not complied a reasonable service charge shall be levied to cover the cost. • If a customer has any other existing savings bank deposit account in that bank. in which case the entire balance of the account will be withdrawn. A depositor cannot withdraw a smaller sum than one rupee unless it is to close the account. 18. scheduled tribes and other backward classes also. Minimum balance requirements Category With cheque facility (Rs. 22. • Holders of ‘Basic Savings Bank Deposit Account’ will not be eligible for opening any other savings bank deposit account in that bank. No cheque shall be drawn for amounts below Rupees Five only. Cheque book will not be issued. 23. For accounts opened in the middle of the half-year permissible withdrawals will be calculated pro-rata 21. • Facility of ATM card is available. For Basic Savings Bank accounts. he/she will be required to close it within 30 days from the date of opening a ‘Basic Savings Bank Deposit Account’. benefits etc. • Restrictions for number of transactions: 4 withdrawals in a month including ATM withdrawal. Number of withdrawals permitted is fifty per half year in a financial year. • Penalty for exceeding number of transactions: No interest is payable • Basic Savings Bank Account must also be extended to students from scheduled castes.Career Guide for IOBians 21 _____________________________________ _____________________________________ _____________________________________ • Minimum balance: No requirement of any minimum balance • Withdrawals in the account: withdrawal in cash & ATM withdrawals. • If such account is opened on the basis of simplified KYC norms. _____________________________________ _____________________________________ _____________________________________ .) Without cheque facility (Rs.) Rural & Semi urban branches 500/- 100/- 20 per month Other branches 1000/- 500/- 20 per month Pensioners’ SB acc 250/- 5/ 20 per month 19.) Penalty for non maintenance (Rs. 25. 51/. 1988 ACCOUNTS Charges Flat charges of Rs.A for opening of Savings Bank(account A)/term loan (Account B) accounts under the scheme Account A (SB) under the scheme may be converted into Account B (Term deposits) and vice versa applications for conversion from SB to term deposit or vice versa – FormB The proceeds of Account B are to be routed through Account A (SB).per instrument -Maximum Rs. RD & Deposits.2.Career Guide for IOBians 22 _____________________________________ _____________________________________ _____________________________________ 24. 54-B.Free & For othersRs. Joint Accounts are not permitted under Capital Gains Accounts Scheme.51/For With Cheque book accounts Rs. Some charges: Item of service Issue of Duplicate Statement Issue of Duplicate Pass book Standing Instructions Stop payment Instructions signature verification Account closure charges 27. Cheque leaves issued more than 25 in number would be charged at the rate of Rs. the depositor should apply in Form-C _____________________________________ _____________________________________ _____________________________________ . Savings Bank customers can enjoy the privilege of having their name(s) printed on the cheque-book – Personalised Cheque-book (PCB).55 per Non MICR Cheque Leaf. 26. IOB-PRIDE Project.255/Rs.31/Within same branch for credit to Loan. Interest on Term Deposit accounts is to be credited to Account A only. Separate accounts should be opened if the depositor intends to avail the benefit under more than one of the above sections of the Income Tax Act Account opening form.( No period restriction) UNDER CAPITAL GAINS ACCOUNTS Branches situated in non-rural areas can accept deposits under the above scheme to enable the tax payers to avail of the benefit of exemption from Capital gains These accounts can be opened only by those tax payers who are eligible for exemption under Section 54. FORM .1.41/.for 40 entries Flat charges of Rs.55/= per MICR cheque leaf and Rs. 1961 (43 of 1961).31/.per transaction Rs. 76/For without Cheque Book accounts Rs. SAVINGS BANK SCHEME. 54-D. 54-F OR 54-G of the Income Tax Act. initial withdrawal.31/. Amount can be withdrawn from Account A only. Form F is to be submitted for variation/ cancellation of nomination.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . TDS should be deducted as per extant guidelines.25000 should be paid to the depositor only by way of crossed demand draft drawn in favour of the person to whom the depositor intends to make the payment. Accounts under the scheme may be closed only with the prior written approval of the Assessing Officer (Income Tax Department. Nomination is permitted. (Maximum Three nominees). Amount held in Account A and Account B can not be placed or offered as security for any loan or guarantee and can not be charged or alienated. the nominee. the first nominee shall have the right to receive the amount due in the account of the deceased depositor. Non – compliance of this rule will render the depositor to lose exemptions under relevant section. FORM E is to be submitted for nomination. Withdrawals for amounts exceeding Rs. will make application in Form H with the approval of Assessing officer ( having jurisdiction over deceased depositor) application for closure of account in Form G srn/19. if above referred particulars are not furnished. Nomination is to be entered in Pass book/ Deposit Receipt In case of more than one nominee. If the depositor dies. Branches may refuse to allow further withdrawal.Career Guide for IOBians 23 _____________________________________ _____________________________________ _____________________________________ and for subsequent withdrawals in Form -D Form D (in duplicate) is to be submitted by giving details showing the manner / purpose for which the previous withdrawal has been utilized. Government of India) having jurisdiction over the depositor Amount drawn from Account A has to be utilized within 60 days from the date of such withdrawal for the purpose mentioned in the relevant sections.05. Unutilized amount should be re-deposited in Account A immediately. Account can be transferred to another branch of the same Bank. Interest is taxable. Central Office should be obtained. as per directives from Reserve Bank of India. This interest will be paid on daily products basis and credited to the accounts every six months ending February and August. 1. 2. • As the purpose of releasing the credit is to pass-on the interest benefit to the customers.000/- Others Rs.000/- Rs. • No current account should be opened for blind persons • For opening of accounts of other banks. • Whenever any partner of a partnership firm approaches the branch for opening an account in the similar name of the firm with him as a proprietor or otherwise.and above will require the account holder furnishing the Income-tax PAN number or declaration in Form 60 or 61 as the case may be. • Current accounts of Regional Rural Banks are eligible for payment of interest irrespective of whether they are sponsored by our bank or by other banks. 1.Career Guide for IOBians 24 _____________________________________ _____________________________________ _____________________________________ Current & Cash Credit Accounts • Prior approval of Regional Office should be obtained for opening accounts in the name of Executors and Administrators. the credits arising out of clearing are to be passed on to the respective accounts on the day the Bank Account is credited for the relative clearing. 1. • No interest is payable on the balances held in current account except in the following cases.000/- • All cash deposits in Current and Cash Credit accounts of Rs. • Credit balances lying in current/cash credit accounts of individuals/proprietary concerns where the individual/ proprietor has expired.50000/.000/- Rs. are eligible for payment of interest at Savings Bank rates for the period from the date of death till date of settlement of the claims. no drawings shall be allowed against such uncleared credit as a matter of routine. _____________________________________ _____________________________________ _____________________________________ . prior sanction of Banking Operations Department. • In respect of Cash Credit Accounts. • The minimum balance to be maintained in any current account is furnished hereunder : Category of Branches Tiny and Village & Cottage Industries Others Metro and Urban Rs. Liquidators. such request should be declined by the branch. and Trusts. 10. Demand Drafts. • VALUE ADDITIONS (CONCESSIONS) IN CURRENT ACCOUNTS Eligible Accounts: Current Deposit accounts where an average quarterly balance of Rs.and above was maintained during the previous quarter. b) Charges for the return of cheques for want of clear funds.Rs. • However.000/-. Some Charges: Sl No Services Charges 1. Issue of Duplicate Statement Flat charges of Rs.000/.Career Guide for IOBians 25 _____________________________________ _____________________________________ _____________________________________ • The following types of service charges are to be recovered in the case of Current and Cash Credit accounts: a) Ledger folio charges to be recovered on an annual basis. Charges for nonmaintenance of Minimum balance Rs. • • The total amount of instruments collected during a month for which no service charges are recovered should not exceed Rs. Interest Warrant. For arriving at the quarterly average balance.in a month are totally exempted from Exchange/ Commission charges. there is no restriction on the number of instruments collected per month.25.41/.per transaction 3.76/.3. • Concessions • Inland Demand Drafts and /or Mail Transfers not exceeding 2 occasions in a month for a total amount not exceeding Rs. the calendar quarter immediately preceding the date of transaction is to be taken into account. Dividend Warrant. Hundies. (excluding Documentary/Clean Bills.per month 4. Issue of Cheque Books MICR Centres Centres Rs.25/. Standing Instructions Within same branch for credit to Loan. c) Charges for carrying out Standing Instructions as and when carried out.31/.2.05 per cheque cheque NonMICR Rs. Refund Order etc. as and when a cheque is returned. Supply bills).10. Deposits. • Collection charges should not be levied on outstation instruments such as cheques.for 40 entries 2.per day –Maximum of Rs.Free For others.000/.00 per _____________________________________ _____________________________________ _____________________________________ . RD. Cash handling charges First 10 Sections NIL From 11th Section Rs.04.2550/- srn/04.102/.Career Guide for IOBians 26 _____________________________________ _____________________________________ _____________________________________ 5.51/- 8.510 6.102/- 7.5 per section (per transaction) Maximum Rs. for signature verification Rs.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .per instrument & maximum Rs. Stop payment Instructions Rs. Account closure charges Rs. 35000/. • Overdraft facility up to one-month salary in case of salary earners.s. • Personal Accident insurance covers of Rs. Lawyers.100000.5. • Preferential rate for gold coins.2010 Issuing Dept : Marketing and Development _____________________________________ . • Transfer of funds through RTGS without charges. CA. IOB-SB Gold – II: If the quarterly average balance is Rs.000 ( Provided the customer satisfy the Bank requirement and eligibility norms) • Transactions at ATM Customers can withdraw maximum of Rs 50.2000/-and kept in TD.50000.25000/.per day in ATM • Overdraft facility up to One Month salary at the rate of interest applicable to temporary overdraft facility (Provided the customer’s a/c is Satisfactory and free from adverse CIBIL report) In Case of Retirement / Switch Over to the other organisation the A/c will be treated as Regular SB A/c’s wherein he/ she would have to maintain the required balance) Ref: DEP/ 88 /2010 – 11 Date : 28. IOB-SB Silver – I : Quarterly average balance between Rs.08. • Personalised Multi city cheques issued at MICR centres free.If the quarterly average balance is Rs. Wherein the balance exceeding Rs. average daily balance in the account during the last three months should not be less than Rs. Public /Private sector. (Customer will be allowed to maintain at Zero Balance as long as he/she associated with that organisation • 1 Cheque book free(60 leaves per annum) • RTGS/NEFT Free • Personal Accident Cover Free of Cost for Rs 1 Lac (cost will be borne by the Bank) • Credit Card Free Life Time Card with Base Limit of Rs 10. High Net Worth individuals. Wherein the balance exceeding Rs. _____________________________________ CORPORATE SALARY ACCOUNT All existing customers as and when they request and new accounts at the time of opening the account are eligible under the scheme Can be opened and maintained at Zero Balance. • Transfer of funds through NEFT without charges • Personalised cheque books with name printed free of cost. the balance exceeding Rs125000 will swept out and kept in TD.will be swept out in units of Rs. the account can be opened with '0' balance. _____________________________________ All individuals including professionals such as doctors.000/. • ATM usage at any Bank free.will be swept out in units of Rs. • RTGS free of charges. The customers of this category are also eligible for Online equity trading facility and Overseas Travel card free of charge. Software Companies.25000/. 5 lakhs free of cost. liquiddeposit facility is offered.2000/-and kept in TD. • Facility for automatic transfer of balance in SB to Term Deposit – If the quarterly average balance is Rs. 100000 and above. 5000 and less than Rs. 000 • Transfer of funds through NEFT free of cost • Personal Accident insurance cover of Rs. While opening the account. Public/ private sector and businesspeople. IOB-SB Silver II . IAS and IPS. the balance exceeding Rs 65000 will be swept out and kept in TD.35000/.Career Guide for IOBians _____________________________________ _____________________________________ 27 _____________________________________ CASA Schemes Features Target Group Minimum balance requirement Special features / concessions Remarks SB-Silver SB-Gold Individuals including those employed in reputed companies. this facility is offered. IOB-SB Gold – I : If the quarterly average balance is between Rs 50000 and less than Rs. among Software. CEOs. one lakh free of cost. The average daily balance over the last three months should not be less than Rs. Govt.and above. Executives working in MNC.25000 are not eligible for liquid-deposit facility.and above. • ATM usage at any Bank free • Demat account opening charges free • Online Tax payment free of charge. among Software.500 Zero balance with prior permission of GM/GM(Mkg) Fund Transfer Facility/ Bankers Cheque (or) Demand Draft restricted to tuition fees/hostel fees to a Particular School/ College A/c for payment of fees. . • Maximum amount in the account is. Rs 50. Govt.Student IOB SB PLATINUM SPECIAL All existing customers(students) .75000/-. POS & ECOM. Branch should not issue Debit Cards separately as the multipurpose card is a debit Card with facilities to operate in ATM. Rs. • a Free Personal Accident Insurance Cover for Rs 1 Lac Customer ID card (Format given below) as an alternative to carry out their transactions in the absence of Pass Book. • Free Multi purpose usage card • Free Standing Instructions.11. POS & ECOM.11 _____________________________________ _____________________________________ _____________________________________ .11 Issuing Dept. • Free Personal Accident Insurance cover of Rs. 1. The card would be in nature of a debit Card issued to the students with facilities to operate in ATM.02. : Retail Banking and Marketing Dept Ref:DEP/ 103 /2010-2011 dt : 05.11DEP/ 011/2011-12 Dt : 29.000/. Public/ Private Sector. which may serve as identification card as well. • Transfer of funds through RTGS/NEFT (above Rs. Ref: DEP/ 102 /2010-2011 Date : 05.Student Age – 10 Years and above All individuals including those employed in reputed companies.Career Guide for IOBians _____________________________________ Features Target Group Minimum balance requirement Special features / concessions Remarks _____________________________________ 28 _____________________________________ SB .00 lakh) -75% concession on charges.02.( Maximum amount will be removed after the A/c holder attains the age of 18 yrs) Rs. • Free Cheque Book.750/- • Free cheque book (75 leaves). The card would be embossed with the photo of the student. 7500 • Free 75 Cheque Leaves • Debit Card Free IOB International VISA Debit Card to Employees/ Owners. • Transfer of funds through NEFT free. • Personal accident Cover for Rs. • Issue of Demand drafts @ 50% concession. Clubs. clubs. 1. Limited companies. IOB Super current account Proprietary concern. HUF. Local Bodies. • Folio charges free. Trusts. Local Bodies. • Online Tax payment facility. • RTGS/ NEFT (ABOVE Rs. 7. • International Debit Card without charges to all employees and owners. • Transfer of funds through RTGS @ 50% concession. and Govt.1 lac. / Partnership Firms. one lakh free of cost. • Waiver of Demat account opening charges. Limited companies. Partnership firm. • Outstation cheque collection charges @50% concession Remarks _____________________________________ _____________________________________ 29 _____________________________________ IOB SUPREME . corporations.00 lakh) Facility Available with 75 % Concession • Rent free POS Machines is applicable only for the customers satisfying the terms and conditions of the Bank .50 per gram on purchase of minimum 76 grams of gold coin in a day.5 lac • Anywhere Banking in CBS branches free. HUF.CA Proprietary. Societies etc Rs. • Folio charges @ 50% concession. Association. • Online Tax payment facility • Customised Multi city cheques issued at MICR centres at 50% concession. SMEs. • Transfer of funds through RTGS @ 25% concession. Partnership firm. Trusts. • Outstation cheque collection charges @25% concession. Govt. • Transfer of funds through' NEFT free. _____________________________________ . Departments subject to RBI directives. Societies. Departments subject to RBI directives The average daily balance in the account over the last three months should not be less than Rs. • Customised Multi city cheques issued at MICR centres free. The average daily balance in the current account during last three months should not be less than Rs. • Issue of Demand drafts @ 50% concession. clubs. • Waiver of Demat account opening charges. • Cash Withdrawal up to RS. • Rent Free POS for 75 days. Five lakhs free of cost. • Name printed cheque books with free of cost up to 100 leaves. Association. Societies.Career Guide for IOBians _____________________________________ Features Target Group Minimum balance requirement Special features / concessions _____________________________________ IOB Classic Current account Proprietary concern. • Name printed cheque books free of cost. SMEs. • Personal accident Cover for Rs. corporations. • Gold Coin Concession of Rs. 50.000 under CBS transactions from any branch. 50.per account per day.04.2012 _____________________________________ _____________________________________ . 50000 per year) Up to one Month salary at the rate of interest applicable to temporary overdraft facility(Provided the customer’s a/c is Satisfactory and free from adverse CIBIL report) Waiver of Processing Charges DEP/ 18 /2012-13 Date : 26. 50.50 lacs • Free mobile banking • • • • • • • Free International Visa debit card Free Add on Card for spouse Only one Add on Card under the scheme.2012 _____________________________________ SBDEFNON Personnel below the rank of commissioned officers and other Staff: Zero balance • Free NEFT & RTGS. Rs. Bank satisfactory & CIBIL REPORTS Unlimited & Free DD (only if issued transfer from salary account and ceiling to Rs.2.000 limit for POS/Merchant Establishment Zero Lost Card Liability (Army personnel will have to communicate the loss of card to the Bank and the liability will be nil from then on.Career Guide for IOBians _____________________________________ _____________________________________ 30 _____________________________________ IOB Defence Salary Account Features SBDEFCOM Target Group Commissioned officers Minimum balance Zero balance Special features / concessions ATM Credit card Demand Draft Over draft Retail loans Remarks • • • • • • • • • • • • • • • • • Free NEFT & RTGS. 1 lac per yr) Up to Two Month salary at the rate of interest applicable to temporary overdraft facility(Provided the customer’s a/c is Satisfactory and free from adverse CIBIL report) Waiver of Processing Charges DEP/ 18 /2012-13 Date : 26.per account per day. • Free CBS Transaction (Within bank) • Unlimited & Free Cheque book • Instant Credit of Outstation cheques up to Rs 15000 • Passbook available & Free updating at Non-Home Branch • Free facility setting up Standing Instructions • ASBA Facility Available • Free PAI for Rs. No annual maintenance Fee Withdrawal limit of 50000/.04. Rs.000 limit for POS/Merchant Establishment Zero Lost Card Liability (Army personnel will have to communicate the loss of card to the Bank and the liability will be nil from then Free life time Credit Card Subject to Eligibility.) Free life time Credit Card. Bank satisfactory & CIBIL REPORT Unlimited & Free DD (only if issued transfer from salary account and ceiling to Rs.00 lacs Free mobile banking Free International Visa debit card Free Add on Card for spouse. • Free AMEX-IOB GOLD Charge CARD ( free for 1st yr) Subject to Eligibility. Free CBS Transaction (Within bank) Unlimited & Free Cheque book Facility of Auto sweep in and sweep out available (As applicable to Silver II Account) Instant Credit of Outstation cheques up to Rs 30000 Passbook available & Free updating at Non-Home Branch Free facility setting up Standing Instructions ASBA Facility Available Free PAI for Rs.5. Only one Add on Card under the scheme No annual maintenance Fee Withdrawal limit of 50000/. ASBA facility available Back to index srn/30. Anywhere Banking in CBS/TBA branches 11. 6. Online Tax payment facility. 7. 9.Career Guide for IOBians _____________________________________ _____________________________________ 31 _____________________________________ General features/concession for SB/Current account holders 1. NEFT free upto Rs.2013 _____________________________________ _____________________________________ _____________________________________ .100 to those other than exempted schemes. SMS alerts for daily transactions.03. 4. 2. PAN / TAN facilitation 8. Facility for family Health Insurance – IOB-healthcare Plus. 3.1 lakh for all customers 5. Utility Bill payment facility 10. ATM cards on day one International Debit Card without charges – only annual maintenance charges of Rs. Internet banking (E see banking). • The minimum amount of deposit under MIS is Rs.1 lakh) to one hundred and twenty months. • Accounts under Education Deposit schemes may be opened for periods of 63 months or 84 months only. • Wedding Deposit accounts may be opened for a minimum monthly instalment of Rs. • Multiple Deposit Accounts can be opened for a minimum sum of Rs.5 only. Term Deposits Period of deposit & minimum amount • Term deposits can be made for periods ranging from 7 days ( Rs.1 lakhs. MIS deposits can be opened for a minimum period of 1 year and maximum period of 10 years • Recurring Deposit accounts may be opened for monthly instalment of Rs. • The minimum amount for which deposits are accepted under the SFD scheme is Rs.000 only and in multiples of Rs.1 lakh and above ) / 15 days ( less than Rs. under Plan-I and for minimum amount of Rs.25 and in multiple of Rs.3000 for periods ranging from 6 months to 120 months.1000 for periods ranging from 15 days to 120 months. • Deposits for six months and over are classified under Fixed Deposits. and the rest are classified under Short Term Deposits. • For minimum period of 7 days the deposit amount is more than Rs.5 only.1000 can be accepted under RDP for periods ranging from 6 months to 120 months. _____________________________________ _____________________________________ _____________________________________ .10 and in multiples of Rs.50 and minimum in multiples of Rs.10.Career Guide for IOBians 32 _____________________________________ _____________________________________ _____________________________________ Term Deposits 1.1000 only under Plan-II . • MDA .100 only. The accounts may be opened for sixty three months.5 thereafter.100 only and in multiples of Rs.5 and FOR WEAKER SECTIONS Rs. eighty four months or one hundred and twenty months.100 with a minimum of Rs. Deposits can be opened for monthly instalment amounts in multiples of the minimum instalment fixed as above. Every subsequent year.1 only.10 only with a minimum of Rs. • Any amount in multiples of Rs. the monthly instalment will increase by the amount of monthly instalment in the initial year.50 or in multiples of Rs.100 only and any further amounts should be in multiples of Rs. • Branches can accept deposits for a minimum of Rs. The minimum amount of initial monthly instalment should be Rupees Two hundred and fifty only for a sixty three months deposit and Rupees Three hundred and fifty only for an eighty four months deposit.PLAN I (WITHOUT UNITS): Minimum initial Deposit of Rs. 00. written consent of all the depositors should be obtained.Career Guide for IOBians 33 _____________________________________ _____________________________________ _____________________________________ • Varshik AAi Yojana is a combination of RDP and Fixed Deposit Scheme. addition of name(s) of any other person(s) may be permitted at the written request of the sole depositor. a minimum monthly instalment of Rupees One hundred or above in multiples of Rupees Ten with a maximum of Rupees Ten thousand only per month is permitted. The deposit can be accepted for any period from 5 years to 10 years.100 to Rs.000 per year is accepted under the scheme from one individual singly or jointly with another person (including minor) and the minimum amount is Rs. • Under Easy Deposit Scheme. • Under IOB Tax Saver Scheme. • While addition/deletion of names in the account. • A deposit receipt is not transferable • If the deposit is in the name of a single individual. • If the deposit is already in the joint names of two or more persons. • Splitting of joint deposits in the name(s) of each of the joint depositors in the proportion desired by the depositors is permitted subject to obtaining _____________________________________ _____________________________________ _____________________________________ . The Core amount which the depositor indicates is from Rs.1000. then also no stamp duty is attracted. for adding or deleting the name of any person in the deposit. a maximum of Rs. • At least one of the original depositors is to be RETAINED during the currency of the deposit as deletion of names of all the original depositors will tantamount to termination of the contract. Deposits under the scheme can be accepted for a minimum period of Two years and a maximum period of Ten years.10000/-. • No addition or deletion of name(s) should be permitted in the case of accounts in the names of minors. branches may accede to the request provided the legal heir(s) of the deceased depositor(s) and the survivor(s) give a consent letter for the addition/deletion. after the demise of one or more of the joint depositors. the amount of deposit or duration does not undergo any change. The minimum amount of deposit should be Rupees One thousand only. • Bank’s deposit receipts are exempted from stamp duty as a receipt under the Stamp Act. • If the request for addition/deletion of a name is received from the survivor(s). the receipt must be discharged by the depositor over a revenue stamp of Rupee One. • If the principal or interest exceeding Rupees Five Thousand is paid otherwise than by transfer to the depositor. • Deletion of the name of the former in a “former or survivor” deposit is not permitted. 1. When the deposit is renewed together with interest or the proceeds credited to depositors’ account. the ceiling of Rs. renewal of deposits alone can be effected by the facilitator branch up to an amount of Rs. in single name or jointly with the members of their family. as the bank is fixing the rates closer to the ceiling rate prescribed by RBI. the card rate alone will apply. • For deposits exceeding Rs. Vardhan Scheme . The depositor should also be having an account with the facilitator branch (so as to enable Facilitator branch to identify the depositor). • Payment of additional interest is restricted to deposit amount of Rs 25 Lacs in aggregate in the name of Senior Citizen in the same Branch or different Branches for Special Deposit Schemes (A declaration is to be obtained to this effect from the senior citizen). provided the monies deposited in the account belongs to the staff member.a in their deposits. • In case of normal deposit schemes.50% over the card rates. Such splitting should not be treated as premature withdrawal. • For payment / closure of the deposit. • IN CBS atmosphere. • Staff members are eligible for additional interest of 1% p. • The interest rates on NRE/FCNR/RFC deposits of staff members should not exceed the rates allowed to general public. Ten lakhs. • The spouse of a deceased member or a deceased retired member of the bank’s staff is also eligible for additional interest of 1%. • Retired staff members are eligible for additional interest of 1% p.Career Guide for IOBians 34 _____________________________________ _____________________________________ _____________________________________ the written request from all the joint depositors. without the benefit of additional interest rate.for Senior Citizens The main features of the scheme are as follows: • Deposit scheme for Senior Citizens who have completed 60 years of age.25 Lacs.a in their deposits. subject to conditions. provided the monies deposited in the account belongs to the staff member.25 lacs is not applicable. in CBS atmosphere.B. the deposit receipt should be sent to the account maintaining branch on collection basis as detailed above. accounts maintained by staff member. in single name or jointly with the members of their family. • A minor aged Ten years or above can open deposit account in his/her single name to be operated upon by himself/herself. 2. • Additional interest of 0. _____________________________________ _____________________________________ _____________________________________ . • The additional interest rate is not payable on NRE S. renewed after paying the interest for the overdue period . A bank on request from a depositor shall allow withdrawal of a Rupee term deposits of less than Rs 1 crore. • Additional interest rate contracted for Senior Citizen’s deposit is payable for deposits only upto 5. The interest paid on the deposit to be as per card rate for period run as per existing guidelines and In case special rates are offered.No penalty for premature closure subject to. Interest already paid for the overdue period will also be recovered. • If NRE deposit has completed one year from the date of opening or renewal and closed prematurely . before completion of the period of the deposit agreed upon at the time of making the deposit. from the date of renewal .00 lacs on premature closure (Vardhan Scheme) • For deposits above Rs.No interest is payable on the deposit. • If NRE deposit has not completed one year from the date of opening or renewal and closed prematurely .No interest Is payable on the renewed deposit. Bank should.No interest is payable. Penalty for premature closure of deposits • RBI guidelines Banks are given the discretion to disallow premature withdrawal of a term deposit in respect of bulk deposits of Rs 1 crore and above of all depositors. notify such depositors of its policy of disallowing premature withdrawal in advance.!% penalty is applicable. • If an NRE overdue deposit. additional interest rate contracted for Senior Citizen’s deposit is not payable (Vardhan Scheme) • If an overdue deposit. at the time of accepting such deposits. however.Career Guide for IOBians 35 _____________________________________ _____________________________________ _____________________________________ 3. Bank will have the freedom to determine its own penal interest rates for premature withdrawal of term deposits.e. is closed prematurely before completing one year from the date of renewal . • IN IOB For Domestic Deposits.15 lakhs and above . The interest already paid for the overdue period will also be recovered. Allowed interest on a compounded basis at the _____________________________________ _____________________________________ _____________________________________ .5 lakhs.. renewed after paying the interest for the overdue period . the same stands withdrawn and interest rate as per card rate for the period run only will apply. Bank should ensure that the depositors are made aware of the applicable penal rates along with the deposit rates. including deposits of individuals and HUFs. • Conversion Of Balance Under Recurring Deposit Scheme To Fixed Deposit/RDP/SFD Etc.15 lakhs and 7 days in the case of deposits of Rs. is closed prematurely before completing 15 days in the case of deposits of less than Rs. i. simple interest shall be paid at the applicable rate operative on the date of maturity. the term deposit should be placed for a period longer than the remaining period of the original contracted period of Recurring deposit. staff and senior Citizens – Deposits can be renewed from the date of maturity. However. 6. • If the overdue period is more than 14 days from the date of maturity for deposits from the public. In case of term deposits remaining in overdue deposits / unclaimed balances and later withdrawn by customers without renewal. Deceased depositors’ accounts • Interest on deceased depositor’s term deposit shall be paid at the contracted rate on maturity of the deposit if paid on the date of maturity. interest shall be paid at the appropriate rate for the period for which the deposit has remained with the bank. 5. without charging penalty for premature closure. for the period for which the deposit remained with the bank beyond the date of maturity. • In the event of death of depositor before the date of maturity of the deposit and the amount of deposit is claimed after the date of maturity.Career Guide for IOBians 36 _____________________________________ _____________________________________ _____________________________________ rate applicable for the period during which the deposit has remained with the bank. interest for the overdue period shall be paid separately at simple rate prevailing on the maturity date or date of renewal whichever is lower is applicable. Back to index _____________________________________ _____________________________________ _____________________________________ . • However in the case of death of depositor after the date of maturity of deposit. without any penalty for premature closure. 4. branches may pay simple interest from the maturity date till date of payment. • In the event of payment of deposit being claimed before the maturity date. Payment of interest on renewal of deposits (NRE deposits) • Up to and inclusive of 14 days from the date of maturity (both the date of presentation and date of maturity inclusive) for deposits from the public. interest shall be paid at savings deposit rate (operative on the date of maturity) from the date of maturity till date of payment. 7. • In the case of NRE deposits. if the overdue period is less than one year. at the rate of Savings Bank Interest prevailing on the date of maturity. the interest shall be paid at the contracted rate till the date of maturity. interest shall be paid for the actual number of days on such period reckoning 365 days in a year. the interest rates for one year prevailing on date of maturity or renewal whichever lower is to be applied. staff and senior Citizens. From the date of maturity to the date of payment. also in respect of a leap year. Payment of interest reckoning on number of days in a year: On deposits payable in less than three months or where the terminal quarter is incomplete. • In case of Reinvestment deposits with remaining maturity of less than 4 years the margin is fixed at 10 % • For RDP with remaining maturity of 4 years and above the margin is fixed at 15 %. which will be calculated on the basis of weighted average method. Notice of lien/assignment • When a Notice of Lien is received from branches of our Bank. • The ‘Notice of Assignment’ should be clear as to the intention of the Depositor to assign the ‘debt due by the Bank’ to a specified third party. An acknowledgement shall be mailed to such third party with a copy to the Depositor. 9. the principal together with the accrued interest should be credited to “OVERDUE DEPOSITS ACCOUNT” in the General Ledger. ADVANCES AGAINST DEPOSITS • Margin on advances (both demand loans and Cash credit) against the prime security of all kinds of rupee term deposits is 10 % (short deposits. branches should effect the payment of proceeds only by Drafts or Bankers’ Cheques or by credit to the depositor’s account if the proceeds of the deposit payable is Rs. State/Central Government Departments. NRE deposits). Special fixed deposits. 10. the same shall be registered by the receiving branch and acknowledgement shall be mailed with a copy to the Depositor. whenever payment of term deposits is made to the depositors. • The minimum amount of loan against RD accounts should be Rs. and Competent Court and from any other Competent Authority. Advances to staff members can be granted up to Ninety Five percent of the deposit amount. then the rate of interest will be 1% over the rate of deposit.20000 _____________________________________ _____________________________________ _____________________________________ . OVERDUE DEPOSITS • If a deposit is not paid or renewed on the due date. fixed deposits. Branch should verify the correctness and authenticity of such Notice and can register the same by marking in the Deposit Receipt. 11. • Payment of Term Deposits As per Section 269-T of the Income Tax Act. • Loan can be granted against Varkshik Aai Yojana deposit upto the extent of Eighty Five percent of the principal amount only. • Rate of interest in respect of loan against several deposits: if the borrower/depositor wishes to have one loan against several term deposit receipts. Recurring deposits. Income Tax Department. Enforcement Directorate.Career Guide for IOBians 37 _____________________________________ _____________________________________ _____________________________________ 8. • Loan against staff deposits: the rate of interest chargeable shall be half percent over the staff deposit rate. Government Investigating Agencies.100 only. • In case of term deposits with “Either or Survivor” or “Former or Survivor” mandate. If such a mandate is obtained. the signatures of both the depositors need not be obtained for payment of the amount of the deposits on maturity. • Such premature withdrawal would not attract any penal charge. • The joint deposit holders may be permitted to give the mandate either at the time of placing fixed deposit or anytime subsequently during the term/tenure of the deposit. • DEPOSITS MATURING ON A HOLIDAY In the event of a deposit falling due for payment on a holiday/Sunday interest at the originally contracted rate on the deposit amount is payable for the holiday(s) intervening between the date of expiry of the specified term deposit and the succeeding working day. only if. it would be open to banks to do so. as the case may be. would not stand in the way of making payment to the survivor on maturity. there is a joint mandate from the joint depositors to this effect. irrespective of the date of payment of the deposit. banks can allow premature withdrawal of term/fixed deposits by the surviving depositor without seeking the concurrence of the legal heirs of the deceased joint deposit holder. _____________________________________ _____________________________________ _____________________________________ . banks are permitted to allow premature withdrawal of the deposit by the surviving joint depositor on the death of the other. the signatures of both the depositors may have to be obtained. however. 12. • In case the mandate is ‘Former or Survivor’. • If the joint depositors prefer to allow premature withdrawals of fixed/term deposits also in accordance with the mandate of ‘Either or Survivor’ or ‘Former or Survivor’. when both the depositors are alive. • If fixed/term deposit accounts are opened with operating instructions ‘Either or Survivor’. • However. • This. provided they have taken a specific joint mandate from the depositors for the said purpose. when both of them are alive. the ‘Former’ alone can operate/withdraw the matured amount of the fixed/term deposit. the signature of both the depositors may have to be obtained.Career Guide for IOBians 38 _____________________________________ _____________________________________ _____________________________________ or more or when the aggregate amount of deposits held by the depositor in the branch is Rs. • If the former expires before the maturity of the fixed/term deposit.20000 or more. • However. • Premature withdrawal would however require the consent of both the parties. in case the deposit is to be paid before maturity. the ‘Survivor’ can withdraw the deposit on maturity. in case the deposit is to be paid before maturity. and that of the surviving depositor and the legal heirs of the deceased in case of death of one of the depositors. the interest rate will be 10 year G Sec rate. There is no upper ceiling for amount of deposit.10. HUF. Trusts. • On premature closure. Companies / Firms and RRBs. • Deposits will be accepted for a minimum period of more than 3years but up to a maximum period of 10 years • Floating rate deposits will be accepted under Special Fixed Deposit(Q) Scheme only and interest is payable at quarterly intervals. _____________________________________ _____________________________________ _____________________________________ . the interest rate will be 5 year G Sec rate.thereafter. • Interest rate: For deposits for a maturity period of 3 years to 5 years. • Premature closure is not permitted. The rates will be reset in the accounts on 1st March and 1st September every year. • Premature closure is permitted if depositor gives a minimum 10 days notice in writing and the deposit has completed 3 years. there will be a foreclosure charge of 1.000/. • The minimum amount of deposit accepted under the scheme is Rs. The scheme is optional. These instructions are applicable to domestic as well as Non-resident (FCNR & NRE) term deposits. a natural / legal guardian on behalf of a minor.00% if the deposit amount is more than Rs.1 lakh and in multiples of Rs. if the deposit has not completed 3 years from the date of deposit irrespective of the amount of deposit.5 lacs. • Under Floating Interest Rate deposit. The interest rate on the loan will be 2% over the current floating rate for loan to self and 3% over the current floating rate for loan to third parties. and for deposits for maturity period of above 5 years to 10 years. The rate will be fixed based on the daily average of G Sec rate for the last 6 months.Career Guide for IOBians 39 _____________________________________ _____________________________________ _____________________________________ • 13. • Loan can be granted against the deposit for 90% of the amount deposited. the interest rate is fixed in relation to an anchor rate and will change as and when there is a change in the anchor rate at predetermined intervals. Floating Rate Deposits • Floating Rate Deposit Scheme is applicable only to the public and is not applicable to staff members • The deposits received from Senior Citizens under Floating Rate Deposit Scheme are not eligible for additional interest rate • Resident individuals either singly or jointly with others. 100 per month. penalty of Rs. • Transfer of Floating Rate deposit is not allowed between branches 14. gold coins will not be given and the maturity proceeds will be paid to the customers. • If closed after 7 days and before 15 days. In such an event.100 lacs • Interest rate : Treasury dept. will be given to the depositors. Gold Recurring Deposit Scheme • Minimum amount of deposit: Rs.1. • Deposits can be accepted for a minimum period of 12 months and maximum of 24 month.Career Guide for IOBians 40 _____________________________________ _____________________________________ _____________________________________ • The interest on loan will also be reset once in six months to synchronise with resetting the deposit rate. • If the maturity amount is less than the price of 2 gms coins. the cost of which will be borne by Central Office. Normal Interest is only applicable _____________________________________ _____________________________________ _____________________________________ . • An existing Fixed rate Deposit can be converted into a Floating Rate Deposit scheme. • No Prepayment Penalty for this Scheme • If Closed before 7 days no interest is payable. Unfixed Deposit • Period : 7 days to 179 days • Minimum amount Rs.and in multiples of Rs. the Deposit will be treated as prematurely closed and the interest on the closed deposit will be paid at the appropriate rate for the period run without deducting any foreclosure charges • Conversion floating rate to fixed rate schemes is not permitted. • In the event of delayed payment of monthly instalments of RD. depositor should remit at least ten instalments during a year. • Concession of Rs. • Personal Accident cover up to Rs.per month will be charged by the Bank.per year will be levied. One lakh. • The depositor will get gold coins worth the maturity amount on the date of maturity.250/. failing which a penalty of Rs. • The price of gold coins will be the price prevailing as on the date of maturity of the deposit.50 for Rs. 15.50 or Rs.10/. decides(refer to the dept)/IOB online.25 per gram on the gold price prevailing as on the date of maturity. • In case of Easy deposit. 100/. 1 crore and above of all depositors. Bank should ensure that the _____________________________________ _____________________________________ _____________________________________ .e. • The accounts with joint operations and corporate customers are not allowed with this facility.. • Banks will have the discretion to disallow premature withdrawal of a term deposit in respect of bulk deposits of Rs. Additional Interest for Senior Citizens and Additional Interest for Staff Members will not be applicable under the Scheme Opening of Internet Deposits • Any individual account holder having an account with the operational instructions “self operated” or “either or survivor” can open a deposit online. • The deposit can be closed in full term or on a premature basis by getting the print out of the deposit discharged. notify such depositors of its policy of disallowing premature withdrawal in advance. • E-accounts can be opened under the following categories. however. • No separate manual deposit receipt needs to be printed / issued for deposits opened online. shall verify from the ledger and issue a new passbook for the RD account opened by him / her online. i. before completion of the period of the deposit agreed upon at the time of making the deposit. • As a recurring deposit requires issuance of passbook. at the time of accepting such deposits. • Nomination has to be registered by the customer/s at the Branch by furnishing nomination form duly signed by depositor/s. • The title of the deposit account would be the same as that of the source account for funds. including deposits of individuals and HUFs. • A bank on request from a depositor shall allow withdrawal of a Rupee term deposits of less than Rs.Half Yearly – Monthly • As the deposit is opened online and the printing of receipt is also automatically done through the system.Career Guide for IOBians 41 _____________________________________ _____________________________________ _____________________________________ • 16. it does not bear any signature of Bank Official and hence the e-receipt is to be construed as the deposit receipt issued to the customer. Bank should. verified and the proceeds credited back to the customer’s savings / current account on closure. 1 crore. Re-Investment deposit plan – Interest payable on Maturity Recurring Deposit All Special Schemes Fixed deposits – Interest payable . • Bank will have the freedom to determine its own penal interest rates for premature withdrawal of term deposits. the branch may at the request of the customer. 05. Acceptance of Bulk Deposits : branches have to obtain prior permission from AGM.Career Guide for IOBians 42 _____________________________________ _____________________________________ _____________________________________ depositors are made aware of the applicable penal rates along with the deposit rates.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . 2013. 17. before accepting single deposit of Rs. Treasury – Domestic department. srn/19. The revised guidelines will be applicable with effect from April 1.1 crore and above. even at card rates. Rs.3000 Minimum of Rs. Self employed persons.100/-. students. Traders. • Senior citizens / Pensioners could be targeted for this product. 50 and in multiples of Rs. • Target house wife. Special fixed Deposit {SFD (M)/(Q)} • Ideal for depositors who want regular monthly or quarterly interest income. quarterly compounding and paid at the time of maturity Monthly/Quarterly • All future expenses will be met through this deposit • The interest accrued till date may be considered for arriving at the loan amount.5/-. • Ideal for depositors who save in installments for future big occasions.Career Guide for IOBians _____________________________________ _____________________________________ 43 _____________________________________ Term Deposits Schemes Features Target group Minimum Deposit amount Minimum & maximum period Payment of Interest Remarks Re-investment Deposit Plan (RDP) Individuals. _____________________________________ Recurring Deposit (RD) Monthly interest is payable at discounted rate _____________________________________ 6months to 120 month quarterly compounding and paid at the time of maturity • All future expenses will be met through this deposit • The interest accrued till date may be considered for arriving at the loan amount _____________________________________ .1000 and multiples of Rs. small traders etc. salaried persons Rs. 6 months to 120 months 1 year to 120 months. • The depositor has the option of making any number of deposits under the same account and each remittance will be deemed as a separate deposit maturing after the agreed period.and in multiples of Rs. _____________________________________ . due date and maturity value. • If the depositor wants to take back a part of his deposit amount the required number of units can be closed and repaid while the remaining amount remains intact and earns interest. may be split into convenient units and held as different remittances under the same MDA. 6 months to 120 months Rs. may be split into convenient units and held as different remittances under the same MDA. • The depositor has the option of making any number of deposits under the same account and each remittance will be deemed as a separate deposit maturing after the agreed period. Professionals. due date and maturity value. professionals. Remarks 44 _____________________________________ _____________________________________ quarterly compounding and paid at the time of maturity • Each remittance is accepted for identical period • The amount of the deposit the customer wishes to deposit. salaried individuals etc. _____________________________________ _____________________________________ • Individuals either singly or jointly with two or more persons. firms.50/12 months to 24 months quarterly compounding and paid at the time of maturity • Maturity proceeds in gold coins • Concession of rs. societies etc • Traders. companies. rural savers. Minimum deposit amount rs:10000/.in multiple of Rs. business people etc 6 months to 120 months quarterly compounding and paid at the time of maturity is accepted for • The amount of the deposit the customer wishes to deposit. house wife.250/. Minimum amount Rs. institutions.100 and in multiples of Rs. small traders etc who want to save for purchase of gold coin in future. • Separate deposit receipt is not issued for each deposit but a pass book is issued showing each remittance with interest rate. 5/- • Each remittance identical period. • Separate deposit receipt is not issued for each deposit but a pass book is issued showing each remittance with interest rate.Career Guide for IOBians _____________________________________ Features Target group Minimum Deposit amount Minimum & maximum period Payment of Interest Gold RD Multiple Deposits (MDA) Plan I Agriculturists.1000/-. 1 lakh Multiple Deposit (MDA) Plan II Salaried people.25 per gram on gold coins on rates prevailing • Free Personal accident cover upto Rs. 50 May be opened for 63 months. mature on the specified maturity date. • • This is a variation of RD • The monthly instalment payable by the depositor increases uniformly year after year Each remittance under the MIS account should be treated as a separate RDP _____________________________________ 45 _____________________________________ _____________________________________ _____________________________________ EDUCATION DEPOSIT (ED) • • Rural savers. • The depositor can get back the deposit amount plus interest either as a lumpsum on the date of maturity or in three annual instalments in the case of sixty three month deposits and in four annual instalments in the case of eighty four month deposits • The monthly deposit from the second year decreases by 1/5 in the case of 63 month deposit and 1/7 in the case of 84 month deposit. _____________________________________ . self employed persons. Monthly installments can be planned in such a way that the maturity proceeds are utilized for meeting the education expenses.10 with a minimum of Rs. Remarks • Various remittances made into the account at irregular intervals at the convenience of the depositor. • Remittances become due for payment on the same date fixed at the time of opening the account. Rs. 84 months or 120 months compounded quarterly and reinvested • The scheme is combination of RD and RDP. Rs.100 one year and maximum period of ten years compounded quarterly and reinvested Minimum & maximum period Payment of Interest Minimum of Rs. traders etc • This scheme will benefit those who want to save but unable to make fixed monthly payments.250 for 63 months and Rs. Minimum Deposit amount Automatic cumulative Wedding deposit (ACWD) • Targeted at small traders.100 and any further amounts should be in multiples of Rs. professional and self employed salaried persons etc. small traders. • The deposit can be made in such a way that maturity proceeds are used for marriage expenses of their children.350 for 84 months 63 months & 84 months compounded quarterly • The scheme is also a variation of Recurring Deposit. self employed persons etc.Career Guide for IOBians _____________________________________ Multiple investment scheme (MIS) Features Target group • Agriculturist. • The monthly instalment payable by the depositor decreases uniformly year after year. 5/-. The total period of the deposit in both stage 1 and stage II should not exceed 120 months The interest is paid in round sum every month and the fraction is accumulated and paid as bonus at the end of each year. The accumulated capital will remain intact.15 lakhs) and above but less than six months are called Short Deposits 6 months to 120 months compounded half yearly and paid on maturity • Monthly interest depending on the minimum balance in a/c between 10th and last day of the month • Minimum deposit amount is the core amount and depositor is free to deposit up to 10 times the core amount every month • Interest on Short Deposits is payable only on maturity of the deposit.I : The depositor remits to the bank monthly instalments for a period of sixty. salaried individual. professionals etc. Min 100. • Interest on Fixed Deposit is payable half-yearly on the first working day of April and October.100 Earn And Save for You (Easy) Deposit Students.10000 6 months to 120 months Interest at simple rates payable every half-year • Moneys deposited for six months and above are called Fixed Deposits and deposits for fifteen days ( amounts less than Rs. 84 months or 96 months compounded quarterly Permanent Income Plan (PIP) is a combination of RD & SFD schemes. _____________________________________ _____________________________________ . house wife. rural savers. thirty six or twenty four months for deposits of sixty.15 lakhs ) for 7 days ( amounts more than Rs. The scheme operates in two stages. Rs. 50 and in multiples of Rs. Rs.. higher deposits in multiple of 10 & max. self employed persons etc. • Salaried people. who want to save money in flexible and convenient installments.II : Bank pays a fixed sum monthly / quarterly to the depositor along with an annual bonus for sixty. _____________________________________ 46 _____________________________________ _____________________________________ Fixed Deposit (FDR) & Short Deposit (SDR) Ideal for Senior citizens / salaried class/ business people who want to retain savings for a fixed period for some future use. Minimum Deposit amount Minimum of Rs.1000 and in multiples of Rs. Minimum & maximum period Payment of Interest 60 months. eighty four or ninety six months respectively.Career Guide for IOBians _____________________________________ Features Permanent income plan (PIP) Target group • Ideal for depositors who want to have permanent income either monthly or quarterly after 5 to 8 years. Remarks Stage . Stage . eighty four or ninety six months similar to Recurring Deposit accounts. 000 and Max. payment of taxes.1. • 1% charge on premature closure • Loan can be taken upto 90% of deposit amount.Career Guide for IOBians _____________________________________ _____________________________________ Floating rate deposit Features Tax Saver Scheme Individuals. • This scheme intended to attract deposits under Section 80 C of Income Tax Act. annual insurance premia etc. House wives. Target salaried class and other Income Tax payers Target group Minimum Deposit amount Minimum & maximum period Payment of Interest Remarks Minimum 1 lakh and multiples of Rs.00. salaried individuals etc. Rs. • Deposits under Varshik Aai Yojana should be classified under the General Ledger head RDP _____________________________________ • The principal remains intact till the date of maturity.000 3 to 10 yrs 5 to 10 yrs Quarterly Interest according to the mode of deposit • The deposit will be in the nature of Special Fixed Deposit (quarterly interest payment • Interest rate reset on 1st March and 1st September every year • 5 year G sec rate (daily average for the last 6 months) for deposits with maturity of 3 to 5 yrs • 10 year G sec rate (daily average for the last 6 months) for deposits with maturity of 5 to 10 yrs • Premature closure is permitted if the deposit has completed 3 years and with a notice of 10 days from the depositor. _____________________________________ . Rs. Institutions etc.10. • No loan against deposit • No premature closure • Interest on deposit is liable to tax • Useful for depositors to pay annual school fee of their children. • Conversion from fixed to floating rate deposit is possible by closing the fixed rate deposit and paying applicable interest without any penalty. SFD or FD.1000 2 yrs and above Compounded quarterly and paid annually • The scheme is a combination of RDP and Fixed Deposit Scheme. Rs. _____________________________________ Min.10.000 47 _____________________________________ Varshik Aai Yojana Parents with school going children. Conversion from floating to fixed not permitted. • Deposit can be made under RDP. the same stands withdrawn and interest rate as per card rate for the period run only will apply. and 10% only for others. • Term Deposits like any other deposit account are freely transferable from one branch to another under written instructions of the depositor(s) provided the reasons adduced by the depositor(s) are satisfactory. Margin for loan is 15% where the residual maturity is 4 years and above.2012 subject to the following conditions: The interest paid on the deposit to be as per card rate for period run and In case special rates are offered.08. • Nomination facility is available for deposit accounts • Advances in the form of demand loans or cash credits/overdrafts may be granted against the security of our bank’s term deposit receipts. Back to index _____________________________________ _____________________________________ _____________________________________ .50% under vardhan scheme.Career Guide for IOBians _____________________________________ _____________________________________ 48 _____________________________________ General • Branches may permit addition/deletion of names in term deposits standing in the names of individuals • No deletion of the name of the former in a “former or survivor” deposit. branches may accede to the request of depositors for refund of the amount of deposit before maturity when the depositor is in urgent need of money • Penal charges on premature closure of Deposits (all Domestic Rupee Term Deposits – Irrespective of amount) has been waived with effect from 07. • Senior citizens are given additional interest @ 0. • No addition or deletion of name is permitted in the case of accounts in the names of minors. • Although the amount of a term deposit is payable only on maturity. in scrap form along with the prescribed application form duly signed. Resident minor by a natural or legal guardian d. melting. There will be a preliminary assay to ascertain gold content / caratage by non-destructive technique followed by a foolproof fire assay method c. The rate of interest will be decided by the Bank from time to time b.0 parts per thousand accompanied by a certificate acceptable to our bank C. Trusts and Companies). It can also be compounded at the option of the Depositor. Persons eligible to deposit a. HUF. Interest can be paid semi annually on 30th September and 31st March every year. Interest will be paid in Rupee only at Bank’s Gold / Rupee buying rate _____________________________________ _____________________________________ _____________________________________ . if any will be borne by the depositor. d. HOW TO DEPOSIT a. Interest rates once fixed and indicated in the Deposit Certificate will remain the same for the entire period of deposit c. • There is no upper limit for such deposits D. The cost of transport. Joint Deposits in the case of individuals B. Minimum & Maximum Quantity • Minimum quantity accepted as deposit will be 1000 grams in net weight and for quantities less than 1000 grams prior permission from Treasury Department is necessary. jewellery etc. without any stones.Career Guide for IOBians 49 _____________________________________ _____________________________________ _____________________________________ IOB Gold Deposit Scheme A. b. Bank will accept gold bars. Period Of Deposit • E. A Trust including Mutual Funds /Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations may deposit under the scheme c. d. Resident Indians (Individuals. coins. assay and other charges incurred at the Mint and octroi. Bank will issue a provisional receipt on preliminary assay followed by a Deposit Certificate on final assay. Exception from fire assay/destructive assay will be provided for physical gold tendered by Mutual Funds/Gold Exchange Traded Funds approved by SEBI and complying with the Good delivery norms of the London Bullion Market Association(LBMA) having a fineness of 995. gems etc. e. Period of deposit will be minimum 6 months and maximum 7 years Rate of Interest a. b. Bank will renew the same from that date only at the then prevailing interest rate. _____________________________________ _____________________________________ _____________________________________ . Current Interest Rates Until further instructions. b.a. Nomination will automatically seize in case the depositor transfers the IOB Gold Deposit Certificate to another person d. Bank will make necessary adjustments in weight consequent to the redemption in different fineness as against the fineness shown in the final receipt.a. In case of repayment in Gold. In case of repayment in rupees. Interest will be paid from the date of provisional receipt on the net weight and fineness indicated in the final receipt f.Career Guide for IOBians 50 _____________________________________ _____________________________________ _____________________________________ e. 1 year and above upto 3 years 1. a. c. it will be paid at Bank’s Gold/Rupee buying rate on the date of repayment d. b. the depository rules will apply.a.75% p. Interest will be calculated at 360 days a year basis (365/360 F. Bank will pay the same in rupees at our Gold/Rupee buying rate. The deposit will stop earning interest from the date of maturity e. More than 3 years to 7 years G. the Survivor will be deemed nominee c. Nomination facility is available in the case of a deposit in a single name and not for HUF/Trusts/Companies. The transferee. In case the depositor wishes to renew the deposit after maturity date.65% p. Transferability 1. is eligible for fresh nomination facility I. Bank will repay 995 or 999 fineness gold in one Kilo Bar or such other denomination as available at our sole discretion. However in the case of certificates issued in dematerialized form. Bank will redeem the Deposit Certificate for the principal amount of the deposit either in Rupees or in Gold as per the option exercised by the Depositor against surrender of the Deposit Certificate duly discharged. b. In the case of deposits payable to Former/Survivor. Nomination a. For any fraction quantity. if an individual. The transfer is required to be registered with the Deposit Issuing Branch H. IOB Gold Deposit Certificate is in the form of a document of title to goods and is therefore transferable by endorsement and delivery. No retrospective renewal is permissible. Repayment a.50% p. the following are the rates of interest payable on Gold Deposits 6 months and above to less than 1 year 1. Capital gains earned through trading or on redemption will be exempted from Capital Gains Tax L. Interest earned under IOB Gold Deposit Scheme will be exempted from Income Tax.04. J.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . b. Value of Gold deposited under be exempted from Wealth Tax.Career Guide for IOBians 51 _____________________________________ _____________________________________ _____________________________________ f. Premature Payment There will be a lock-in period of 6 months and no premature payment will be allowed during the said period. Bank may at its discretion in such renewals after the maturity date pay interest at such rates as deemed feasible for the overdue period in rupees at its Gold/Rupee buying rate on the date of payment. IOB Gold Deposit Scheme will c. K. Tax Concessions In terms of various amendments carried out by respective Acts in Finance Act 1999. Central Office before accepting any gold under IOB Gold Deposit Scheme ****************************** srn/15. Prior Permission Prior permission is to be obtained from Treasury. the following concessions are currently available: a. Authorised Branches The scheme is open and is available at our select branches only at present M. Transferring to Inoperative Accounts will be done by the system on or before 10th March of every year. at the rate SB interest prevailing on the date of maturity. from the maturity date till the date of payment. c. where the account is under lien for advances allowed in another account. where the operations in the account is stopped to obtain legal representation. Savings Bank/Current Account where there has been no operation in the accounts by customers for the last 3 years (other than crediting of periodic interest in SB accounts or debiting service charges) will be classified as Inoperative Accounts. it should be noted that balances should not be transferred to inoperative accounts in the following cases: a. d. In case of Term Deposits transferred from Unclaimed Balances Account and withdrawn by customer without renewal. _____________________________________ _____________________________________ _____________________________________ . b. Term Deposit Account The Deposit account will be classified as Unclaimed Deposit account if the deposit is not claimed within 5 years from the due date. inoperative accounts and unclaimed balances Every working day the CBS system will classify Savings Bank/Current Account where there has been no operation in the account by customers for one year (other than crediting of periodic interest in SB accounts or debiting service charges) as non-operative. remaining unclaimed) for 3 years or more are to be classified as unclaimed balance. Every working day the CBS system will classify Savings Bank/Current Account where there has been no operation in the accounts by customers for the last 2 years (other than crediting of periodic interest in SB accounts or debiting service charges) as Dormant Accounts. However. branches may pay simple interest.Career Guide for IOBians 52 _____________________________________ _____________________________________ _____________________________________ Dormant accounts. where the account is showing a debit balance Accounts which had remained in-operative for 5 years and above since their transfer to Inoperative Accounts (8 years since the last transaction in it by the customer) are classified for transfer to Unclaimed Balances Account.e. where an account is stopped under Garnishee or other court order. Demand Drafts The Demand Drafts which are outstanding (i. The list will be updated once in a year.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . Display List of Unclaimed Deposits The bank displays on the website. the list of only the names of the account holders and his/her last known address in respect of Unclaimed Deposits / Inoperative Accounts which are inactive / inoperative for ten years or more. the list of the names of the account holders and his/her last known address in respect of Unclaimed Deposits / Inoperative Accounts which are inactive / inoperative for 10 years or more. The bank will display on the website. to retransfer the balance in the particular account giving all the relevant details. The list will be updated once in a year. Central Office. after verification of the bonafides of the customer. The account number. the account has to be opened in the computer system afresh by obtaining KYC –Crop form and going through the Customer Acceptance Policy and Customer Identification procedure as per KYC Norms / AML standards. if operations are to be continued in the account. its type and the name of the branch shall not be disclosed on the website. as of 31st December. When a branch is approached by a customer whose account has been transferred to Unclaimed Balances Account. There is no limitation period for claiming back the amount from the Unclaimed Balance Account. The account number. On receipt of the credit from Central Office. its type and the name of the branch shall not be disclosed on the website. however.Career Guide for IOBians 53 _____________________________________ _____________________________________ _____________________________________ Sundry Creditors All items (except those relating to clearing adjustments) lying in the Sundry Creditor for 3 years or more are to be classified as unclaimed balances. Excess Cash Excess Cash unclaimed for more than 6 months shall be transferred to Unclaimed Balances Account maintained at Central Office every half year during March and September Overseas Branches should.01. as of 31st December ********************** srn/09. should request the Balance sheet Management Department. the branch. maintain Unclaimed Balances Account in their own books to which all their inoperative accounts outstanding for more than three years should be transferred under advice to the parties concerned at their last known addresses or as per guidelines prevailing in the respective countries whichever makes more stringent compliance. 3. Maximum balance should not exceed Rs. Illiterate Persons A person who is unable to read and write is considered to be illiterate. signing consistently and operating personally by himself. The illiterate customer can have a Mandate Holder for operation of his account using cheque books No account can be opened. • He should be able to adhere to a uniform signature • His date of Birth should be declared and recorded. A Minor can have a Term Deposit Account in own name. even if he/she can sign in some language Illiterate customers have to withdraw cash in person and not by Cheques. _____________________________________ _____________________________________ _____________________________________ . no withdrawal slips permitted. Locker. etc.000/ Withdrawal only by loose leaf cheques. Only cash operations are permitted. Net Banking. 2. if He/she had completed 10 years of age the maximum aggregate principal amount in such deposit(s) can be accepted without any ceiling No advances will be allowed against the security of these deposits. provided he is capable of conducting the account. retail loans. but he can have a Joint Account with a major. Minor Special Account A minor can open/operate a SAVING BANK account with cheque book facility in his/her name provided: • The Minor has completed 10 years of age • The Minor should be able to read and write a language. are invariably offered to visually challenged persons/Persons with disabilities without any discrimination as they are legally competent to contract. except in cases like payment to school.50. hostel. Visually Challenged/Persons with Disabilities All banking facilities such as cheque book facility including third party cheques. ATM facility. credit cards etc.Career Guide for IOBians 54 _____________________________________ _____________________________________ _____________________________________ SPECIAL TYPES OF CUSTOMERS 1. for a minor blind person. illiterate account can be opened. Major. who is not blind. however.20. then her signature should be attested as above. Further. by her natural guardian. 6.Career Guide for IOBians 55 _____________________________________ _____________________________________ _____________________________________ Advances up to Rs. only fixed deposit account should be opened. If the relative has no objection for the natural guardian knowing about the joint deposit. the minor has completed ten years of age b. if they are convinced that it is necessary to do so for the protection of the minor’s interest. Limited Company Minimum number of members in a private limited company: 2 Maximum number of members in a private limited company: 50 Minimum number of members in a public limited company. all instruments including withdrawal slips/cheques etc. The minor can sign consistently. Savings bank accounts cannot be opened jointly with the minor by the close relative. executed by her should be duly attested by her husband or two account holders of the bank. The stipulation of a maximum period of 120 months for term deposits does not apply to minor’s deposits. 7 Maximum number of members in a public limited company: No limit _____________________________________ _____________________________________ _____________________________________ . The account opening form should be signed by both the relative and the natural guardian with FORMER OR SURVIVOR instructions 5. premature payments of such deposits will be allowed. Branches may open accounts of minors for periods over ten years. Pardanashin ladies: No account to be opened if she happens to be an illiterate If the pardanashin lady is able to sign. she can sign the account opening form and specimen signature sheets at her residence in front of her husband. 4. the deposit may be opened in the joint names of the relative and the minor represented by the natural guardian. who should attest the lady’s signature. Where.000 against the security of minor’s term deposits can be granted to the natural guardian provided he gives a written declaration to the effect that the advance is required for the benefit of the minor. the pardanashin lady is unmarried and if she signs the application form and the specimen signature sheets at her residence. in respect of Savings Bank accounts/Current accounts (in exceptional cases) opened for pardanashin ladies. OPENING OF JOINT ACCOUNTS OF MINORS WITH THIRD PARTIES: For joint account with the minor and third party. provided. In no case. a. the maximum amount of the fixed deposit is Rupees thousand and Fifty c. Career Guide for IOBians 56 _____________________________________ _____________________________________ _____________________________________ When a Private Limited Company becomes a Public Limited Company, a copy of amended Certificate of Incorporation should be obtained and the change in the name should be noted in Bank records. Memorandum and Articles of Association are required for opening the accounts of private/public limited companies. 7. Accounts of Executor Executor is appointed by the Will of the dead person. When no one is named in the will or the person die without any will, the court appoints Administrator. For opening of their accounts, the Administration is required by the Bank. Probate (Will) or Letter of a true copy of the Certificate of Commencement of business duly certified by a Director or the Secretary of the Company (in case of public limited companies only), 8. DEEMED PUBLIC LIMITED COMPANIES Under Section 43(A) of the Companies Act, a private limited company shall be deemed to have become a public limited company when the average annual turn over of the company exceeds, for a period of three years, the limit prescribed by the Central Government from time to time. (Rs.10 crores as of 18th September, 1990). Such companies are termed as Deemed Public Limited Companies. 9. Trust Accounts: A public Trust includes a Society formed either for Religious or Charitable purpose and registered under Societies Registration Act. Accounts of a Trust can be opened ONLY with Regional Office approval. In the event of death of any trustee, the surviving trustees should not be allowed to operate the account or withdraw the balance without ascertaining whether terms of the trust deed permit such withdrawal or operation. The Bank has no right of set off against the trust funds for debts due from the trustees or any other persons in their individual capacity. Accounts of Provident Funds are treated like the Trust Accounts only. 10. ACCOUNTS OF OTHER BANKS For opening accounts of other banks in India with our bank prior sanction should be obtained from Banking Operations Department, Central Office, through Regional Office. For opening of our accounts with other banks as well as for entering into agency arrangements with other banks, prior approval of Treasury (Foreign ) Dept ,Central Office is compulsory. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 57 _____________________________________ _____________________________________ _____________________________________ 11. Guardianship of minor: Minor attains majority at the age of 18 years. A guardian appointed by a court on the basis of Will : Testamentary Guardian Hindu: the case of a boy or an unmarried girl — the father, and if, he is not alive, the mother. Where both the father and mother are not alive, no one other than a person holding a guardianship certificate from a competent court can act as a guardian of the minor. Mohammedans: Under Mohammedan law the father is the guardian of the property of the minor but after his death the following persons are entitled, in the order mentioned below to be guardians of the minor: a. the executor appointed by the father’s will b. the father’s father c. the executor appointed by the will of the father’s father d. In the absence of the above said guardians, a guardian appointed by a competent Court alone can act as a guardian. Mother can be the guardian if appointed by the court or under the will of the father or father’s father. In no other case, can the mother act as the natural guardian of the Mohammedan minor. Christians, Parsis and other Religions Under the Personal Law applicable to Parsis, Christians, the father is the natural guardian. The mother will be the natural guardian only if the father is not alive. If both are not alive, a person holding a guardianship certificate, from a competent Court can act as guardian. However, it should be noted that the guardianship may extend only to the person and not the property of the minor, depending on the directions in the court order. If the guardianship of the person appointed by the court extends only to the person of the minor and not to the property, such a guardian will not be in a position to alienate any property of the minor, even in the interest of the minor. Acceptance of legal guardianship certificates Branches can open accounts for persons with disability, depending upon the Legal Guardianship Certificate, issued by the competent authorities as mentioned below. A legal guardian so appointed, can open and operate the Bank account, as long as he remains the legal guardian. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 58 _____________________________________ _____________________________________ _____________________________________ • Local Level Committees set up under National Trust for the welfare of the persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (called as Mental Disabilities Act, 1999). • legal guardians appointed by District Courts under the Provisions of Mental Health Act, 1987 The details of Local Level Committees are available in the web-site of the National Trust for the welfare of persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities, i.e. www.thenationaltrust.in. 12. Insolvent persons: No account should be opened in the name of an un discharged insolvent and no operation should be allowed in any existing account as soon as the bank is put on notice of the insolvency of the account holder 13. Partnership firms A minor admitted to the benefits of a partnership or his guardian is not required to sign the account opening form and other documents. He should not be allowed to operate the account unless he is a mandate holder to operate the firm’s account. A Minor is liable only to the extent of his/her share for any debts incurred by the partnership firm before he attains majority. If the minor does not elect to become a partner by giving public notice within 6 months of his/her attaining majority or his/her knowledge of admission to the benefits of the firm, whichever is later, he/she shall become a partner on the expiry of the said 6 months. Minimum number of persons in a partnership firm:2 Maximum number of person in a partnership firm engaged in banking:10 Maximum number of person in a partnership firm engaged in activity other than banking:20 Maximum number of person in a partnership firm of professionals: 50 A company can be a partner in a partnership firm. HUF cannot be a partner of a partnership firm. 14. ACCOUNTS OF HINDU UNDIVIDED FAMILY CONCERNS The account of Hindu Undivided Family (HUF) firm should be opened and operated upon by the Karta Savings Bank accounts in the name of a Hindu Undivided Family Firm may also be opened, if such accounts are for non-trading purpose In a HUF, male members of the family become coparceners by birth _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 59 _____________________________________ _____________________________________ _____________________________________ The female members are not coparceners in the HUF. However, in the States of Tamil Nadu and Andhra Pradesh the Hindu Succession Act has been amended to confer equal right to property on Hindu women. In these two states, in a HUF, the daughters shall, by birth, become coparceners in their own right and have the same rights as a son has in the co-parceners property. The Karta of a HUF may issue a mandate letter in favour of a major coparcener for operating the account. In case the mandate is to be issued in favour of a third party an indemnity has to be obtained executed by the Karta and the entire major coparceners of the HUF. Liability of a co-parcenor in HUF is restricted to his share in HUF asset. srn/04.05.2013 Back to index _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 60 _____________________________________ _____________________________________ _____________________________________ Rights of Banker 1. Right of set off: • This is the right to combine more than one account in order to arrive at the net amount due from the customer i.e. adjusting debit balance in one account against credit balance in another both relating to the same customer. • This right is subject to the following conditions: a. The moneys in the accounts should belong to the customer(s) in the same right and capacity. b. The right of set off is subject to the duty to honour cheques c. A notice must be served on the customer before exercising the right. d. The right does not extend to contingent liabilities. e. Right of set off as well as Right of lien is available for time barred debts. f. Right of set off is available on the deposit balance held in other branches of the Bank 2. Appropriation of Payments • When a debtor having several debts makes a payment, the creditor should appropriate them as per rules of appropriation, which is based on the provisions under Section 59, 60, 61 of Indian Contract Act. • Under Section 59, the borrower customer has a right to tell his Banker to which debt (out of several) the money he pays is to be applied and the Banker accepting such credit is under obligation to act accordingly to the such instruction. • If however, the debtor customer fails to give any such instruction, as per Section 60 of Indian Contract Act, the creditor-Banker is free to use his discretion to credit the amount to any borrowal account he (Creditor Banker) chooses under intimation to the customer who cannot later seek to vary the appropriation. • However, "when neither party makes any appropriation (choice) the payment shall be applied in discharge of the debts in order of time, whether they are or not barred by the law in force for the time being as to the limitation suits. • If the debts are of equal standing, payments shall be applied in discharge of each proportionally" (Section 61 of Indian Contract Act). 3. In case of credit, in a running loan/cash credit account, the first item on the debit side of an account is discharged or reduced by the first item on the credit side. This is generally known as : Clayton's Rule _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 61 _____________________________________ _____________________________________ _____________________________________ 4. On receipt of notice of death/insolvency/including revocation of guarantee of a guarantor, the operation of the account (cash credit/overdraft account) should be stopped or ruled off . Why? in the light of Clayton's case rule 5. Section 133 of Income Tax Act 1961 permits IT Authorities to call for any information with reference to a particular account or all accounts of the customer. Section 131 empowers the income tax authorities to examine a bank officer on oath. 6. General Lien :Banker’s right to retain the property of another till such time the owner thereof has paid his debt due to the person in possession of the property: General Lien • Right of lien is the right to retain the property of another till such time the owner thereof has paid his debt due to the person in possession of the property. • Right of lien gives power to retain and not to sell. • Being a statutory right no specific contract is necessary for creating this right though the same may be excluded by mutual agreement. • Right of lien arises out of normal course of business and is not therefore available for goods received for specific purpose (safe custody, goods in safe deposit lockers, goods held by bank in the capacity of trustee), • Is available against goods/securities held by the debtor in joint names or in capacity other than that in which the debt is. • Banker's lien, known as implied pledge is a 'general lien' (as per section 171 of Indian Contract Act) which is applicable against all dues payable as against a particular lien (under Section 170 of Indian Contract Act) which is available for specific dues only. • Through general lien, Bankers get the advantage of selling the goods/securities after giving the debtor a reasonable notice which is not available under particular lien • Right of lien is available for time barred debts srn/04.04.2012 Back to index _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 62 _____________________________________ _____________________________________ _____________________________________ RIGHT TO INFORMATION ACT 2005 • Right to Information Bill 2005 as introduced by Union Ministry of Personnel, Public Grievance and Pension was passed by Lok Sabha on 11.5.2005 and by Rajya Sabha on 12.5.2005, and received the assent of the President on 15.6.2005. • It came on the Statute Book as THE RIGHT TO INFORMATION ACT 2005. • It has been held by the Supreme Court that Right to Information is derived from the freedom of speech and expression which is guaranteed by Article 19 (1)(a) of the Constitution of India. What is Right to Information? • Information, in general terms, has been described by the Act as any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, log books, contracts, reports, papers, samples, models, data material held in any electronic form etc. • The right to information under the Act means, accessibility to the information held under the control of any public authority and includes the right to i. inspection of work, documents, records ii. Taking notes, extracts or certified copies of documents or records iii. Taking certified samples of the material iv. Obtaining information in the form of diskettes, floppies, tapes, video cassettes or in any other electronic mode or through printouts whether such information is stored in a computer or in any other device. Who can seek the information? • ALL CITIZENS have the right to information under the Act. • In respect of companies, firms and association of persons, the directors, partners and office bearers respectively can seek information under the RTI act in the name of the company, firms and the association of persons, even though these entities may not be construed as 'Citizen' in terms of the RTI Act. • Further, the person requesting for information need not give any reasons. Who will give information? • The Act provides that if any officer is assigned the task of providing information by CPIO then, such officer shall be treated as CPIO. • In our Bank, The Deputy General Manager (Law department), has been designated as Central Public Information Officer (CPIO) and • All Regional Heads as Central Assistant Public Information Officers (CAPIO). _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 63 _____________________________________ _____________________________________ _____________________________________ • Branches / Regional Offices / Other departments at Central Office will act as facilitators only. Exemption from disclosure • Section 8 & 9 provide for the exemption from disclosure. • On studying the request from the applicant, CPIO will decide whether the disclosure is exempted under the Act, on case to case basis. Brief details of grounds for exemptions are furnished below: Information which would affect sovereignty and integrity of the Country . Expressly forbidden by any court of law or tribunal and disclosure which could be construed as contempt of court. Information causing breach of privilege of Parliament and State Legislature. Information including commercial confidence, the disclosure of which would harm the competitive position of a third party (issues involving larger public interest not covered) Information available to a person in his fiduciary capacity. Information received from foreign government, in confidence. Information which endanger life or physical safety of any person. Information impeding the process of investigation Cabinet papers including records of deliberations. Information which relates to personal information the disclosure of which has no relationship to any public activity or interest. Disclosure of information infringing the copy right may be rejected outright. Procedure for request of information • Any request by any person seeking information can be made orally or in writing in any official language to the Public Information Officer specifying the particulars of information sought by him / her either in English or Hindi or in Official language of the local area, in a prescribed form. • The oral request shall be reduced to writing. Fee Payable: Application fee - Rs. 10. Following fee structure has been prescribed for furnishing the information. • Rs. 2 for each page (in A4 or A3 size paper) created or copied • Actual charge or cost price of a copy in larger size paper _____________________________________ _____________________________________ _____________________________________ 5 for each fifteen minutes (or fraction thereof) thereafter. • Any Appeal received at Branches / Regional Offices should be forwarded to the Appellate Authority immediately. • For information provided in diskette or floppy Rs. Appellate Authority • If the reply provided by the CPIO is not satisfactory. and in any case within thirty days of the receipt of the request. an appeal can be preferred before the Appellate Authority. • The appeal so received.04. General Manager (Law department) had been designated as Appellate Authority. no fee for the first hour.Career Guide for IOBians 64 _____________________________________ _____________________________________ _____________________________________ • For inspection of records. srn/04. • Failure to reply to the applicant will attract penalty under the Act. 50 per diskette or floppy • Additional fee representing the cost of providing the information may be charged. But full details should be furnished to the applicant. CPIO or CAPIO shall either provide the information or reject the request as expeditiously as possible. and a fee of Rs. • In our Bank. to enable them to dispose the same within the stipulated period.2012 Back to index _____________________________________ _____________________________________ _____________________________________ . should also be disposed of by the Appellate authority within 30 days. within 30 days by the seeker of the information. • No such fee shall be collected from persons who are of below poverty line • No charges should be levied if the information is not provided within the time limit Time Limit prescribed • As per the Act. agents acting on our behalf. • Banking Codes & Standard Board of India has brought out two codes. Last reviewed during August 2009.Career Guide for IOBians 65 _____________________________________ _____________________________________ _____________________________________ Banking Codes & Standard Board of India (BCSBI) • BCSBI was promoted by Reserve Bank and 11 Banks public. wire transfers and all electronic transactions e. whether they are provided by branches or subsidiaries. term deposits. They are. remittances by way of Demand Drafts. recurring deposits. RTGS.g. through interactive electronic devices. Code of Bank’s Commitment to Micro and Small enterprises. across the counter. payment orders. • This Code applies to all the products and services listed below. • Banking codes stipulated by BCSBI are voluntary Code. Current accounts. The review will be undertaken in a transparent manner. which sets minimum standards of banking practices for banks to follow when they are dealing with individual customers. • The customers should be given a copy of the Code while opening an account. • Even though the Codes are voluntary. One is ‘Code of Bank’s Commitment to Customers’. • This Code will be reviewed within a period of three years. but "An independent and autonomous watch dog to monitor and ensure that the Banking Codes and Standards adopted by the banks are adhered to in true spirit while delivering their service • BCSBI has been registered as a separate Society under the Societies Registration Act 1860. on the internet or by any other method. • In our bank. The membership is restricted to scheduled commercial Banks. it is obligatory on our part to submit Statement of Compliance to BCSBI on the adherence of various Codes. PPF accounts and all other deposit accounts Payment services such as pension. over the phone. • As per code of BCSBI and RBI directives for any increase or introduction of Service charges one month prior notice is to be given to the customers. It provides protection to you and explains how banks are expected to deal with you for your day-to-day operations. EFT. by post. private and foreign. savings accounts. • It is not a Department under the control of RBI. all the Regional Managers are designated as Regional Code Compliance Officer to ensure implementation of the code. NEFT Banking services related to Government transactions _____________________________________ _____________________________________ _____________________________________ . Government bonds Indian currency notes exchange facility Collection of cheques.2012 Back to index _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 66 _____________________________________ _____________________________________ _____________________________________ Demat accounts. equity. safe custody services. smart cards and services (including credit cards offered by our subsidiaries/companies promoted by us) etc. srn/04. safe deposit locker facility Loans. overdrafts and guarantees Foreign exchange services including money changing Third party insurance and investment products sold through our branches Card products including credit cards.04. ATM cards. debits cards. 5. bills etc. 2007. _____________________________________ _____________________________________ _____________________________________ . 1. Objective of the scheme To resolve the complaints relating to provision of banking services . the Banking Ombudsman may hold sittings at such places within his area of jurisdiction as may be considered necessary and proper by him in respect of a complaint or reference before him. Powers and jurisdiction • The Reserve Bank shall specify the territorial limits to which the authority of each Banking Ombudsman. a. Grounds of complaint (1) A complaint on any one of the following grounds alleging deficiency in banking or other services. • The appointment of Banking Ombudsman may be made for a period not exceeding three years at a time. Of its constituents against a bank b. 2. Location of office and temporary headquarters The office of the Banking Ombudsman shall be located at such places as may be specified by the Reserve Bank.2006 • Reserve Bank of India has formulated Banking Ombudsman Scheme and setup Banking Ombudsman Offices at various centres across the country. Of one bank against another bank through the process of conciliation. drafts. • The Banking Ombudsman Scheme is being amended by RBI from time to time and last amended scheme as on May 24. a. mediation and arbitration. • The Banking Ombudsman shall receive and consider complaints relating to the deficiencies in banking or other services and facilitate to their satisfaction or settlement by agreement or through conciliation and mediation between the bank concerned and the aggrieved parties or by passing an Award in accordance with the Scheme. non-payment or inordinate delay in the payment or collection of cheques. 4. In order to expedite disposal of complaints..Career Guide for IOBians 67 _____________________________________ _____________________________________ _____________________________________ THE BANKING OMBUDSMAN SCHEME. 3. Appointment • The Reserve Bank may appoint one or more of its officers in the rank of Chief General Manager or General Manager to be known as Banking Ombudsmen to carry out the functions entrusted to them by or under the Scheme. refusal to close or delay in closing the accounts etc. non-observance of Reserve Bank Directives on interest rates. c. non-disbursement or delay in disbursement of pension (to the extent the grievance can be attributed to the action on the part of the bank concerned. and for charging of commission in respect thereof. b. failure to issue or delay in issue of drafts. Non-adherence to provision of fair practice code or code of bank’s commitment to customers issued by BCSBI. levying of charges without adequate prior notice to the customer. e. and d. disbursement or non-observance of prescribed time schedule for disposal of loan applications. non-payment of deposit or non-observance of the Reserve Bank directives. non-credit of proceeds to parties' accounts. if any. non-payment or delay in payment of inward remittances . m. n. failure to honour guarantee or letter of credit commitments .Career Guide for IOBians 68 _____________________________________ _____________________________________ _____________________________________ b. _____________________________________ _____________________________________ _____________________________________ . without sufficient cause. f. current or other account maintained with a bank . d. (2) A complaint on any one of the following grounds alleging deficiency in banking service in respect of loans and advances may be filed with the Banking Ombudsman having jurisdiction: a. refusal to open deposit accounts without any valid reason for refusal. any other matter relating to the violation of the directives issued by the Reserve Bank in relation to banking or other services o. pay orders or bankers’ cheques. etc. delays. e. of coins/small denomination notes tendered for any purpose. Non-observance of any other direction or instruction of the Reserve Bank as may be specified by the Reserve Bank for this purpose from time to time. i. c. j. Non-observance of Reserve Bank Directives on engagement of recovery agents. non-acceptance of application for loans without furnishing valid reasons to the applicant. h. non-adherence to prescribed working hours . l. applicable to rate of interest on deposits in any savings. delay in sanction. k. non-acceptance. non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on ATM/Debit card operations or credit card operations. but not with regard to its employees). g. forced closure of deposit accounts without due notice or without sufficient reason. and f. for which any proceedings before any court. c. The complaint is not frivolous or vexatious in nature. the complainant had. the complaint is not in respect of the same subject matter which was settled or dealt with on merits by the Banking Ombudsman in any previous proceedings whether or not received from the same complainant or along with one or more complainants or one or more of the parties concerned with the subject matter. Procedure for filing complaint (1) Any person who has a grievance against a bank on any one or more of the grounds may. • The Award passed under sub-clause (1) shall specify the amount. the complaint is made not later than one year after the complainant has received the reply of the bank to his representation or. to be paid by the bank to the complainant by way of compensation for the loss suffered by him and may contain any direction to the bank.Career Guide for IOBians 69 _____________________________________ _____________________________________ _____________________________________ (3) A customer would also be able to lodge a complaint against the bank for its non-adherence to the provisions of the fair practices code for lender or the code of bank’s commitments to customers issued by BCSBI (4) The Banking Ombudsman may also deal with such other matter as may be specified by the Reserve Bank from time to time in this behalf. 1963 for such claims. not later than one year and one month after the date of the representation to the bank. If the complaint is arising out of the operations of credit cards. tribunal or arbitrator or any other forum is pending or a decree or Award or order has been passed by any such court. where no reply is received. if any. 6. it shall be filed before the Banking Ombudsman within whose territorial jurisdiction the billing address of the card holder is located and not the place where the bank concerned or the credit card processing unit is located. 7. made a written representation to the bank and the bank had rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or the complainant is not satisfied with the reply given to him by the bank. b. tribunal. make a complaint to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. The complaint is made before the expiry of the period of limitation prescribed under the Indian Limitation Act. arbitrator or forum. himself or through his authorised representative (other than an advocate). _____________________________________ _____________________________________ _____________________________________ . Award by the banking ombudsman • The award shall state briefly the reasons for passing the award. the complaint does not pertain to the same subject matter. before making a complaint to the Banking Ombudsman. d. (2) No complaint to the Banking Ombudsman shall lie unless:a. e. 04. can prefer appeal within a period of 30 days of its communication. if not satisfied with the award. Either the bank or the complainant. • A copy of the Award shall be sent to the complainant and the bank.Career Guide for IOBians 70 _____________________________________ _____________________________________ _____________________________________ • the Banking Ombudsman shall have the power to pass an award directing payment of an amount not exceeding the actual loss suffered by the complainant as a direct consequence of the act of omission or commission of the bank. srn/04. • An award shall lapse and be of no effect unless the complainant furnishes to the bank concerned within a period of 30 days from the date of receipt of copy of the Award. a letter of acceptance of the Award in full and final settlement of his claim. or ten lakh rupees (one lakh for credit card) whichever is lower. The time allowed for filing appeal by the bank is one month from the date of receipt by it of the acceptance in writing of the Award by the complainant.2012 Back to index _____________________________________ _____________________________________ _____________________________________ . 8 Appeal before the appellate authority • ‘Appellate Authority’ is the Deputy Governor in charge of the Department of the RBI. Career Guide for IOBians 71 _____________________________________ _____________________________________ _____________________________________ Garnishee Order: • Issued by court under Section 60 of Civil Procedure code • Issued at the request of the creditor to attach the debtors' funds in the hands of another debtor (banker known as Garnishee) • It is issued in two stages. • First order Nisi is issued requesting the bank to explain why the funds of the depositor should not be attached. Bank informs depositor and stops operations. • After receipt of explanation from banker, Order Absolute is issued. On receipt of it, banks make payment to the court. • If amount to be attached is not mentioned the entire balance is attached. However, if it is for specific amount, only that amount should be attached. • Applicable for the accounts in the same capacity as mentioned in the order. • If the order is in the name of individual it will not attach the partnership a/c in which the individual is a partner or the individual who holds the a/c in trust. • Under garnishee order the order issued in the name of partnership company attaches the partnership account and also the individual partner's accounts • Accounts in the name of deceased and undischarged insolvent are not attached • Any deposit already due or accruing due (term deposit) are attached but payable to court only on maturity. • If the order is in the name of individual but the a/c is in the Joint names it is not attachable. • If the order is issued in joint names it attaches the joint accounts as well as individual accounts if any. • Payment in cash, before actual parting; and in case of clearing, upto the time of return of clearing cheques the balance available can be attached • Proceeds of cheques/bill sent on collection are not attachable. Uncleared balances on SB/CD are also not attachable. • Right of set off is available before effecting the Garnishee order. • On receipt of a Garnishee Order, the date and time of its receipt must be marked and authenticated by the officer of the department _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 72 _____________________________________ _____________________________________ _____________________________________ • Notice of receipt of the garnishee order should be sent to the account holder immediately. • In order to prevent against inadvertently making payments of the amounts so earmarked, the branch must transfer them to Sundry Creditors Account by giving full details of the garnishee order in the sundry creditors voucher, which must be recorded in the sundry creditors register / module as well. • In the case of accounts of proprietary concerns, a garnishee order mentioning the name of either the proprietary concerns or the name of the proprietor extends to the accounts of both the proprietary concern as well as the accounts in the name of the proprietor since there is no distinction in law between the proprietor and his proprietary concern. • A garnishee order does not extend to any deposits made subsequent to its receipt. srn/28.04.13 Back to index _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 73 _____________________________________ _____________________________________ _____________________________________ Attachment Order • Issued by Income Tax Authorities under Sec.226(3) of Indian Income Tax Act. • Issued to receive from any person the money due or becoming due to the assessee, or from any person who holds money or may hold subsequently for or an account of an assessee. • In case an IT attachment order is received on a partnership account, the same will attach the personal accounts of the partners as well. • The attachment order issued is final and binding. • Joint a/c is also attached on pro-rata basis. • If the bank fails to act on an Income Tax (IT) attachment order, it will be deemed as an assessee in default. • Right of set off is available in both cases before effecting the Garnishee or IT attachment order. • On receipt of an Attachment Order from the IT Department, the date and time of its receipt must be marked and authenticated by the officer of the department. • Notice of receipt of the attachment order should be sent to the customer immediately. • If, however, any amount standing to the credit of the constituent in respect of which a notice under section 226(3)(i) is served has already been under lien to the Bank, such account should be advised to the Income Tax Officer and if there is any surplus after adjusting the amount due to the Bank such surplus will be available for remittance to the Income Tax Officer. Back to index _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 74 _____________________________________ _____________________________________ _____________________________________ Negotiable instruments – some points • The NI Act states in its preamble that it seeks to define the law relating to promissory note, bill of exchange and cheque and therefore it deals with only these three kinds of negotiable instruments • Common Features: Any instrument that possesses the common features may be considered to be a negotiable instrument (e.g. bank drafts, government promissory notes). • The common features of negotiable instruments are as follows: • i. A negotiable instrument can be transferred by delivery or by endorsement and delivery, depending on whether it is payable to the bearer or order. Transferability of the instrument may be restricted by the maker or holder by crossing it as 'Account Payee.' ii. A negotiable instrument confers an absolute and valid title on the transferee who takes it in 'good faith, for value, and without notice of the defect in the title of the transferor. iii. The holder of negotiable instrument can sue in his own name and can recover the amount of the instrument from the party liable to pay thereon as there is a right of action attached to the instrument itself. Promissory Note: (section 4 of NI Act). ''A Promissory Note is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument A promissory note that is dependent on contingency would tantamount to being an uncertain undertaking and hence cannot be treated as a promissory note. • BILL OF EXCHANGE : (Section 5 of NI Act). ''A bill exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument." Main elements of a bill of exchange are as follows: • Bill of exchange is used in business and trade involving the seller and buyer of goods/services sold on credit terms. • It has three parties - drawer (seller), drawee (buyer) and payee (beneficiary). • Instead of paying cash, the drawee (buyer) undertakes to pay to the payee, or to his order, a specified sum on demand (i.e. demand bill on presentment of the bill), or on a specified future date (i.e. usance bill after acceptance). • The drawee of a bill is not liable until he accepts the bill, indicating thereby his assent to the drawer's order to pay. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 75 _____________________________________ _____________________________________ _____________________________________ • Demand bill is payable immediately on presentment to the drawee. • Usance bill is presented twice to the drawee - first for acceptance, and thereafter for payment on the due date. • The date of payment must be certain or ascertainable. Demand bill is payable on demand or immediately on presentment. Usance bill is payable after specified period or at a future date. Usance bills attract stamp duty and they need to be accepted by the drawee/ s to legally -bind him/them for payment. CHEQUES (Section 6 of NI Act). ''A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. • • • A cheque has three parties. The drawer is the account holder signing the cheque; drawee is always the bank branch where the account holder maintains his account and the payee is the beneficiary who will receive the amount mentioned in the cheque. • The cheque has to be signed in ink by the account holder or his authorized agent (through mandate or power of attorney) as per the specimen • Printed signatures on dividend/interest warrants cheques that are issued by companies in bulk, are also acceptable. • A cheque has to be dated, as the date constitutes a material element of a cheque. • A holder of an undated cheque may fill in the date while presenting it for payment. • A post-dated cheque cannot be paid before the date on the cheque. • An ante-dated cheque (i. e. date prior to the presentment) is payable within 3 months from the date specified on the cheque. There is no law to this effect. • A banker can pay a cheque written only in words where the amount in words and figures mutually differs. • But if the amount is written only in figures, the bank generally returns it. A demand draft is a negotiable instrument and is always drawn, payable to order. A demand draft resembles a bill of exchange; the only difference being that in the former, the drawer (bank) and the drawee (bank) are same. General Crossing : A cheque or bank draft may be crossed by the drawer/issuer and holder by simply drawing on its face, two parallel transverse lines, with or without the words 'not negotiable' or and 'company' or 'account payee'. In such cases the drawee banker shall not pay it to anyone other than a banker. Such crossing ensures that the cheque or draft will be payable not in cash, but only through the bank, by credit to the account of the payee. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 76 _____________________________________ _____________________________________ _____________________________________ • Account payee crossing restricts further transferability of the instrument as the amount thereof has to be credited to the payee's account only with the bank. SPECIAL CROSSING: A special crossing consists of an addition of the name of a banker across the face of a cheque with or without two parallel transverse lines. • Such crossing ensures that the drawee bank shall not pay the cheque to anyone than the banker/his agent (to whom it is crossed) for collection. • This means that a specially crossed cheque has to be routed through an account with the named bank. • Endorsements: Endorsement is made on the back of the instrument, or by attaching a slip of paper ('allonge') if the space on the instrument is not enough. • A negotiable instrument payable to order can be negotiated only by endorsement and delivery • Following are the main requirements of endorsement Signature of the endorser with/without adding any words. Endorsement to be made by the payee or by all the payees jointly. A stranger cannot endorse an instrument, unless he is a holder in due course. Endorsement to be made for the entire amount and not for a part of the amount of the instrument. • Type of Endorsements: Blank endorsement: When the endorser signs only his name on the back of the instrument, it is termed as a blank endorsement. After such endorsement, the instrument can be negotiated by mere delivery without any further endorsement required. Special endorsement or endorsement in full: When the endorser's signature is accompanied by instructions to pay the amount to/to the order of a named person, it is termed as a special endorsement. The person to whom the money is payable is known as endorsee. That endorsee can further endorse the instrument in favour of another person specifically instructing to pay to that certain person. Restrictive endorsement: When further negotiation of the instrument, is prohibited. (e.g. the instrument is endorsed as "pay A only") it is termed as restrictive endorsement. Such an endorsement takes away the negotiability of the instrument. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 77 _____________________________________ _____________________________________ _____________________________________ • Inland instruments (Sec 11) A promissory note, bill of exchange or cheque drawn or made in India and made payable in or drawn upon any person resident in India shall be deemed to be an inland instrument. • A minor may draw, endorse, deliver and negotiate negotiable instruments so as to bind all parties except himself. • When maturity is a holiday (Sec – 25) When the day on which a promissory note or bill of exchange is at maturity is a public holiday, the instrument shall deemed to be due on the next preceding business day. • • 'Holder' of a negotiable instrument as per section 8 of NI Act. • In order to be a 'holder' of these instruments, the title or claim of the person is more important rather than the actual possession of the instrument. • Thus, a person who has stolen or fraudulently obtained possession of a cheque cannot be the 'holder' of the cheque, despite actually possessing it HOLDER IN DUE COURSE Section 9 of NI Act defines a 'holder in due course' as "any person who for consideration became the possessor of a promissory note, bill of exchange, or cheque if payable to bearer, or the payee or endorsee thereof, if payable to order, before the amount mentioned therein became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title." • • The term 'holder in due course', denotes a 'bona fide holder for value without notice Paying Bankers Duty: The Paying Banker's (Drawee) duties are laid down by section 31 of NI Act as "The drawee of a cheque having sufficient funds of the drawer in his hands, properly applicable to the payment of such cheque must pay the cheque when duly required so to do, and, in default of such payment, must compensate the drawer for any loss or damage caused by such default. • The banker would be justified in refusing payment of a cheque, if: The cheque is countermanded by the customer. There is a garnishee order attached to the amount of the cheque. The bank receives notice regarding insolvency, death or insanity of the customer. " There is a defect in the title of the presenter of cheque. • PAYMENT IN DUE COURSE Payment in due course' has been defined in section 10 of the Act. Its main features are: _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 78 _____________________________________ _____________________________________ _____________________________________ The payment must be in accordance with the apparent tenor of the instrument: A cheque should not be paid before its due date. If the amount is written only in figures, the bank generally returns it. Pencil signature is valid, but not allowed by bankers in practice. If the cheque is torn, the banker should normally return it for the reason 'mutilated cheque', unless the drawer confirms the mutilation or the collecting bank attaches a certificate that it was accidentally torn. The paying banker is not concerned with an 'account payee' crossing. His liability is discharged once he makes payment in due course. It is the duty of the collecting banker to collect the proceeds of the cheque for the credit of the payee's account. It should be noticed that a bank may be held liable for wrongful dishonour of cheques when there is sufficient balance in the customer's account, as per the provisions of sec 31 of Negotiable Instruments Act, 1881. • The protection under section 131 of NI Act is available to a collecting banker when he acts as agent for collection. • Section 138 deals with dishonour of cheque for insufficiency etc., of funds in the account; • This section shall apply only when; The cheque has been presented to the bank within a period of 3 months from the date of on which it is drawn or within the period of validity whichever is earlier The payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be to the holder in due course of the cheque within 15 days of the receipt of the said notice. The offence can be tried by I Class Judicial Magistrate or Metropolitan Magistrate. Punishment under the section is with imprisonment for a term upto 2 years or with fine which may extend to twice the amount of the cheque or with both. • Merely because the drawer issued a ‘stop payment instruction’ to the drawee or to the bank for stopping the payment, will not preclude an action under Sec 138 of the NI Act by the drawee or the holder of a cheque in due course. srn/04.04.2012 Back to index _____________________________________ _____________________________________ _____________________________________ associations. • CDs in physical form are freely transferable by endorsement and delivery. corporations. • Banks have the freedom to issue CDs depending on their requirements. Non. CDs in demat form can be transferred as per the procedure applicable to other demat securities. • Investors : CDs can be issued to individuals. on the issue price of the CDs. funds. • Banks / FIs cannot grant loans against CDs. • The FIs can issue CDs for a period not less than 1 year and not exceeding 3 years from the date of issue.Resident Indians (NRIs) may also subscribe to CDs. i. the minimum deposit that could be accepted from a single subscriber should not be less than Rs. which should be clearly stated on the Certificate. trusts. i. Such CDs cannot be endorsed to another NRI in the secondary market. Back to index _____________________________________ _____________________________________ _____________________________________ . 1 lakh and in the multiples of Rs. cash reserve ratio (CRR) and statutory liquidity ratio (SLR). • Minimum amount of a CD should be Rs. • Banks have to maintain the appropriate reserve requirements. etc. but only on non-repatriable basis.e. for funds deposited at a bank or other eligible financial institution for a specified time period.Career Guide for IOBians 79 _____________________________________ _____________________________________ _____________________________________ Certificate of deposit (CD) • Certificates of Deposit (CDs) is a negotiable money market instrument and issued in dematerialised form or as a Usance Promissory Note.1 lakh. • The issuing bank/financial Institutions cannot clos a CD before its due date. 1 lakh thereafter.. • The maturity period of CDs issued by banks should be not less than 7 days and not more than one year. • CDs are issued at a discount on face value. companies.e.. • There is no lock-in period for the CDs. Career Guide for IOBians 80 _____________________________________ _____________________________________ _____________________________________ Commercial Paper (CP) • Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note • Companies. Eligible participants/issuers shall obtain credit rating for issuance of CP from any one of the SEBI registered CRAs. Amount invested by a single investor should not be less than Rs. The minimum credit rating shall be ‘A3’ as per rating symbol and definition prescribed by SEBI.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . • CP shall be issued at a discount to face value as may be determined by the issuer. • A corporate would be eligible to issue CP provided: the tangible net worth of the company.4 crore.5 lakh (face value).5 lakh or multiples thereof. srn/14. • CP can be issued either in the form of a promissory note (Schedule I) or in a dematerialised form through any of the depositories approved by and registered with SEBI. company has been sanctioned working capital limit by bank/s or allIndia financial institution/s.04. and the borrower account of the company is classified as a Standard Asset by the financing bank/s/ institution/s • Rating Requirements: All eligible participants shall obtain credit rating for issuance of Commercial Paper from either CRISIL or ICRA or CARE or The India Ratings and Research Private Limited (India Ratings) or such other credit rating agencies as may be specified by the Reserve Bank of India from time to time. is not less than Rs. Primary Dealers (PD) and Financial Institutions (FI) that have been permitted to raise short-term resources are eligible to issue. The issuers shall ensure at the time of issuance of the CP that the rating so obtained is current and has not fallen due for review • CP can be issued for maturities between a minimum of 7 days and a maximum up to one year from the date of issue • CP can be issued in denominations of Rs. as per the latest audited balance sheet. for the purpose. USD-denominated cheques : • All Cheques denominated in USD and payable in US up to USD 10000 should be sent for collection to JP Morgan chase Bank.25 per cheque towards check 21. They have tie up with Blue Dart Courier to collect checks from our AD branches. Mumbai under “usual reserve” as applicable to cash letter service.drawn on USA and denominated in USD JP Morgan will allow us to obtain finality of payments against fraud on the front of the cheque in 6 days if the cheque is drawn on JP Morgan Chase or in New York City and in 15 days if the cheque is drawn outside New York City.000 but upto a maximum of USD 25.000/.upto a maximum of USD 500. Cheques under this scheme will be collected on a “final” credit basis.P. • Services of “JP Morgan Chase Bank NA” is used for handling Secure Collection Service which includes cheques not covered under Cash Letter Service. Cash letter covers should be addressed to: J P Morgan Services India Pvt. Mumbai under their “Cash Letter Services (CLS) irrespective of their designated USD correspondent. • JP Morgan will make arrangements to collect cheques from the AD branches for onward transmission to their Mumbai Office through their authorised couriers at their cost. • JP Morgan Bank will credit our Nostro account on the second banking business day in USA calculated from the date of receipt of cheque at JP Morgan. Cheque collection(foreign). That is if the cheques are returned for reason other than “fraud”. Ltd Check Processing Center Treasury & Securities Services Paradigm “B”. which will be absorbed by Treasury Dept. Branches can be assured of the final payment. of value above USD 10.Career Guide for IOBians 81 _____________________________________ _____________________________________ _____________________________________ Cheque collection 1.000. Morgan will not debit/recall funds after it is credited to our Nostro account. • JP Morgan Chase will make arrangements to collect cheques from the AD branches for onward transmission to their Mumbai office through their authorised couriers at their cost.000/. Dishonour of cheque will be notified within these time frames. J. 9th Floor. • Regional Offices concerned are authorised to permit the branches to send cheques above USD 10. Mumbai 400 064 _____________________________________ _____________________________________ _____________________________________ . • JP Morgan will transmit the image of cheques after truncation to New York for clearing purposes. • JP Morgan will be charging USD 0. Malad Link Road. the NAD branches concerned should pay the interest and for any delayed period beyond 16 days. PE36SB. United Kingdom As regards all other Cheques/travellers Cheques. containing in the line MICR the codification 6940908 and payable in France. Thorpe Wood Peterborough. branches can continue to send them to Societe Generale _____________________________________ _____________________________________ _____________________________________ . Collection of Euro – travellers cheque All the Travellers Cheques issued in EURO by Thomas Cook Travellers Cheques Ltd. educational. • In respect of cheques with value less than USD 100. religious and social programmes shall be governed by Foreign Contribution Regulation Act (FCRA 1976). • In respect of customers of NAD branches. Travelex Inc and Inter-payment Services Ltd. interest at term deposit rate applicable for the period of delay should be paid. 2.Career Guide for IOBians 82 _____________________________________ _____________________________________ _____________________________________ • Branches while accepting cheques for collection must affix a rubber stamp on the counterfoil reading “original cheques will not be returned as per US Law. customers may be informed of the charges likely to be levied while accepting the cheques for payment. • AD branches concerned should pay the interest for the delayed period. • Cheques received for collection from customers representing receipt of foreign contribution by entities like associations/organizations having a definite cultural.15 days • Cooling period will not be indicated for other countries. • The exchange rate will be the rate prevalent on the date of conversion. economic. in view of the fact that within the same country it may vary from one centre to other • The day when the amount is due for credit is the date of credit to Nostro Account plus 15 days for USD cheques and date of credit to Nostro Account plus 21 days in case of other currencies subject to other conditions as applicable in respective countries. if cheques are unpaid • Cooling period for USD denominated cheques . • No compensation will be paid for the volatility in the exchange rate. if the date of credit is more than 16 days. • Branches should pay interest at SB rate from the date of credit to Nostro account to the date of credit to customer’s account. • However. Travelex Global and Financial Services Ltd. must be send directly to the following address: Travelex Global and Financial Services Limited Travellers’ Cheques Operations Worldwide House. taking into account the clearing cycle and other related factors. • Immediate credit of local/outstation cheques/instruments: Branches/Extension counters of the Bank will consider providing immediate credit to outstation instruments which include Demand drafts drawn on other Banks. like distance from clearing house.15000/. would present local cheques on drawee banks across the counter and it would be the bank’s endeavour to credit the proceeds at the earliest. Display board will be placed in the banking hall . communication facility. Cheques deposited after the cut-off time and in collection boxes outside the branch premises including off-site ATMs will be presented in the next clearing cycle. Collection of Inland cheques: • Local Cheques All cheques and other Negotiable Instruments payable locally would be presented through the clearing system prevailing at the centre.tendered for collection by individual account holders subject to satisfactory conduct of such accounts for a period not less than 6 months. Cheques deposited at branch counters and in collection boxes within the branch premises before the specified cut-off time will be presented for clearing on the same day. Bank branches situated at centres where no clearing house exists. • The facility of immediate credit will be offered Bank/Current/Cash Credit Accounts of the customers. on savings _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 83 _____________________________________ _____________________________________ _____________________________________ 3. • For extending this facility there will not be any separate stipulation of minimum balance in the account. Interest Warrants and Dividend Warrants upto the aggregate value of Rs. Withdrawal of amounts as credited would be permitted as per the Cheque return schedule of the clearinghouse. methodology being followed by other banks in the particular centre etc. • The facility of immediate credit would also be made available in respect of local cheques at centres where no formal clearing house exists. local established practices. All branches will fix up the day’s cut off time for the inclusion of instruments for clearing. indicating the cut off time limits for receipt of cheques for payment to Government Accounts like income-tax etc. As a policy bank would give credit to the customer’s account on the same day clearing settlement takes place. • Immediate credit will be provided against such collection instruments at the specific request of the customer or as per prior arrangement. This facility is available at selected Centres only. Purchase of local and outstation cheques: • Bank may. Applicable service charges for speed clearing will be collected from the customers. It will be introduced to other centres in a phased manner. Through speed clearing system. Speed Clearing System. • Opened at least 6 months earlier and complying KYC norms • Conduct of which has been satisfactory and bank has not noticed any irregular dealings. • Where no cheques/instruments for which immediate credit was afforded returned unpaid for financial reasons. • Besides satisfactory conduct of account. 4. They can get the clearance affected within the time frame applicable for local banks. at its discretion. purchase local/outstation cheque tendered for collection at the specific request of the customer or as per prior arrangement. for payment or return as warranted. 5. Satisfactory conduct of account. • In the event of dishonour of cheques against which immediate credit was provided. 6. interest shall be recoverable from the customer for the period the bank remained out of funds at the rate applicable for overdraft limits sanctioned for individual customers. • Where the bank has not experienced any difficulty in recovery of any amount advanced in the past including cheques returned after giving immediate credit. • Exchange charges applicable for cheque purchase will not however be charged drafts. the images of the cheques will be viewed and acted upon by the drawee bank branches.Career Guide for IOBians 84 _____________________________________ _____________________________________ _____________________________________ • Under this policy. • Bank shall levy normal collection charges and out of pocket expenses while providing immediate credit against outstation instruments tendered for collection. the standing of the drawer of the cheque will also be a factor considered while purchasing the cheque. Back to index _____________________________________ _____________________________________ _____________________________________ . prepaid instruments like demand interest/dividend warrants shall be treated on par with cheques. Cheque Truncation System (CTS): In order to utilize the technological innovations in banking services “ Cheque Truncation System”(CTS) is introduced in certain centres in which physical exchange of cheques to drawee bank in clearing will be dispensed with and instead. customers can present the cheques drawn on other Bank’s CBS Branch through Local Clearing. Payment of interest for delayed collection of Outstation Cheques: • As part of the compensation policy of the bank. • For cheques and other instruments sent for collection to centres within the country the following time norms shall be applied Cheques presented at any of the four major Metro Centres ( New Delhi. Kolkata and Chennai) and payable at any of the other three centres: Maximum period of 7 days. • There shall be no distinction between instruments drawn on the bank’s own branches or on other banks for the purpose of payment of interest on delayed collection. • Bank may enter into specific collection arrangement correspondent bank for speedy collection of such instrument. • Such interest shall be paid without any demand from customers in all types of accounts. Mumbai. 9. Interest for delayed collection (for inland cheque only)shall be paid at the following rates: • Local cheque: interest will be paid at savings bank rate for the corresponding period of delay _____________________________________ _____________________________________ _____________________________________ . • In case of local cheques presented for clearing. the bank shall permit usage of the shadow credit afforded to the customers’ account immediately after closure of relative return clearing and withdrawal shall be allowed on the same day or maximum within an hour of the commencement of business on the next working day subject to usual safeguards. the bank will pay interest to its customer on the amount of collection instruments in case there is delay in giving credit beyond the time period mentioned above. with its 8. • Bank would give credit to the party on credit of proceeds to the Bank’s Nostro Account with the correspondent bank after taking into account cooling periods as applicable to the countries concerned. • Cheques/Instruments presented in high value clearing ( with the minimum value of Rs 1 lac) shall be credited on the same day (applicable only in areas covered by high value/same day clearing).Career Guide for IOBians 85 _____________________________________ _____________________________________ _____________________________________ Time frame for collection of Local/ Outstation cheques / Instruments 7. Metro Centres and State Capitals (other than those of North Eastern States and Sikkim) Maximum period of 10 days In all other Centres: Maximum period of 14 days • Cheques drawn on foreign countries: • Such instruments are accepted for collection on the “best of efforts” basis. In the event of the proceeds of Cheque under collection was to be credited to an overdraft / loan account of the customer.Career Guide for IOBians 86 _____________________________________ _____________________________________ _____________________________________ • Outstation Cheques : Savings Bank rate for the period of delay beyond 7/10/14 days as the case may be in collection of outstation cheques. 10. For extraordinary delays. • Bank will reimburse the related charges debited in the account of the drawer (of collection/clearing cheque deposited by the customer which is lost in transit) by the drawee bank branch _____________________________________ _____________________________________ _____________________________________ . Cheques/Instruments lost in transit.. in the event the instrument is to be obtained from a bank/institution who would charge a fee for issue of duplicate instrument.e. i. Where the delay is beyond 14 days. delay exceeding 90 days. In the case of extraordinary delay. bring the same to the notice of the accountholder so that the account holder can inform the drawer to record stop payment • The bank would provide all assistance to the customer to obtain a duplicate instrument from the drawer of the Cheque. in clearing process or at paying Bank’s Branch In line with the compensation policy of the bank the bank will compensate the account holder in respect of instruments lost in transit in the following way: • In the event a Cheque or an instrument accepted for collection is lost in transit or in the clearing process or at the paying bank’s branch. the bank shall immediately on coming to know of the loss. bank will pay interest on the amount of the Cheque for a further period of 15 days at Savings Bank rate to provide for likely further delay in obtaining duplicate Cheque/instrument and collection thereof. • In addition. interest will be paid at the rate of 2% above the rate applicable to the loan account. interest will be paid at the rate applicable to for term deposits of the respective period. • The bank would also compensate the customer for any reasonable charges he/she incurs in getting duplicate Cheque/instrument upon production of receipt. interest will be paid at the rate applicable to the loan account. • In case intimation regarding loss of instrument is conveyed to the customer beyond the time limit stipulated for collection (7/10/14 days as the case may be) interest will be paid for the period exceeding the stipulated collection period at the rates as applicable for delay. interest will be paid at the rate of 2% above the corresponding Term deposit rate. interest shall be recovered at the rate of 2% above the interest rate applicable to the overdraft /loan from the date of credit to the date of reversal of the entry if the Cheque/instrument was returned unpaid to the extent the bank was out of funds. The customer will not be charged any interest from the date immediate credit was given to the date of return of the instrument unless the bank had remained out of funds on account of withdrawal of funds.Career Guide for IOBians 87 _____________________________________ _____________________________________ _____________________________________ 11. • Policy for dishonour of Physical/ Truncated for less than Rs. • If the Customer’s consent is not forthcoming. strike or other labour disturbances. damage to the Bank’s facilities or of its correspondent bank(s) absence of the usual means of communication or all types of transportation. Charging of interest on cheques returned unpaid where instant credit was given If a cheque sent for collection for which immediate credit was provided by the bank is returned unpaid. the amount so credited will not qualify for payment of interest when the Cheque is returned unpaid. Paid value of the cheque and the interest thereon will be collected from the customer by debiting his/her account with prior notice. lockout. natural disasters and other “Acts of God” war. If the proceeds of the Cheque were credited to an overdraft/loan account. 1 Crore Branches should affix a rubber stamp with message on the front upper wrapper of cheque book that issue of cheque without maintaining sufficient balance in the account will disqualify the drawer for additional cheque books. etc beyond the control of the Bank prevents it from performing its obligations with the specified service delivery parameters. necessary legal action will be initiated. If the proceeds of the Cheque were credited to the Savings Bank Account and was not withdrawn. Interest where applicable would be charged on the notional overdrawn balances in the account had credit not been given initially. 13. sabotage. • In case the recovery is found to be difficult. fires. accident. _____________________________________ _____________________________________ _____________________________________ . the value of the cheque will be immediately debited to the account. 12. Force Majeure The bank shall not be liable to compensate customers for delayed credit if some unforeseen event (including but not limited to civil commotion. 14. Charging of interest on cheques returned unpaid where credit was given • Bank will seek the consent of the beneficiary-customer for debiting his/her account towards recovery of discounted value of the cheque which is lost-intransit and interest thereon. One Crore and above and return of all cheques irrespective of amount issued in favour of stock exchanges by stock broker entities to the respective Regional Offices. • When an ECS mandate is dishonoured for the third time in a financial year branches should send a caution advice to the customer requesting him to maintain the account properly and in accordance with the Bank rules and regulations. despite cheque returns. • The branch should call for return of the unutilized cheque leaves from the customer and effectively follow up to obtain the same. _____________________________________ _____________________________________ _____________________________________ . • In the event of dishonour of cheques drawn on a particular account of the drawer on four occasions in a financial year. 15. • However. desirous of continuation of account after the notice period should refer to the Regional Office. • Branches should also draw the attention of customers that if the Mandate is dishonoured for fourth time even after receipt of the ECS will be stopped.Career Guide for IOBians 88 _____________________________________ _____________________________________ _____________________________________ • Branches should report on daily basis the particulars of all the dishonoured cheques for Rs. • When cheque is returned for the third time pertaining to a particular account in a financial year. • Regional Managers are vested with authority to allow continuation of the account even after the notice period. the returns are to be reported to the sanctioning authorities and the same is to be reckoned while the account is appraised for review / renewal/ enhancement of limits..) 16. the branch should record the reasons which lead to the dishonour of cheques in the account and no fresh cheque books should be issued. 1 Crore and above (Similar to that of Less than one crore. but daily reporting. if branches. Policy for dishonour of Physical/ Truncated for Rs. the branch should send a letter to the account holder by Registered post with acknowledgement due & also notice by certificate of posting (in addition to Regd letter) requesting that the account holder should maintain the account properly and also cautioning him that the Bank will close the account if it is not conducted properly within one month. branches should send a caution advice to the customer requesting him to maintain the account properly and in accordance with the Bank rules and regulations. • If the customer does not maintain the account properly even then. taking in to consideration merits of the case. • When the account holder is also a borrower. • Even after expiry of the notice period if the account is not conducted properly the branch should close the account and remit the balance payable to the customer by draft by Registered post with acknowledgement due & notice by certificate of posting. Policy for dishonour of ECS mandates • The Electronic clearing envisages lodgement of mandate by a customer with his Banker authorizing him to debit his account when a claim is made by an user institution through ECS Clearing. • Regional Managers are vested with authority to allow continuation of the account even after the notice period. 2007 provides for punishment of 2 years and twice the amount of electronic funds transfer. 76/ Above Rs.to the account of their customers who are Co-operative Credit societies.05. 1 crore Rs.25. RBI has prescribed the ceiling charges for ECS returns. if the payees of such cheques are the constituents of such co-operative credit societies. • Our Bank has fixed ECS return charges within the ceiling limits and the same is given below: For transactions up to Rs. • To discourage Banks from indiscriminately charging ECS customers on dishonor of ECS mandate and with a view to encourage ECS by the Public.Career Guide for IOBians 89 _____________________________________ _____________________________________ _____________________________________ • The branch should send a letter to him by Registered post with acknowledgement due & a notice by certificate of posting. 51/ Above Rs. • Branches may consider collecting account payee cheques drawn for an amount not exceeding Rs 50000/. 18.10 lac . taking in to consideration merits of the case. • The provisions contained in Section 25 of the payment and Settlement Systems Act. • The sub-section (5) of Section 25 of the Payment and Settlement Systems Act.1 crore 17. requesting him that he should maintain the account properly failing which there is no alternative to the Bank but to close the account. 1 Lac - Rs. 2007 accord the same rights and remedies to the payee against dishonour of electronic funds transfer as are available to the payee under section 138 of the Negotiable instruments Act. 31/- Above Rs. desirous of continuation of account after the notice period should refer to the Regional Office. 102/- ( first 3 returns) Rs. 204/- Above Rs.000/ up to Rs. • However. if branches. ***************************** srn/12. despite dishonour of ECS mandates. 25. 1 Lac – to 10 lac Rs.upto Rs. Collection Of Account Payee Cheques Proceeds To Third Party Account Prohibition On Crediting • Banks cannot collect account payee cheques for any person other than the payee constituent. 153/- ( after 3 returns) Rs.000/ - Rs. Dishonour of electronic funds transfer request for insufficiency of funds in banks – Penalty Clause.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . or both for dishonour of electronic funds transfer as has been stipulated for dishonour of cheques under the Negotiable instruments Act. Lockers should be rented to Trusts only with the prior permission of the Regional Office B. Lockers should be rented only to respectable persons. branch should ensure that atleast one of the Original hirers continues to be a hirer in the new contract also. 3. Forms and Registers to be used: Locker Application and Agreement: F.51/. properly introduced to the Branch. Lockers should not be rented to minors. Lockers can be rented to: Individuals – Singly or Jointly including non resident Indians 2. 2. Whenever locker hirers wish to add/delete names in the existing locker account. 4. Break opening of lockers _____________________________________ _____________________________________ _____________________________________ . Other procedures for hiring locker • At the time of breaking open the locker there should be sufficient evidence to show that the hirer failed to pay the rent due in spite of registered notices. Addition/deletion of names 1. 303 X D.per operation over and above 24 free operations in a year • For delay in remittance of Locker rentals : Rs. Since the closing / opening of the locker is carried out only to facilitate addition/ deletion of names.20 per month as penalty • For Loss of Locker keys : Rs.125 AX Power of Attorney for Single Hirers: F. Branches need not collect any additional rent for the purpose of such closure and opening on account of addition / deletion of names C. 551 Hindu Undivided Family Letter F. the locker account should be closed and a fresh contract should be entered into with all the hirers in whose names the lockers are to be rented out. Lockers should not be hired with “Former or Survivor” clause. E. in the Safe Deposit Locker Agreement (Form 125 AX).in addition to break opening charges F.122 AX Power of Attorney for Joint Hirers: F 122 BX Trust Account Opening Form: F. Hiring Lockers 1.Career Guide for IOBians 90 _____________________________________ _____________________________________ _____________________________________ Safe deposit locker A. Charges • For Visits/ Operations : Rs.204/. 3. H. It is the responsibility of the custodian of the vault to check all lockers operated during the day and ensure that they are properly locked and that no articles / valuables are left behind by the locker hirers in the strong room/ locker room 2. should be removed to vacant locker and kept in the joint custody of the Manager and Deputy Manager of the Branch with the triplicate copy of the list of contents also deposited therein along with the articles. 4. The locker should be broken open by the representative mechanic of the manufacturers in the presence of 3 respectable outside witnesses and 2 officers of the Bank. 2. The lock of a surrendered locker must be interchanged with that of another vacant locker before being let out to another hirer and the entry in the Locker Key Register should be amended accordingly under the authorisation of the official concerned I. In case the key is not left behind the contents should be kept in a vacant locker and the key should be kept in the joint custody of the Manager and Deputy Manager or the custodian. Access to locker may be allowed to the hirer’s appointee or Authorised person only against a Power of Attorney in form 122 AX or Form 122 BX as the case may be (single hirer or joint hirers). Responsibility of the Officer in charge of the locker units 1.Career Guide for IOBians 91 _____________________________________ _____________________________________ _____________________________________ 1. 4. Access to Lockers 1. 3. In case the key is left in the unlocked locker the contents should be kept locked in the locker and the key should be kept in the joint custody of the Manager and Deputy Manager or the custodian. accompanied by a third party desires that the third party. In case the hirer who has left the locker unlocked is not immediately available the contents may be listed in the presence of the Manager. A declaration to that effect should be obtained in writing from the hirer to that effect. 3. Locker hirers must either operate the locker or surrender it where the lockers have remained not operated for more than three years for medium risk category OR one year for higher risk category 2. Deputy Manager the custodian and one or two customers. be allowed to accompany him inside the vault. pending the receipt of instructions of Regional Office/Central Office regarding their disposal. if any. In the case of joint accounts such notice should be sent to each person. G. the hirer may be permitted to do so at his specific written request and at his sole risk and responsibility 2. The contents. If the hirer. 1. A registered notice on form 122 J form 122 K as the case may be along with the quadruplicate copy of the list of contents should be sent to hirer(s). Procedures to be followed – When Locker left open by the Hirer. _____________________________________ _____________________________________ _____________________________________ . o Non traceable report issued by the police authorities o indemnity by the claimants/legal heirs / nominee Back to index _____________________________________ _____________________________________ _____________________________________ . 7. the same should be valued at the current market value for arriving at the value of claim. left by missing person could be settled without insisting on production of court order is fixed at ` 25.branch should insist for the order of the competent court presuming the missing person as dead. If the value of the articles exceeds ` 25. In addition to the above. 6. While taking inventory. • The order of the Competent Court will be accepted in lieu of death certificate for settlement of claims in favour of Legal heirs / nominee as the case may be along with other documents prescribed for settlement of deceased claim 3. After taking inventory of the Articles in Safe Deposit Lockers / Safe Custody left by the missing person. affidavit.subject to:• Considering the Claim for settlement only after lapse of 7 years from the date of his/her being reported missing. Satisfactory proof evidencing the death of the constituent(s) must be tendered along with the claim papers. as prescribed for the normal death claim.04. documents of title to landed property need not be valued at the current value of the property as the title can pass on to the claimants only through a subsequent legal procedure. 2.Career Guide for IOBians 92 _____________________________________ _____________________________________ _____________________________________ J. Settlement of Claim on account of missing persons 1. The threshold limit for the value of the articles kept in Safe Deposit Locker / Safe custody . In respect of missing persons. consent letter.2012 o FIR for reporting missing of the person. 5.000/.000/. etc except the death certificate. the presumption of death can be raised after a lapse of seven years from the date of his/her being reported missing. the claimant /legal heirs should also produce the following documents:- srn/04. branches are not required to open any sealed/closed packet(s) left in the Safe Deposit Locker /Safe Custody with the branch. Also. legal heir ship certificate. • The claimant /legal heirs should produce enquiry form. 4. Branch should also obtain all other documents prescribed for settlement of normal death claim (in favour of nominee or legal heirs) other than the death certificate. then the claim in respect of assets left by a missing person can be settled on the basis of the same. The value of the claim in respect of articles kept in Locker / Articles kept in Safe Custody is done by taking inventory of the articles in the presence of Legal heirs/Nominee along with 2 witnesses. • If the court presumes that he/she is dead. • The legal heirs or the nominee have to raise an express presumption of death of the depositor under Section 108 of the Indian Evidence Act before a competent court. 50.(Rupees Two Lakh Fifty Thousand Only). 24 x 7. The risk aspects involved in such transactions may be addressed by the banks through adequate security measures IOB Mobile Banking • “Carry your Bank in your Pocket – IOBmobile” • Website of IOB Mobile Banking https://www.000/(Rupees Fifty Thousand Only) and monthly limit of Rs.2.000/. • Mobile Banking service works on all GSM mobile phones that support SMS technology. • SMS alert service keeps you informed/ updated about the significant activities/ transactions taken place in your account(s).mobi • Mobile banking initiatives permits to access a Bank account and carry out various banking transactions and enquires. which allows customers to do banking activities from their mobile phone using SMS Technology.Career Guide for IOBians 93 _____________________________________ _____________________________________ _____________________________________ Mobile Banking RBI Instructions • Technology and Security Standard: Transactions up to Rs 5000/. • IMPS offers an instant. This amount is the overall limit for both IMPS and non-IMPS funds transfer through mobile banking. • Mobile banking is one the alternative banking channels. • The beneficiary does not need to disclose his/her account and other financial critical details to the sender. • Allows sender to send money to the mobile number of the beneficiary. Interbank Mobile Payment Service (IMPS) • IMPS is introduced in co-ordination with National Payments Corporation of India (NPCI).iobnet. _____________________________________ _____________________________________ _____________________________________ . • The customer can transact on IMPS subject to a daily cap of Rs.can be facilitated by banks without end-to-end encryption.50. What is "GPRS"? • The General Packet Radio Service (GPRS) is a new non-voice value added service that allows Mobile Phones to be used for sending and receiving data over an Internet Protocol (IP)-based network. inter-bank electronic fund transfer service through Mobile Phones. Remittance Process For Remitter (To Send Money): Login to the IOB Mobile Banking Software and select “Interbank System (IMPS)” under “Funds Transfer” Option. Register for our Bank’s Mobile Banking MPIN and Mobile Money Identifier (MMID) will be provided by the system. For Beneficiary (To Receive Money): Share the Mobile Number and MMID with the remitter Check the confirmation SMS for credit to the beneficiary’s account • Note the Transaction Reference Number for any future query srn/04. Enter Debit Account. Create / Approve Payee. Get Mobile Money Identifier (MMID) from the Receiving Bank.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . Registration Process for Beneficiary: • No need to register for Mobile Banking Service.04. Note the Transaction Reference number for any future query. Beneficiary Nickname. Beneficiary Mobile number should be linked to the account in the Beneficiary Bank. Remitter shall have GPRS enabled Mobile phones. Amount and Remarks Await confirmation SMS for the debit in the sender’s account Beneficiary’s account.Career Guide for IOBians 94 _____________________________________ _____________________________________ _____________________________________ • Pre-Requisites for IMPS Registration Process for Remitter: KYC and AML guidelines should be complied with. Vouch the transactions to the credit of the beneficiary’s account with us. To have uniformity. 2. immediately. • It is a channel through which funds remitted by customers are routed outward to the credit of other Bank Customers through RBI. RTGS messages are returned in R-42 format. B. • In the case of any inward RTGS customers’ transactions received by branches. C. LC payment. Return of Inward RTGS Transactions: • Returns of inward RTGS customer transactions should always be routed through inter-bank settlement.Career Guide for IOBians 95 _____________________________________ _____________________________________ _____________________________________ RTGS TRANSACTIONS Customer Window: A. they have the following options: 1. Bill Payments etc. In such cases. 4. immediately. at the time of receipt of RTGS inward transaction(s). If it is a local holiday for the branch or the branch has finished the ‘day end’ jobs. field tag 7495 should be filled in as follows. Inter-Bank Window: • It is a channel through which bank to bank settlement takes place like funding of clearing adjustment. on the same day. • There is no restriction on the amount to be transferred. our Software provides an option to keep the transaction in the Sundry Creditors A/c of the respective branch General Ledger. Returning of the inward messages should be effected within one and half hour of the time of receipt of the transaction. 2 lakh and above. Field Tag 7495 Line Number Line 1 Line 2 Line 3 Details provided RETURN UTR number of the original transaction Reason for return 3. • A customer can transfer funds through RTGS only if the amount is Rs. automatically. the entries shall be vouched to the credit of the customer’s account or returned back to the sender’s bank through the ‘return’ option available in the system (which reverses the entry in the Sundry Creditors _____________________________________ _____________________________________ _____________________________________ . back to the sender’s bank with the option ‘return’. • Routing customer payments under inter-bank mode is a gross violation of RBI norms and it is being viewed by the Regulator as a serious lapse. after the branch does the day begin jobs on the next working day. Return the inward transaction. if credits are unable to be afforded for any reason 9.40 0.001 and above Band 1 2 3 4 Charge per transaction Rs.10 and (iii) time-varying tariff as follows: Block 1 2 3 4 Time of settlement at the Reserve Bank of India From To 09:00 hours 12:00 hours After 12:00 hours 15:30 hours After 15:30 hours 17:30 hours After 17:30 hours Charge per transaction Rs.4000 (ii) transaction fee – Monthly Volume From To 1 25.000 100. Message format used in RTGS for transmission of messages in respect of customer transactions : R41 7. 6. (i) membership fee - Rs. Nil 1. The B+2 return discipline would require banks to afford credit to beneficiary accounts immediately upon completion of a batch or else return the transactions within 2 hours of completion of the batch settlement. Branches are not permitted to forward their originating RTGS customer transactions through Inter Bank Window.000 50. Levy of service charges by RBI • RBI levy service charges for all outward transactions of RTGS members.00 10.001 100.00 5.30 0.50 0. 5. • The RTGS service charges would have three components.Career Guide for IOBians 96 _____________________________________ _____________________________________ _____________________________________ and sends the message to the other Bank with full particulars of the inward message. 0.00 _____________________________________ _____________________________________ _____________________________________ .000 25.001 50. NEFT uses the Public Key Infrastructure (PKI) technology to assure endto-end security and the Indian Financial Network (INFINET) to connect bank branches for electronic transfer of funds 8. accounts. _____________________________________ _____________________________________ _____________________________________ . 1. o While branches originate a transaction the originator must ensure that the funds are either received from abroad or a NRE account maintained in India is debited. Transactions can do so only when the receiving bank is in agreement with our bank to receive funds through prior arrangement. the branch should select ‘NRE’.00 hrs After 12. If the field tag 7495 contains the word ‘NRE’. branches shall ensure that any inward credit in RTGS from other banks to credit of Govt.00 hrs to 12. The receipt from the other bank is through interbank (R-42 message type) mode with complete information . Inward transactions We are one of the accredited banks. in field tag 7495. branches have to use the interbank mode (R-42 message type) for such transfers 2. a. then the field tags 5516/5517 become mandatory and the details of the ordering institutions have to be given. before the transaction is originated.5.26+ST = 29 Above Rs. 9. o While remittance of funds to the credit of NRE accounts. Government Accounts – transactions 1. Is always supported by a chalan sent in either through Fax/post b.30 hrs to 16.00 hrs to 15. receiving credits to Govt.30+ST = 34 Rs. 3. In case “NRE’ is mentioned in field tag 7495.25+ ST = 28 Rs.50+ST = 56 Rs. instead of ‘FT’ available as default.5 lacs Rs. Therefore. In the field tag 7495 (sender to receiver information).00 lacs Rs.55+ST = 62 Remittance to the credit of NRE accounts o Only foreign inward remittances and remittance originated from NRE accounts in India are eligible for credits in NRE accounts. 2.Career Guide for IOBians 97 _____________________________________ _____________________________________ _____________________________________ D.30 hrs Rs. In such a case. the following steps should be followed. accounts.2 lacs to Rs.51+ST = 57 After 15. Outward transactions Branches originating outward Govt. Time settlement at RBI RTGS transactions E. Service charges levied from RTGS customers. it is assumed that the sending bank is certifying the source of fund and payment bank must ensure STP F.30 hrs Rs. CDCC and loan accounts. a nominal Current Account titled “NEFT-Non Customer Pool Account” has been opened in all CBS branches by ITD.00 Hrs A gap of one hour and thirty minutes is kept between customer timings and interbank timings to ensure that a customer transaction.00 Hrs to 13.000 for originating transactions. • Credits are accepted through NEFT to SB. • For the purpose of remitting such funds received by cash. branches should use the code no. NEFT remittances are received through a process known as Straight-Through-Process (STP). • No Service charges for NEFT transactions upto Rs.1 lac. is 641120 and module ID is 'CDCC'. if the branches are not able to apply funds to beneficiary’s account. • In order to remove ambiguity and to introduce the element of positive confirmation. • If the customer doesn’t provide e-mail id/mobile number. they should return the transaction (using the return mode available in the system) within two hours of the batch time _____________________________________ _____________________________________ _____________________________________ . 50. NEFT outward message to contain an additional mandatory field. branches should use branch e-mail id. NEFT TRANSACTIONS: • The National Electronic Funds Transfer (NEFT) system was launched in November 2005. wherein mobile number or e. • In order to facilitate non-customers to make remittances under NEFT and to have uniformity. would have to be returned to the sender’s account within one hour and thirty minutes after closing hours of Customer mode window.00 Hrs Saturday 9.mail address of the originating customer shall be populated.30 Hrs 9. otherwise. the receipts are liable to be rejected. All NEFT receipts shall have the new 15-digit number. The account No. • The remitter has to produce identification documents like Passport/PAN/ Driving license/Telephone Bill/certificate of identification issued by employer in India with details and photograph etc • In our CBS system.Career Guide for IOBians 98 _____________________________________ _____________________________________ _____________________________________ G. • In the case of inward NEFT transactions.00 Hrs to 15.00 Hrs to 16. • NEFT has no amount restrictions and accepts cash up to Rs. Cut of Timings (Outward & Inward return) • Days Customer transactions Inter bank transactions Monday to Friday 9. where credit cannot be afforded to the beneficiary. 50.30 Hrs 9.00 Hrs to 18. not exceeding two hours from the time of receipt of the requests.00PM. • In the event of delay in return of the funds transfer instructions for any reason whatsoever.1. • In cases of delayed credits. banks resort to value-dating of the credit in the customer’s account to avoid payment of penalty which is not in accordance with the instruction issued by RBI in this regard • During the NEFT operating hours. the Bank which converts the foreign currency into Rupees should only issue the FIRC. Cut of Timings (Outward & Inward return) Days Monday to Friday Saturday Customer transactions (hourly settlements) 9. either online or across the counters.00 PM. 10. particularly the beneficiary account number information rests solely with the remitter/ originator. _____________________________________ _____________________________________ _____________________________________ . 12 Noon.00PM.00AM. negligence or fraud on the part of an employee of the destination branch in the completion of funds transfer pursuant to receipt of payment instructions by the destination branch leading to delayed payment to the beneficiary. the responsibility to provide correct information in the payment instructions.e.1.00 PM. 4. the destination branch has to refund the amount together with interest at the current RBI LAF Repo Rate plus 2% till the date of refund. 6. 3. 11.Career Guide for IOBians 99 _____________________________________ _____________________________________ _____________________________________ under which the remittance was received.00 AM. preferably in the next available batch but.00 AM 12 Noon.00 PM.00PM 9.11. 7.00 AM. 10. 5. The return transactions are on B+2 basis • In the event of any delay or loss on account of error.00PM General: • FIRC should not be issued for remittances to NRE/NRO Accounts made through RTGS/ NEFT/NECS/ECS etc.00 PM.00 AM.00AM. in any case. • Banks have to put in place a mechanism which would enable NEFT participating banks to provide a positive confirmation to the remittance originator confirming the successful credit of funds to the beneficiary’s account. originating branches should endeavour to put through the requests for NEFT transactions received by them. • As per the revised guidelines from RBI. • Issuance of FIRC to the beneficiaries for inward remittance should be only by the Bank which has received the proceeds in Foreign Currency i. in the RTGS/ NEFT/ NECS/ ECS credit transactions. 2. the destination branch has to pay compensation at current RBI LAF Repo Rate plus 2% for the period of delay. well in advance.Career Guide for IOBians 100 _____________________________________ _____________________________________ _____________________________________ • Destination branches (branch which is crediting beneficiary accounts) will rely only on the account number information for the purpose of affording credit. all high value transaction of Rs. ************************** srn/07. • High value reporting : Branches have to report. • NECS/ECS-Credit o The destination branches would be held liable to pay interest at the current RBI LAF Repo Rate plus two percent from the due date of credit till the date of actual credit for any delayed credit to the beneficiary’s account even if no claim is lodged. • Banks should provide the option to the originating customer to choose between these NEFT & RTGS at the time of initiation of the funds transfer.5 Crores and above (both inflow and outflow) which are routed through NEFT/RTGS/Clearing along with the details to Money Market Desk at Treasury over telephone.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .05. • Lien Period : There is no cover for the first 45 days except in the case of death due to accident. • Maximum Maturity Age : 65 years • Minimum Period • Minimum loan amount : Rs. All Housing Loans (Existing & Future) may be covered under "Liability Insurance" 2. • The first named borrower’s life is covered. • All new and existing Retail Loan Borrowers between 18 years to 59 years of age as on last birthday are eligible for cover. the insurance company will pay the liability as per repayment schedule in the loan account and the property will be released from the mortgage without any burden on the dependants • Mode of Payment of Premium : One Time Single Premium Payment basis and must be debited to the Retail Loan account • Medical Examination: Medical examination is required depending on the quantum of loan and the age of the borrower.75 Lakh • Maximum Liability Covered : Sanctioned Limit of the Retail Loan or the outstanding liability as per repayment schedules whichever is lower. • Type of Cover : Risk Cover for Outstanding Liability • In the event of the death of the borrower.20 lakhs : Simple Declaration of Good Health No medical requirements _____________________________________ _____________________________________ _____________________________________ . 10000/- • Maximum Cover Available : Upto Rs. The premium is to be paid as per the age of the first named borrower. : 3 years age up to 57 years : Loan upto Rs.Career Guide for IOBians 101 _____________________________________ _____________________________________ _____________________________________ Liability Insurance for Retail Loans • Name of the insurance company offering the insurance : Life Insurance Corporation of India • Types of Retail Loans to be included under ‘Liability Insurance’ : 1. All other Retail Loans where immovable property is taken as security under Mortgage may be covered under ‘Liability Insurance’ • Single premium to cover the entire duration of the loan is payable up front at the time of disbursement of the loan or thereafter. • The premium can be loaded on to the loan amount and recovered over the loan duration as a part of the EMI. • Vouching for Scheme A is based on system generated lot entry. directly to Retail Banking and marketing Dept. proportionate premium will be refunded by the insurance company depending on the loan repayment period elapsed on request by the customer lodged through the bank.04.Career Guide for IOBians 102 _____________________________________ _____________________________________ _____________________________________ For others : Medical examination required • To simplify the procedure and quicken the processing time. 20 Lakh • At present it has been proposed to computerise the Scheme A only. • Foreclosure of the Loan : In case of foreclosure of loan. • Scheme A covers the borrowers (i) Up to 57 years for Loans up to Rs.(a) Liability Insurance with simple declaration – Scheme A and (b) Liability Insurance with Medical Requirements (as Scheme B).2013 Back to index _____________________________________ _____________________________________ _____________________________________ . the branches may forward the relevant application duly filled in along with the necessary documents required to be furnished and the premium by means of a DD drawn on CCO Chennai. Central Office. Liability insurance has been classified under two heads. • Commission : 10% of premium collected srn/04. favouring “LIC OF INDIA”.. • With regard to accounts that fall under Scheme B. The Simple Declaration of Good Health obtained from the borrowers can be tagged and kept along with the Loan documents at the Branch itself as it is required only in case of Claims. Housing Loan Educational Loan Vehicle loan Clean Loan MSME Loan customers Or any other Multipurpose loans for Individual/Proprietor or Joint partnership.A – Critical Illness will be eligible for Tax Rebate u/s 80 D Of Income Tax Act. Fixed Sum Insured (Loan sanctioned) 2.Career Guide for IOBians 103 _____________________________________ _____________________________________ _____________________________________ Loan Secure • Loan Secure is an Insurance Policy. 1. • NPA accounts can also be covered under this policy • Income Tax Rebate: Premium Paid Under Section . It offers protection for the Bank in the unfortunate event of borrower being affected by Named Critical illnesses (Major Medical Illness & Procedures) Personal accident and Permanent total disability Loss of job Fire and allied perils (Dwelling & Contents) Earthquake and Terrorism (optional covers) • Loan Secure can be extended to. • Two types of coverages are offered. Reducing Balance (Loan outstanding) • Age limit: Minimum 20 years & Maximum 50 years • Medical requirements: Free Medical Limit – upto Rs. • The product offers coverage for the period of 3 years which can be renewed thereafter for same period or for a minimum period of one year.1 Crore Pre Insurance Medical checkup for cases Rs.1969 • Bank’s commission: 15 % of the net premium Back to index _____________________________________ _____________________________________ _____________________________________ .1 Crore and above cases for pre-existing disease declared • Free Look in period: 15 days from the date of receipt of documents • Lien Period: 90 days from commencement of period of insurance • Suicide Clause is not covered but attempted suicide clause is covered. funeral expenses are reimbursed up to Rs. Andhra Pradesh. an amount of Rs. • As regards children. • In case of death in hospital. Ltd. Karnataka and Kerala will be serviced by M/s TTK Health Care TPA Pvt. 1000 is reimbursable per policy period • Cost of health check up allowed @ 1% of the sum assured after 3 continuous claim free years • In the case of hospitalization of children below 18 years. 50. CD and NRI customers and their immediate family members. Pondicherry. 5 lacs • Accidental death can also be covered for an additional premium. in the age group of 3 months to 65 yrs • sum insured ranges from Rs. the cover is available for male child up to 21 years and for female child upper age limit is up to 25 years or till their marriage whichever is earlier. • Upper age limit for entry is 65 years (subject to renewal cover available up to 80 years). and rest of India other than these States will be serviced by E-Meditek (TPA) Services Ltd. • This is a floater policy for our individual SB. Customers belonging to the states of Tamil Nadu. • Claims on account of pre-existing diseases will be covered only after 3 claim free years • Ambulance charges up to Rs. sudden illness and any surgery required in respect of any disease.000 to Rs. 1000 as out of pocket expenses to any of the parent is payable • Maternity benefit and baby care expenses are also reimbursed up to 5% of the sum insured • Treatment of NRIs in Indian Hospitals is allowed • Income tax benefit is available U/S 80D for the premium paid • Cashless access to networked hospitals is available through Third Party Administrator. there is no cover except in the case of death due to accident _____________________________________ _____________________________________ _____________________________________ . 1000 over and above the sum insured subject to original illness/accident claim admitted under this Policy • Does not cover domiciliary hospitalization expenses • for the first 30 days of enrolling the policy.Career Guide for IOBians 104 _____________________________________ _____________________________________ _____________________________________ IOB HEALTH CARE PLUS • A product for total family care including parents • A Health Insurance Scheme that provides for hospitalization expense in case of accidents. 0-25..Career Guide for IOBians 105 _____________________________________ _____________________________________ _____________________________________ • No Medical Examination required • Premium rates will be calculated based on the age of the Prime member (applicant). Different age-bands viz. 20% of co-payment is applicable on each and every claim of Insured above 55 years of age. • USGI has extended a grace period of 15 days from the due date for renewal of the policy.01. the completed age will be taken into consideration. Now branches can even renew Health Care Plus polices within 15 days from the date of expiry of the same srn/01.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . 26-35. 56-65. 36-45. • Co-Pay Concept: The concept of co-pay is introduced in the Scheme with regard to claim by members who are above 55 years. For fixing the Premium. 6670 and 71-80 are being introduced. 46-55. All payments towards purchase of Gold Coins should be routed through the respective retired staff member’s account e.9 % Price : At rate announced by our central office on daily basis and available in intranet & internet. a staff can purchase from all the branches of our bank in an accounting year should not exceed total value of Rs. Back to index srn/21.2013 _____________________________________ _____________________________________ _____________________________________ . Rs. • We are at present selling gold coins to the general public as well as our staff members including retired staff.000 and a declaration to this effect should be obtained from the staff member. 20. • Concession to retired staff members: a.(Rupees one lac only) and a declaration to this effect should be obtained from the concerned retired staff member d.000/.100. 8. Gold purchased from the Bank by the retired staff members are only for their personal use and not for resale • Branches should accept only DD/cheques/RTGS/NEFT towards sale of gold coins. 1.05. 25 per gram on the card rate b.10. The maximum amount. only 4 and 8 grams are permitted to be purchased c. • Ensure compliance of KYC norms including source of money for purchase – applicable for both customers and non-customers for each sale. d. 4. • Features of gold coin being sold by us.00. a. 25 per gram on the card rate b. All payments towards purchase should be routed through the respective staff member’s accounts.Career Guide for IOBians 106 _____________________________________ _____________________________________ _____________________________________ Sale of Gold coins • Retail sale of Gold was launched in our Bank in April 2006. The maximum amount a retired staff member can purchase from all the branches of our Bank in an accounting year should not exceed the total value of Rs. Denominations : wt. 2. Source : imported from Switzerland with international assaying certificate Fineness : 999. for purchase of 4 and 8 gram coins only Concessions to staff members c. 50 and 100 grams. A concession of Rs. • Banks should acknowledge the receipt of the duly completed form of nomination. Such acknowledgement should be given to all the customers irrespective of whether the same is demanded by the customers. _____________________________________ _____________________________________ _____________________________________ . permit banks to accept nomination in respect of Deposit accounts. • Nomination facility is not available for accounts of representative capacity. B. Safe custody of articles and Safe Deposit locker facility. • Nomination facility is available for joint deposit accounts also. • Only one individual in his / her personal capacity can be made as a nominee in respect of particular deposit account. • When a bank account holder has availed himself of nomination facility. cancellation and /or variation of the nomination. the same may be indicated on the passbook with the legend "Nomination Registered". Only thumb impression of the account holder is required to be attested by two witnesses. • Claim of the nominee has to be settled irrespective of the claim from the legal heirs unless restricted by court through a specific order. This may be done in the case of term deposit receipts also. • Nomination can be changed any number of times by the depositor. Deposit Accounts • Nomination is accepted for all types of deposits. General Nomination • Section 45ZA to 45ZF of the Banking Regulations Act. Branches to ensure that customers opening all deposit accounts including joint accounts with or without “Either or Survivor” mandate are offered the nomination facility. • Signature of the account holders in forms for making nominations.Career Guide for IOBians 107 _____________________________________ _____________________________________ _____________________________________ A. • Any individual can be nominated to receive the money. • Claim is settled in favour of nominee by closing the account and making the payment against the nominee's discharge on stamped receipt. • Variation and cancellation may be made any time during the currency of deposit. • Nomination facility is available only to individuals. • The nomination forms (DA1. for cancellation of nominations and for variation of nominations need not be attested by witnesses. DA2 and DA3) have been prescribed in the Nomination Rules. a/c. in addition to the legend “Nomination Registered”. banks should give to such nominee access of the locker and liberty to remove the contents of the locker in the event of the death of the sole locker hirer. branch may accept more than one nominee upto the limit of the number of joint hirers. • All other formalities are same as those applicable for deposit accounts. the bank should give access of the locker and the liberty to remove the contents jointly to the survivor(s) and the nominee(s). • In case the locker was hired jointly with the instructions to operate it under joint signatures. C. • Banks. • In case of joint hirers. it shall be lawful for the depositor making the nomination to appoint any person to receive the amount of the deposit in the event of death of the depositor/s during the minority of the nominee. • In the case of a joint deposit account the nominee's right arises only after the death of all the depositors. in case the customer is agreeable to the same. • If the sole locker hirer nominates a person. and the locker hirer(s) nominates person(s). the existing term deposit created by auto-Sweep will be allowed to be continued as normal deposits if the depositor so desires and at such time separate term deposit opening form with nomination should be obtained. • However when the depositor wants to withdraw from the special scheme. in the event of death of any of the locker hirers. E. _____________________________________ _____________________________________ _____________________________________ .Sole proprietor. forms the base account for which nomination is already available. D. Safe Custody • No nomination in respect of person jointly depositing articles for safe custody. Clarification on Nomination for Deposits created by Sweep in facility • No separate nomination need be obtained for the deposits created out of autosweep facility since the SB account from which auto sweep is made. • Where the nominee is a minor.e . Safe Deposit Locker • Nomination facility available both for individual and joint hirers.Career Guide for IOBians 108 _____________________________________ _____________________________________ _____________________________________ • In case of proprietary concern branches should extend nomination facility as the deposit held by a proprietary concern is construed as the one standing in the name of the individual i. they should also indicate the name of the Nominee in the Pass Books / Statement of Accounts / FDRs. • No nomination facility is available for Minor's Special Fixed Deposit Account and Minor's Special S.B. The inventory shall be in the appropriate Forms set out for the purpose. "anyone or survivor" or "former or survivor" or according to any other survivorship clause. the nominee and surviving hirer(s) may still keep the entire contents with the same bank. banks may enter into a fresh contract with nominee(s) / survivor(s) / legal heir(s) and also adhere to KYC norms in respect of the nominee(s) / legal heir(s).04. srn/04. • After removal of the contents of the locker as aforesaid. in case the nominee(s) / survivor(s) / legal heir(s) wishes to continue with the locker.2013 ********************** Back to index _____________________________________ _____________________________________ _____________________________________ . • Further. if they so desire.Career Guide for IOBians 109 _____________________________________ _____________________________________ _____________________________________ • In case the locker was hired jointly with survivorship clause and the hirers instructed that the access of the locker should be given over to "either or survivor". Preparing Inventory • Banks should prepare an inventory before returning articles left in safe custody / before permitting removal of the contents of a safe deposit locker. by entering into a fresh contract of hiring a locker. F. preceded by an inventory. banks should follow the mandate in the event of the death of one or more of the locker-hirers. • Banks are not required to open sealed/closed packets left with them for safe custody or found in locker while releasing them to the nominee(s) and surviving locker hirers / depositor of safe custody article. • Associations or companies engaged in the production or broadcast of audio news or audiovisual news or current affairs programmes through any electronic mode or form or any other mode of mass communication. editor. As the Preamble suggests. Ministry of Home Affairs has brought into force the Foreign Contribution (Regulation) Act. 5. it can accept foreign contribution only after obtaining prior permission of the Central Government. • Political party or office bearers thereof. of companies or body corporate. 2. With the coming into force of the Act.Career Guide for IOBians 110 _____________________________________ _____________________________________ _____________________________________ Foreign Contribution (Regulation) Act. • Correspondent. The following are the persons prohibited from accepting foreign contribution: • Candidate for election. columnist. the Foreign Contribution (Regulation) Act. to its citizens outside India and also to associate branches or subsidiaries outside India. printer or publisher of a registered newspaper. _____________________________________ _____________________________________ _____________________________________ . owner. cartoonist. • Correspondent or columnist. 2010 with effect from May 1. 6. government servant or employee of any entity controlled or owned by the Government. unless such person obtains a certificate of registration from the Central Government. religious or social program shall accept foreign contribution. 1976 stands repealed. • Organisations of a political nature as may be specified. no person having a definite cultural. 2010. The Act extends to the whole of India. owner of the association or company. 2011. 4. • Judge. educational. Foreign Contribution (Regulation) Act. editor. is intended to consolidate the law regulating the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith. registered or incorporated in India. cartoonist. economic. 3. • In case a person falling in the above category is not registered with the Central Government. 2010 1. • Member of any Legislature. Government of India. Registration for the acceptance of foreign contribution • Section 11 of the Act mandates that except as otherwise provided in the Act. unless such other person is also registered and had been granted a certificate or obtained the prior permission under the Act 9. 11. unutilised in the exclusive foreign contribution bank account of a person whose certificate of registration has been cancelled shall vest with the banking authority concerned till the Central Government issues further directions is the matter. person in prescribed which the such form 10. 8. Every bank has to send a report to the Central Government (through our Central Office) within 30 days of any transaction in respect of receipt of foreign contribution by any person who is required to obtain a certificate of _____________________________________ _____________________________________ _____________________________________ . • The Act makes it mandatory for every bank or authorised foreign exchange to report to such specified authority (a) the amount of foreign remittance (b) the source and manner in foreign remittance was received and (c) other particulars. The amount of foreign contribution lying. on persons registered and granted certificate or has obtained prior permission under the Act. the above condition would apply to the person to whom the fund has been transferred 12. Associations which were granted certificates of registration or prior permission under Section 6 of the Foreign Contribution (Regulation) Act 1976.Career Guide for IOBians 111 _____________________________________ _____________________________________ _____________________________________ • The Central Government is also authorised to suspend or cancel the registration so granted. from transferring such contribution to any other person. • However. no funds other than foreign contribution shall be received or deposited in such account or accounts. The Act imposes a prohibition. It states that every person who has been granted a certificate or given prior permission under Section 12 shall receive foreign contribution in a single account only through such one of the branches of a bank as he may specify in his application for grant of certificate. • Such person can open one or more accounts in one or more banks for utilising the foreign contribution received by him. • Every person who has been granted a certificate under Section 12 shall have such certificate renewed within six months before the expiry of the period of the certificate. will continue to be eligible to receive foreign contribution under the Act and such registration shall be valid for a period of five years from the date on which the Act came into force. in and manner as may be prescribed. In case a person whose certificate of registration has been cancelled transfers/has transferred the foreign contribution to any other person. 7. Foreign contribution to be received through a scheduled bank • Section of 17 is of special importance to bankers. 04. ************ srn/04. whether registered or not under the Act.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . It has been made a duty of the bank concerned to send a report to the Central Government within 30 days from the date of such last transaction in respect of receipt of any foreign contribution in excess of one crore rupees or equivalent thereto in a single transaction or in transactions within a duration of thirty days. by any person. but who was not granted such certificate or prior permission as on the date of receipt of such remittance. 13.Career Guide for IOBians 112 _____________________________________ _____________________________________ _____________________________________ registration or prior permission under the Act. • Twelve deposits can be made in a financial year. • Deposits completely exempted from wealth tax.500 and maximum is Rs. The account can also be continued with or without subscription. for further blocks of 5 years. Loan amount is limited to 25 % of at the end of two years preceding.2011). 1.Career Guide for IOBians 113 _____________________________________ _____________________________________ _____________________________________ Public Provident Fund Features • Only one account can be opened in the name of a person.f 01. • Withdrawal is permissible from seventh financial year from the year of opening. • Deposits are qualified for Income Tax rebate under section 80C of Income Tax Act.00. • A subscriber can close the account in the 16th financial year. • Fresh loan is not allowed when previous loan or interest thereof is outstanding.90/lakh (turnover basis). • The rate of interest charged on the loan taken by the subscriber of a PPF account on or after 01.45/ per receipt transaction and for payment Rs. Back to index _____________________________________ _____________________________________ _____________________________________ . limited to one in a financial year. if any whichever is less.e. • Bank earns an income of Rs.12.000/(w.12. • Loan is admissible from the third year. Interest is completely tax free.2011 shall be 2% per annum. • Amount of withdrawal is limited to 50 % of balance at the end of the fourth preceding year less amount of outstanding loan or 50% of balance at the end of immediate preceding year of withdrawal less amount of outstanding loan. • Minimum deposits in a year is Rs. CEILINGS IN CARD TRANSACTIONS • Cash withdrawal . 50000 Rs.40000 and above Rs.8000 Rs.( maximum credit limit) • The limits are to be fixed on the basis of income as follows Rs.10000/-. at present) (Interest applicable on Outstanding Balance only. 25000 Rs.5000 .500000/.50% of Credit Limit _____________________________________ _____________________________________ _____________________________________ . 40000 Rs. Interest Rate For Staff: Linked to BPLR. 8000 -less than Rs.20000 Rs.4000/. Rs.0% p. Our Bank’s Vendor for Credit cards : M/s Yalamanchili Consultancy Services (P) Ltd (YCS) 3.a. Billing and Payment Options Each card would be billed once in a month.100000 4.less than Rs. For Customers : 24.and above and up to Rs. • Classic Cards :The cards issued with the limit slabs of Rs. 20000.Career Guide for IOBians 114 _____________________________________ _____________________________________ _____________________________________ IOB’S INTERNATIONAL CREDIT CARD SCHEME 1. Our credit card is a global card valid not only in India and Nepal but also throughout the world 2. and Rs.) 7. Type of Credit Cards: • Our credit cards are affiliated to VISA International.are eligible for credit cards 5.60000/. Billing cycle: 21st of a month to 20th of succeeding month Billing date: 20th of every month Pay by date: 10th of subsequent month 6.40% of Credit Limit • Purchase at Jewellery Shops . The details of the billing cycle are given below.less than Rs. Staff eligibility: All confirmed employees of our Bank irrespective of the cadre with a minimum take home pay of Rs.25000/-. (Annualized.50000/- • Gold Cards : The cards issued with the limits of Rs. 10000 Rs. 2012 Back to index _____________________________________ _____________________________________ _____________________________________ . Spouse Rs.00 lac ii.25. Baggage Insurance: The baggage of IOB-VISA cardholders will be covered for a maximum sum of Rs. Spouse Rs. Insurance: • For Gold Cards: Personal Accident – Death due to Air crash Road / Rail • i.2.25000/-Rs. The maximum liability covered per cardholder during a policy year is Rs.25.00 lac ii.00 lac ii.while on travel.00 lac For Classic Cards : Personal Accident – Death due to Air crash Road / Rail i. srn/04.per year.Career Guide for IOBians 115 _____________________________________ _____________________________________ _____________________________________ • Per day Ceiling Cash through ATM – Gold cards /Classic cards Rs. • The Bank would compensate the customer forthwith without demur. strike.00 lac 11. Spouse Rs.000/. subsequently totally for a period of 30 days from the date of purchase for a maximum sum of Rs.15000/¬ • Per day cap on all transactions: 50% of credit limit 8. the bank would not only reverse the charge immediately but also pay a penalty without demur to the recipient – amount to twice the value of charges reversed.00 lac i. 2. riots.04. malicious damage. Self Rs. 2. where the bank is at fault. 10. Self Rs.2. Self Rs.00 lac ii.1. Self Rs.4. Compensation In case of erroneous debits arise out of fraudulent or other transactions.00 lac i. The coverage is operative whilst on inland travel outside the city/town of domicile. 1.25000/¬ 9.000/. • Where it is established that the bank had issued and activated the credit card without the written consent of the recipient. terrorism and theft during transit (from the place of purchase to the residence) and whilst kept/situated at the premises of the cardholder. • The Bank would compensate the customer even when neither the bank nor the customer is at fault and the fault lies somewhere in the system. Spouse Rs. Purchase Protection :Any item purchased through IOB-VISA is insured against the risk of fire.10. Minor accounts operated by Guardian. A or S. _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 116 _____________________________________ _____________________________________ _____________________________________ Debit Card 1. • For SB customers. • Visually impaired customers. 5.SIGNATURE 3. transactions exceeding 5 times in a month attract levy of service charges of Rs. Withdrawal of cash from the ATM owned by the account holding bank is free of charges to the customer. A or S (the customers who enjoy cash credit limits against deposits and other readily realizable securities (except shares) for personal purpose are eligible for Debit Cards. five transactions per month is permitted free of charges. 4. 2. Our Bank issues VISA Debit Cards with BIN ‘422132’. financial and non-financial. • CD – Proprietary Firms (Card will be issued in the name of the Proprietor). Withdrawal of cash from other Banks ATM is also possible. • SB – Individuals – Single. 100 & 500 denominations notes. • The number of free transactions permitted per month at other bank ATMs to Savings Bank account holders shall be inclusive of all types of transactions. Our bank issues the following 4 types of cards with VISA Debit Card . A or S. Eligible customers for using debit cards: Cards can be issued only in the name of Individuals.per transaction.Individuals – single. When a customer has forgotten his PIN and has keyed wrong PIN in any ATM for more than 5 times his card will be blocked temporarily. 7. The cash bins in our ATMs are configured for 50. • CC.Gold VISA Debit Card – Platinum VISA Debit Card . 6. • For SB Customers. maximum cash withdrawal would be Rs. 20/. The following account holders are eligible for issuance of Debit Card. financial or non-financial.10000 per transaction. The charges are given below: • For SB customers.Classic VISA Debit Card . • CD – Individuals – Single. These transactions shall be inclusive of all types of transactions. Career Guide for IOBians 117 _____________________________________ _____________________________________ _____________________________________ • In case of Non-SB customers. within a maximum period of 7 working days from the date of receipt of the customer complaint. in pre-defined slabs from 500 to 50000.. FAST CASH: The facility to withdraw cash. 8. The policy covers ATM cash up to RS. This compensation shall be credited to the customer’s account automatically without any claim from the customer. under “Bank’s Owned Model”. the amount wrongfully debited on account of failed ATM transactions.20/. 11. Cash Management. Accounts with continuous zero balance for 30 days gets automatically blocked. 16. 19. Any Customer is entitled to receive such compensation for delay. 10. there will not be any free cash withdrawals and cash withdrawals attract service charges of Rs. 17.100/-. 18. 13. 14. per day. Bank is now installing ATMs through M/s AGS Transact Technologies Ltd.20 lacs. so that the customer can leave immediately after collecting the card and cash.per transaction. M/s Scientific Security Management Services Ltd. The cash inside the ATM is covered under the master policy taken by Central Office. The complaints submitted by the customers are lodged in the online complaint register on the same day. _____________________________________ _____________________________________ _____________________________________ . 20. Further. 15. an agent of TCBIL is the Cash Replenishment Agency (CRA). It is mandatory for the banks to reimburse the customers. 21. Insurance for Cash in ATM. 12. 9. ATM branch is permitted to hold the captured card for two working days (excluding the day of capture) only. as outsourcing agent. ATM Maintenance. the bank shall pay compensation of Rs. The maximum number of currency notes our Bank’s ATM can dispense through the dispensing slit: 40. In addition to the Outsourced Model. on the same day when the bank affords the credit for the failed ATM transaction. to the aggrieved customer. Cards which have not been used for more than 6 months are automatically blocked with ‘Suspended’ status. by the issuing bank. only if a claim is lodged with the issuing bank within 30 days of the date of the transaction. Consumables Management and Cash Reconciliation are outsourced(for outsourced model): TCBIL. For any failure to re-credit the customers account within 7 working days from the date of receipt of the complaint. • In this option the transaction will be completed before the disbursement of cash and card will be ejected. Other Charges The following debit card holders are exempted from the payment of the above Annual Maintenance Fee.100 + service tax is collected from the Debit Card holders only from 2nd year onwards. cards which have been used atleast once during the past 6 months are renewed automatically. without becoming a joint holder for that account.e. All disputes regarding ATM failed transactions shall be settled by the issuing bank and the acquiring bank through the ATM System Provider only. Add on cards Add on card is an additional facility provided to SB account holders (except students accounts) that enables their family members to avail Debit card facility for the same account.20/= plus applicable Service Tax for re-issue of PINs to customers 25. 24. 23. • SB account holders under Special Schemes. The number of Add on cards that can be issued to an account will be restricted to one. Add on card holder must be KYC compliant and branches should obtain KYC documents The name of the Add on cardholder cannot be added in the same account. No fee is collected from the card holder till one year from the date of generation of the Debit card collect Rs. Only active Cards i. The issuing bank is entitled to claim such compensation paid to the customer from the acquirer bank. SB-SILVER and SBGOLD category. if the delay is attributed to the latter. 26. • SB account holders under SB-Students Scheme. The Add on card holder will be treated as a Mandate holder.Career Guide for IOBians 118 _____________________________________ _____________________________________ _____________________________________ 22. Add on cards can be issued even for Joint accounts with ‘E or S’ /‘A or S’ operations. But for Student cards validity period is 5 years. provided all the account holders sign the application. Renewal of cards Our Bank is presently issuing Debit cards with 10 years validity. • Staff Members Annual fee of Rs. _____________________________________ _____________________________________ _____________________________________ . By the same logic the ATM network operators shall compensate the banks for any delay on their part. like.100/= plus applicable Service Tax for re-issue of cards if lost/stolen/damaged and Rs. If the primary card is hot listed. • This requires authorisation from RBI under the Payment and Settlement Systems (PSS) Act 2007. • These Non-bank entities must have net worth of at least Rs 100 crore as per the last audited balance sheet. only Personalised cards will be issued Daily Cash withdrawal limit will be fixed separately for Add on cards. Add on card holders will also be allowed to make 5 free transactions in other Bank ATMs in a calendar month.75% of the transaction amount for value upto Rs 2000/-. • ATMs set up. Annual fee will be levied for usage of add on card from second year onwards.06.2012) Not exceeding 0. then the add-on cards also will get hot listed automatically. While Label ATMs: 28.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . ***************** srn/02. 27. Merchant Discount Rates (MDR) for transactions undertaken with debit cards as under: (RBI cir. Not exceeding 1% for transaction amount for value above Rs 2000/-. which is similar to regular card holders. based on the cards (debit/credit/prepaid) issued by banks.Career Guide for IOBians 119 _____________________________________ _____________________________________ _____________________________________ All the existing terms and conditions for normal Debit cards will apply for Add on cards also. • The WLAO's role would be confined to acquisition of transactions of all banks' customers and hence they would need to establish technical connectivity with the existing authorised shared ATM Network Operators / Card Payment Network Operators. Dt.05. owned and operated by Non-bank entities are known as “White Label ATMs" (WLAs).28. Add on cards will be issued free of charges like normal debit cards. • These entities provide the banking services to the customers of banks in India. However. 000 50.) Annual Maintenance fee VISA DEBIT CARD .CLASSIC Eligibility All SB accounts.per quarter in their accounts.150/.) for usage in Internet (E-com) Charges for issuance of Card (Rs. the card can be issued at the discretion of the Regional Heads and the review of the average balance can be done once in a quarter 20.000 50.) Daily limit (Rs) for usage in Merchant Establishments (PoS) Daily limit (Rs.50.per quarter in their accounts.plus service tax from the second year onwards _____________________________________ _____________________________________ _____________________________________ .GOLD • All SB accounts and CD/CC accounts in the name of Individuals or Proprietary concerns.000/. • For new accounts. the card can be issued at the discretion of the Regional Heads and the review of the average balance can be done once in a quarter • For new accounts.000 2.000 75.plus service tax from the second year onwards Rs.00.PLATINUM • All SB accounts and CD/CC accounts in the name of Individuals or Proprietary concerns.000 30.000/.100/.000 2.000 75.000 50.Career Guide for IOBians _____________________________________ _____________________________________ 120 _____________________________________ Debit Card Schemes Features VISA DEBIT CARD .75. with an average balance of Rs.plus service tax from the second year onwards Rs.00.000 NIL 150 200 Rs. CD/CC accounts in the name of individuals or Proprietary concerns Daily Cash withdrawal limit (Rs.100/. with an average balance of Rs. VISA DEBIT CARD . 000 personal travel accident insurance (or local currency equivalent).) Daily limit (Rs) for usage in Merchant Establishments (PoS) Daily limit (Rs. Daily Cash withdrawal limit (Rs. all the type of card holders should register for „Verify by Visa‟ (vbv) password.70.02. 2.70. • US$ 1.00.Career Guide for IOBians _____________________________________ Features Eligibility VISA DEBIT CARD – SIGNATURE • All SB accounts and CD/CC accounts in the name of Individuals or Proprietory concerns. with no renewal charges. • All Executives will be eligible for Platinum Cards and they can continue to avail the same even after their retirement. • For using the cards in internet for e_Commerce transaction. Staff members can continue to avail this facility subsequent to their retirement from our Bank. Insta cards can be issued under the category Classic Cards only.000 Eligibility for Staff members: • All Staff members will be eligible for Gold cards free of cost. • All General Managers/EDs/CMD will be eligible for Signature cards and can continue to utilise this facility subsequent to their retirement 2.) Remarks 121 _____________________________________ _____________________________________ 50.000 300 200 • High spending power with a no pre-set spending limit or a minimum of US$6000 spending limit.) for usage in Internet (E-com) Charges for issuance of Card (Rs.000 General • All the Debit cards issued by our Bank can be used abroad besides usage in our Country. the card can be issued at the discretion of the Regional Heads and the review of the average balance can be done once in a quarter. • For new accounts. with an average balance of Rs.) Annual Maintenance fee (Rs.2013 _____________________________________ Back to index _____________________________________ _____________________________________ .1 lakh per quarter in their accounts. • However. • All the Four type of cards can be issued as Personalised cards. srn/10. whichever is earlier. obtained by the deductees from their jurisdictional Assessing Officer. both PAN and Country Details to be furnished for claiming DTAA Tax rate.000 10 180000 10 2 30000 10 30.90 _____________________________________ _____________________________________ _____________________________________ . prevailing tax rate of 30. well in time. • These declarations are not valid if PAN has not been furnished. • For NRO Accounts.90% will be deducted.Career Guide for IOBians 122 _____________________________________ _____________________________________ _____________________________________ Tax Deduction at Source 1. before payment or credit to him. Otherwise. • Tax under Section 195 has to be deducted as per rates in force or the rates specified in the Double Taxation Avoidance Agreements (DTAA) entered into by the Central Government.1 Crore TDS rate(%) 10 1 75000 2 5.194A if the recipient submits a declaration in Form No 15G / 15H under the provisions of Section 197A. if any.000 194 C 194 H 194 I 194 J 195 Aggregate Consideration for all contracts during the year Commission or Brokerage Rent of land building or furniture Rent of Plant.000 Payment to Contractors – Consideration for single contract 30. whichever is lower. • Tax has to be deducted as per rates specified. • Tax is deductible if the payment / credit exceeds or is likely to exceed the threshold limits specified in various sections. • Tax is not deductible under Section 193. Threshold limits of payments for TDS purposes with effect from July 1. 2. The following are some basic rules pertaining to deduction of taxes at source: • Tax is to be generally deducted at the time of credit or payment. • Tax need not be deducted or can be deducted at lower rates based on certificate. 2010 are given below: Section Nature of payment 194 A Interest Payment Threshold limit (Rs) 10. machinery or equipment Fees for professional or technical services If the recipient is a non-resident noncorporate person and payment/credit may or may not exceed Rs. 20 If the recipient is a non-domestic company and aggregate payment or credit exceeds ` 1 Crore 42. Qtly TDS Statement for other payments to Residents in Form No 26 Q c.Residents in Form No 27 Q The quarterly statements shall be delivered to the Director General of Income-tax (Systems) or authorised persons i. Statement of deduction of tax – Submission of Quarterly E TDS Returns Quarterly Statement of Tax deduction shall be electronically submitted as follows :a. TIN facilitators. Quarterly TDS Statement for Salaries in Form No 24 Q b. Tax deducted in respect of income or amount credited or paid in the month of March shall be paid to the credit of Central Government on or before 30th day of April Tax deducted in other months shall be paid to the credit of Central Government on or before the seventh day from the end of the month in which the tax has been deducted. whichever is higher. Tax deducted shall be remitted only electronically by way of internet banking facility of any authorised Bank. which falls under the list of specified transaction or else have to furnish Form No 60. • Please note that where PAN is not furnished by the deductee. • All the Forms (Form No 60) so received have to be forwarded to the jurisdictional CIT (CIB).Career Guide for IOBians 123 _____________________________________ _____________________________________ _____________________________________ If the recipient is a non-domestic company and aggregate payment or credit does not exceed ` 1 Crore 41. Penalty for failure to deposit TDS: Simple Interest is payable @ 1. the tax has to be deducted at the applicable rates or @ 20%. Qtly TDS Statement for payments to Non .024 3. Penalty for Failure to deduct tax : Simple Interest is payable @ 1% ( per month or part) from the tax deductible date till date of actual deduction 4. The due dates for furnishing the above returns electronically to the Director General of Income tax ( Systems) or any other authorised person are :- _____________________________________ _____________________________________ _____________________________________ . on or before October 31 and April 30 respectively. • Customers have an obligation to furnish their PAN in every document pertaining to every transaction.e.5% (per month or part) for the amount from date of deduction till date of payment. 5. in two instalments covering the periods April 1 to September 30 and October 1 to March 31 of every year. 194 A) • Income tax should be deducted at source as aforesaid only if the interest paid or credited to each depositor exceeds Rs.16A shall be compulsorily generated through TIN central system and issued. SCSS or SB/CDCC-Liqui is closed. The maximum amount of fees leviable is up to the TDS amount. then applicable TDS will be deducted for the amount of interest paid. Duplicate TDS certificates can be issued if the original certificate is lost by the deductee and a request is made for issue of duplicate.16A is to be issued quarterly. projected-interest from all those accounts for the related financial year will be aggregated. and if it exceeds the threshold limit. 6.10. The same principle will be applied while applying the periodical interest made to the deposits on monthly / quarterly / half yearly basis.per day till return is filed. to be deposited before filing of such TDS return. • Whenever any account in Term Deposits.Career Guide for IOBians 124 _____________________________________ _____________________________________ _____________________________________ S No Quarter ending date Due date 1 30th June 15th July 2 30th September 15th October 3 31st December 15th January 4 31st March 15th May The certificate for deduction at source shall be in Form No 16 ( for Salaries ) and in Form No 16A ( Payments other than salaries) TDS certificate in Form No. Tax Deducted at Source on Interest on Time Deposits (Sec. Form No 16A shall have to be issued quarterly.000 (per branch) during the Financial Year. within 15 days from the due date for submitting quarterly E TDS returns. • If the interest on outstanding term deposits is insufficient to meet the TDS liability.16 is to be issued annually whereas TDS certificate in Form No.10. _____________________________________ _____________________________________ _____________________________________ . For defaults in furnishing statements fee @ Rs 200/. all the accounts with the same customer-id will be pooled.000 or not.and may extend to Rs 100000/-. the balance TDS will be deducted from the principal amount of the outstanding term deposits • Interest on Savings Bank and Recurring Deposits should not be considered while determining whether interest exceeds Rs. Penalty for failure to furnish TDS statements within the time prescribed or furnishing incorrect information in the TDS statements submitted shall be a sum which shall not be less than Rs 10000/. TDS certificate in Form No. PAN has been made mandatory for the following transactions. Any Banking Company to which Banking Regulation Act 1949 applies or a Co-operative Society engaged in carrying on the business of banking b. • It is mandatory for all the deductors to furnish particulars of amount paid or credited on which tax was not deducted in view of the furnishing of declaration in 15G/15H forms under sub-section (1) or sub-section (1A) or sub-section (IC) of section 197A of Income Tax Act . Any Company. 1999 in connection with tour to any foreign country • Making application to Banking Company to which the Banking Regulation Act.000 at any one time to a tour operator or to an authorised person as defined in clause( c ) of Section 2 of the Foreign Exchange Management Act . tax need not be deducted at source in such cases • if a person (not being a company or firm) furnishes a declaration in duplicate (in Form 15G) & senior citizens (in form 15H) to the effect that the tax on his estimated total income of the previous year shall be NIL. • Tax need not be deducted at source from interest paid on any other deposits held by NRIs.194. 7.Career Guide for IOBians 125 _____________________________________ _____________________________________ _____________________________________ • In the case of a Deposit in Joint names. 1961 by the payee. Rates for deduction of tax from interest paid on such NRO deposits are subjected to DTAA. a. the Industrial Finance Corporation and the State Financial Corporation c. Unit Trust of India e. • Interest paid or credited to the following depositors is not subject to tax deduction. e.A with reference to the limit of Rs. • Payment in cash exceeding Rs 25. Life Insurance Corporation of India d.10. the applicability of the provision of Sec. • Interest on minor deposits should be clubbed with interest on deposits of Parents/Guardian • For NRIs. for issue of debit card.g. _____________________________________ _____________________________________ _____________________________________ . Any Financial corporation established by or under a Central. only NRO deposits are subject to tax deduction at source.000 should be considered only in the hands of the first holder. 1949 apply or to any other company. State or Provincial Act. or a Co-operative Society carrying on the business of Insurance • wherever the depositors produce a valid Certificate issued by the Income Tax Officer (in Form 15 AA) authorising the bank not to deduct tax at source in respect of the person named in the Certificate. branches need not deduct tax at source. or The cases of "representative assessee" within the meaning of section 160 of the Act. • The above procedure shall not apply to: Any deposit in the bank held or dealt by the court or any other person appointed by the court in the capacity of being an administrator or receiver or any authority of similar nature. • The Registrar/Prothonotary and Senior Master or any person authorized by the court will pass the information furnished therein to the bank concerned for TDS properly in the name of the depositor(s) in accordance with the provisions of the Act. the depositor(s) shall submit a prescribed declaration with the court for record purpose and to facilitate the administration of TDS. or any deposit which has not been made by any specific depositor but has arisen due to attachment made by the Court.Career Guide for IOBians 126 _____________________________________ _____________________________________ _____________________________________ 8. srn/11.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . the amount of TDS shall be corresponding to each such depositor for the portion of interest accrued in its respective share in the total amount deposited and TDS certificates shall be accordingly issued by the bank. deduct tax at source on the interest accruing on the above mentioned deposit(s) as per existing procedure and at the rates in force. • Deposited in the bank directly or through the court. • The bank shall in accordance with the provisions of the Act. • The certificate of deduction of tax shall be issued by the bank in the name of ‘the depositor’. • If more than one person has been directed to deposit any specified amount. • At the time of making deposit of the amount ordered by the court.04. TDS on the deposits made as directed by court. • The originator is the account holder. the person (natural or legal) that places the order with the bank to perform the wire transfer. In some cases. or where there is no account. In these transactions there are ordering Bank and beneficiary bank.Career Guide for IOBians 127 _____________________________________ _____________________________________ _____________________________________ KYC/AML (Some points related to Foreign Exchange Transactions) • A bank shall refuse to enter into a correspondent banking relationship with ‘shell bank’. • In Interbank transfers and settlements both the originator and beneficiary are banks or financial institutions. • Shell Bank is a bank which is incorporated in a country where it has no physical presence and is unaffiliated to any regular financial group. intermediary bank may also be involved. In interbank transfers and settlements. • All cross-border wire transfers shall be accompanied by accurate and meaningful originator information. It may include any chain of wire transfers that has at least one cross-border element. • In case of non-cooperation from the customer. • The originator and the beneficiary may be the same person. • Information accompanying all domestic wire transfers of Rs. • No shell bank (Sh. the wire transfer requirements are exempted. • Cross-border transfer means any wire transfer where the originator and the beneficiary bank or financial institution are located in different countries. _____________________________________ _____________________________________ _____________________________________ . • Domestic wire transfer means any wire transfer where the originator and receiver are located in the same country. Bank) is permitted to operate in India.50000/. efforts shall be made to establish his identity and Suspicious Transaction Report (STR) shall be made to FIU-IND.and above must include complete originator information. Wire Transfers • Wire transfer is a transaction carried out on behalf of an originator person (both natural and legal) through a bank by electronic means with a view to making an amount of money available to a beneficiary person at a bank. Rishikesh $ 1000 3. • In all other cases. Chennai. AD branches in Metro centres (Mumbai.No $ 500 NIL • All purchases made by a person within one month may be treated as single transaction for the above purpose and also for reporting purposes. Requests for payment in cash in Indian Rupees to resident customers towards purchase of foreign currency notes and/ or Travellers' Cheques from them may be acceded to the extent of only US $ 1000 or its equivalent per transaction. higher amounts may be disbursed in cash. etc. Agra. Bangalore.may be paid in cash. Udaipur. However.Career Guide for IOBians 128 _____________________________________ _____________________________________ _____________________________________ • Money Transfer Service Scheme (MTSS) Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India. where the beneficiary is a foreign tourist. All other AD branches 4. irrespective of the amount involved. Kolkata. AD and NAD branches at Mahabalipuram.O. All other NAD branches Sl. for identification purpose the passport of the customer should be insisted upon _____________________________________ _____________________________________ _____________________________________ . Hyderabad and Ahmedabad) $ 1000 2.000/. Jaipur.Delhi. in exceptional circumstances. Only personal remittances such as remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible Amounts up to Rs. Puri. Shimla. Branches should make payment by way of 'Account Payee' cheque/demand draft only • In all cases of sale of foreign exchange. • A customer ID has to be created for the first transaction of the calendar month and the same ID will be referred for the subsequent transactions. Requests for payment in cash by foreign visitors/ Non-Resident Indians (walk in customers) may be acceded as detailed below: Location/Category of Branches Amount per tourist/travellor 1. or credited directly to the beneficiary's bank account.50. Panjim. Any amount exceeding this limit shall be paid only by means of cheque/ DD/ P. identity cards. if necessary. All suspicious transactions whether or not made in cash and by way of as mentioned in the Rules. 10 Lakh or its equivalent in foreign currency where such series of transactions have taken place within a month and the aggregate value of such transactions exceeds Rs. both domestic or international.10 Lakh.000/. • A copy of the identification document should be retained by the Branch.10 lakh or its equivalent in foreign currency where such series of transactions have taken place within a month.10 lakh or its equivalent in foreign currency all cash transactions. which will permit reconstruction of individual transactions (including the amounts and types of currency involved if any) so as to provide. where forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security or a document has taken place facilitating the transaction. • Bank shall ensure that records pertaining to the identification of the customer and his address (e. Such payment can also be received through debit cards/ credit cards/prepaid cards provided (a) KYC/AML guidelines are complied with. driving _____________________________________ _____________________________________ _____________________________________ .50. • In case of money changing activities and cross border Inward Remittance under Money Transfer Service Schemes. • Banks shall maintain for at least 10 years from the date of transaction between the bank and the client. all necessary records of transactions.Career Guide for IOBians 129 _____________________________________ _____________________________________ _____________________________________ and sale of foreign exchange should be made only on personal application and after verification of the identification document. all series of cash transactions integrally connected to each other which have been valued below Rs. Maintenance of record • Bank shall maintain proper record of transactions as mentioned below: All cash transactions of the value of more than Rs. • Banks and financial institutions are required to verify the identity of the customers for all international money transfer operations.10 Lakh or its equivalent in foreign currency. all series of cash transactions integrally connected to each other would have been valued below Rs. • Payment in excess of Rs. copies of documents like passports.towards sale of foreign exchange should be received only by crossed cheque drawn on the bank account of the applicant's firm/company sponsoring the visit of the applicant/ Banker's cheque/ Pay Order/ Demand Draft. all transactions involving receipts by non-profit organisations of value more than Rs. evidence for prosecution of persons involved in criminal activity.g. *********************** srn/11. card. PAN. are properly preserved for at least 10 years after the business relationship is ended/ from the date of cessation of the transactions/ business relationship.04.Career Guide for IOBians 130 _____________________________________ _____________________________________ _____________________________________ licenses.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .) obtained while opening the account. utility bills etc. undertaking transactions and during the course of business relationship. 5. Sodhani Committee: Report of the expert group regarding foreign exchange markets in India. Different categories of branches of an authorised dealer a) Category A Branches : These branches are not only permitted to handle all types of business but also maintain and operate bank’s NOSTRO Account at Foreign Centre. State Co – operative Banks. Sec. of India to make Rules on any matter to carry out the provisions of this Act. Co – Operative Banks. IFC d) Authorised Dealers category – IV Full pledged moneychangers eg: Thomas Cook (I) Ltd. c) Authorised Dealers category – III. as “Authorised Persons” to deal in foreign exchange 6. _____________________________________ _____________________________________ _____________________________________ . Scheduled commercial Bank. The Authorised persons can be broadly classified into four categories a) Authorised dealers category -I eg. 3.Career Guide for IOBians 131 _____________________________________ _____________________________________ _____________________________________ Foreign Exchange 1.2000.Certain financial and other institutions which are required to do foreign exchange transactions incidental to their activities eg: NABARD.46 of the Act empowers Govt. upgraded FFMCs etc. Trade Links etc… 7. b) Category B branches : These branches are permitted to handle all types of foreign exchange transactions and to operate bank’s NOSTRO Accounts. Permitted to do all kinds of foreign exchange transactions as per RBI guidelines. companies etc.47 of the Act authorises the RBI to make regulations to carry out the provisions and rules made there under. Sec. c) Category C branches : Not permitted to independently handle foreign exchange transactions. b) Authorised Dealers category – II eg: Well Run & financially strong RRB. This act extends to whole of India and also to all offices outside India which are controlled by persons resident in India. 1995. These branches can rout their FX transactions through their designated AD branches. 2. 4.. Sec 10 to 12 of the Act authorises RBI to appoint different banks. FEMA 1999 Effective from 01. They are authorised to deal only specified non-trade related current account transactions..06. known collectively as the eurozone. Hard currencies . 13. Germany 12. The countries are : 1. In the case of contravention of any provisions of FEMA or its rules a person can be imposed a penalty upto three times the sum involved in such contravention a) Amount of contravention is not quantifiable he can be charged a penalty upto Rs 2 lacs. (2) USD. It has come into existence from 01.1999. In case the contravention continues it can imposes an additional penalty of Rs 2000/.01. Greece 13.Euro. Austria 6. 11. Malta 17.000.per day for the period of such continuation 12. The Netherlands 4. Powers of RBI over Authorised persons Chapter IV Sn 13 provides that in case an authorised person contravenes the directions or fails to submit any report. Ireland 5. Estonia 9. Finland 10. France 11. RBI is empowered by FEMA to impose penalty up to Rs 10. _____________________________________ _____________________________________ _____________________________________ . Spain 3. Cyprus 8. b) In case the contravention is a continuing one further penalty Rs 5000/per day can be imposed on him. Italy 14. The Act provides four types of authorities for adjudication/ imposed penalties etc… 1) Adjudicating Authority 2) Special Director (Appeal) 3) Appellate Tribunal for Foreign Exchange (ATFE) to hear appeals against orders of 1 & 2 4) The high court to hear appeals against orders of Appellate tribunal 10. 15. Belgium 7. Luxemburg 16. Slovenia 2. 9.One which is freely convertible to other currencies (1) GBP. These currencies are also called convertible currencies.Career Guide for IOBians 132 _____________________________________ _____________________________________ _____________________________________ Offences under FEMA & penalties 8. DOE will refer to adjudicating authority. (3). Portugal Slovakia The states. JPY. (4). Directorate of Enforcement (DOE) is rested with the responsibility of detecting & investigating offences committed under FEMA. EURO: Common currency of 17 countries of Europe belonging to European Union. _____________________________________ _____________________________________ _____________________________________ . In case of buying transaction. Depending on the parties. These rates are applied when AD purchase a cheque/Bill on DP terms drawn at a foreign centre.. Inter Bank market (for cover deals) c. In case of sale transaction. No exact location for the market. International Market 15. normally. (a)TT Buying rate (b) Bills Buying rates (c)TT Selling rates (d) Bills selling rates. Buying & Selling rates The rate at which an AD buys and sells foreign exchange are called exchange rates. the AD buys/acquires foreign exchange from the customer and gives/parts with rupees. 17. TT Buying rate: This rate is applied to those buying transactions where the AD has already received the foreign exchange to the credit of its Nostro account Bills Buying Rate: This rate is applied to those buying transactions where AD will receive the foreign exchange to its Nostro account at a date subsequent to the date of buying.Career Guide for IOBians 133 _____________________________________ _____________________________________ _____________________________________ 14. the AD gives/delivers foreign exchange and takes payment in rupees. the market is divided into three segments. Other accounts are. Settlement of foreign exchange transactions: Through (a) Nostro accounts (b)Vostro accounts. 5 days a week. Foreign Exchange Markets Foreign Exchange market is over the counter market. 16. a. Buying & Selling of foreign exchange The terms “buy” & “Sell” always viewed from the AD’s point of view. TT Selling rate: applied to all transactions which do not involve handling of documents and other instruments for collection. (c) Loro accounts (d)Mirror account. Merchant market (Retail market) b. Eg. Trading takes place over telephone. 24 hours markets. Bill purchased/discounted transferred to collection account. TC selling rate = TT selling rate + a maximum of margin of 0.20 Indirect method: In this foreign currency is the variable unit Eg: INR 54. Cancellation of Forward Sale TTB 4. Clean Inward remittances TTB 1. 6.5%. 3. currency is the variable unit. DD) where cover has already been provided in NOSTRO 2. Refund of earlier inward remittance converted to rupees. Quoting Foreign exchange rates Direct method : This is called home currency quotation.5%. FC Note selling rate = TC selling rate + a maximum of 0. ii. Sale of foreign currency and other instruments notes and Travellers i. Issuance of TT/DD/MT etc. Import Bills payment. TT. like: i. ii. contract. the margin being handling charge for the bill. PURCHASE SALE 1. Cancellation of DD/MT/TT TTB 3. Purchase/discounting of bills BB 5. Where bank has to claim cheques. Bills selling rate is computed by adding margin (profit) to TT selling rate. Foreign currency notes and *** Travellers cheques TTS TTS TTS BS *** *** AT THE DISCRETION OF THE AUTHORISED DEALER. Cancellation of forward etc. (MT. Where drawing bank at one centre remits cover for credit to a different centre.20 = 1 USD Different types of transactions and rate application. Eg: 1 USD = In this home INR 54. cover after payment. 5. Back to index _____________________________________ _____________________________________ _____________________________________ . Bill purchased/discounted returned unpaid. Cancellation of purchase sent on collection.Career Guide for IOBians 134 _____________________________________ _____________________________________ _____________________________________ Bills Selling rate: applied when AD is required to handle such documents. purchase contract 4. 18. Realization of instruments TTB 2. iii. Value date in foreign exchange transaction MERCHANT MARKET SPOT FORWARD Rate decided today and transaction today Rate decided today Transaction at a future date INTER BANK MARKET INTERNATIONAL MARKET CASH TOM SPOT FORWARD Rate today & Settlement the same day/working day Rate today & Settlement on first succeeding working day Rate today & Settlement on second succeeding working day Rate today & settlement from the third succeeding working day 20. 54. The first rate is called the BID rate and the second is the Ask rate. Inter-Bank Rates: Let us assume that in the inter-bank market.41 This is called a two-way quote. Notional rate: Weekly average of daily rates for different currencies advised by FEDAI on every Friday. the quoting dealer conveys that he is prepared to buy 1 USD at Rs. By quoting like this.39 / Rs.41.39 and is prepared to sell 1 USD at Rs.Career Guide for IOBians 135 _____________________________________ _____________________________________ _____________________________________ 19. the quote for USD is as under: 1 USD = Rs.54.54. _____________________________________ _____________________________________ _____________________________________ .54. 12 % of the gross amount of currency exchanged for an amount upto Rs. RUBF. They should be used for values less than Rs. 1.1. 50. by applying the Bills Selling Rate prevailing on the date of transaction.000 only when finer rates are not warranted for non-customers or for negligible value transactions.04.e.10. subject to the minimum of Rs.012 % of the gross amount of currency exchanged for an amount exceeding Rs. In addition to the above. 24.Career Guide for IOBians 136 _____________________________________ _____________________________________ _____________________________________ Card Rates: Card rates are released by the Dealing room for various currencies and as per extant guidelines in our Bank. 21. the foreign currency liabilities.2012. when conversion of currency is there. 23. Service Tax at the following rate has to be paid w. WCFC. All the foreign currency assets (FCTL. 22. a.6.(1) Arbitrage in space (simple/two point) (2) Arbitrage in time (compound/3 point) (3) Arbitrage in interest rate _____________________________________ _____________________________________ _____________________________________ . Actual market rate will be applied only for our foreign currency assets and contingent liabilities. Rs. Notional Rate is applied for FCNR/EEFC/RFC/DDA Accounts. i.000/.) and foreign currency contingent liabilities (LC. Education Cess of 3% on Service Tax has also to be collected for all forex transactions from the customers.subject to maximum amount of Rs. etc. either manually or by the system shall be parked in the above new GL head 2377.000/. 3 types . • Service Tax thus collected from any customer for any forex transaction.00. calculated as above. But such transactions should also be reported to the dealing room and appropriate telex serial number should be obtained. RDBF. etc.00. c. WCDL.06 % of the gross amount of currency exchanged for an amount exceeding Rs.000.120 and 0. 660 and 0. 10. Rs.00.000/.e f. Service tax on Forex transactions In case of any foreign exchange transaction.000/-.00.) are maintained in the CBS – System. 0. 25. b. 01. The amount available in the said GL Head at the end of every month will be remitted to the Government account by Central Office before 5th of succeeding month. Buyers’ Credit.and upto Rs. Arbitrage: An arbitrage transaction consists of purchase of one currency in one centre & an almost simultaneous sale of the same currency in another centre with an objective to make profit due to the exchange difference prevalent in these two centres. LG.. 30/-. This is a profit & loss account item and not a balance sheet item. resident outside India) keeps his deposits with a bank in India. Asian Clearing Union (ACU) • A clearing union can be defined as a multilateral payments arrangement that periodically offsets the debits and credits accumulated by each member against the other members in the process of trade and other transactions. b.FEMA/1/RB/2000 classifies all capital account transactions into two categories namely (a) Prohibited transactions and (b)permissible transactions. TDR means certificate issued by the Central/State Govt. a resident in India buys/sells immovable property situated outside India b. A resident borrows foreign exchange from outside India c. education. _____________________________________ _____________________________________ _____________________________________ .e. 27. Current Account Transactions:A transaction which is not a capital account transaction is called a current account transaction.Career Guide for IOBians 137 _____________________________________ _____________________________________ _____________________________________ 26. Types of capital account transactions RBI. Eg: a. If a Non-resident (i. Capital Account transactions are transactions which alter the assets and liabilities (including contingent liabilities) outside India of person resident in India or assets and liabilities in India of persons resident outside India. vide notification No. A resident issued guarantee in favour of a non-resident d. Remittance for living expenses of parents/spouse/children living abroad. Transaction in foreign exchange All transactions in foreign exchange can be broadly classified into two categories namely (a) Capital Account transactions and (b) Current account transactions. Eg: a. Prohibited transactions:(1) Business of Chit fund (2) Nidhi company (3) Agricultural & plantation activities (4) Real Estate business and construction of farm houses (5) Trading in Transferable Development Rights (TDRs). in respect of land acquired for public purposes without monetary compensation and such certificates being transferable in part or whole. it is a revenue receipt for him. medical expenses etc. remittance in connection with travel. it changes his asset position in India and is therefore a capital account transaction. if an exporter receives payment towards the export made by him. Payment of imports c. • All instruments of payment are required to be denominated in Asian Monetary Unit. A Non-resident can be issued foreign exchange by way of TC/DD/currency note without limit to the debit of their NRE/FCNR accounts. Communication net work of federal reserve of US is FED-WIRE 35. • Settlement of such instruments may be made by authorised dealers through operation on ACU dollar Accounts 28. Cash payment is allowed against Foreign Travellers Cheque upto USD 1000 or equivalent per transaction. Bangladesh.Clearing House Automated Transfer System (Hongkong) _____________________________________ _____________________________________ _____________________________________ . 1974 at the initiative of the United Nations Economic and Social Commission for Asia and Pacific (ESCAP). • The Asian Monetary Unit is the common unit of account of ACU and is equivalent in value to one U. in tourist centre /towns and upto USD 500 in other centres 32. • The central banks and monetary authorities of Iran. 29. • Members of Asian clearing Union have to settle their transactions under ACU mechanism. • The Asian Monetary Unit may also be denominated as ACU dollar ACU Euro which shall be equivalent in value to one US Dollar and one Euro. Pakistan. 30. CHATS . CHIPS-UID Clearing House Inter-Bank Payment System – Universal Identification code 34. dollar.Clearing House automated Payment System (UK) 36. 31. Iran on December 9. as a step towards securing regional co-operation. Nepal. • The ACU is a system for clearing payments among the member countries on a multilateral basis.Clearing House Inter-Bank Payment System (in Newyork) 33. FED-WIRE. CHAPS .Career Guide for IOBians 138 _____________________________________ _____________________________________ _____________________________________ • The Asian Clearing Union (ACU) was established with its head quarters at Tehran. Sri Lanka. CHIPS . respectively. Resident can be issued /foreign exchange by way of TC/DD/currency note without any limit to the debit of their RFC/EEFC a/cs. Bhutan. Myanmar and Maldives are the members of the ACU. India. There is no restriction for inward remittance of foreign exchange from other countries to India except that it should be received through authorised banking channels.S. as the case may be.. M-Field Mandatory field in Swift Message O-field Optional field in Swift Message STP Straight through Processing SWIFT service is available for 24 hours in a day. 40. “ Currency Declaration form” ( CDF). However when he brings Foreign currency note above US$ 5000 or currency note & TC exceeding US$ 10000 (or equivalent) he is required to submit the customs authorities.US$ 2000 Foreign Coins . Bringing of Foreign Exchange to India A person is permitted to bring India Foreign exchange in the form of Currency cheque. Holding /Possessing of Foreign Exchange allowed . the bank shall pay the beneficiary interest @ 2 % over its savings bank interest rate. The bank shall also pay compensation for adverse movement of exchange rate. SWIFT No. The next 2 the code of the country. 41. SWIFT SWIFT Society for World Wide Inter-Bank Financial Telecommunication Registered Office/head quarters at LA HULPE in Brussels in Belgium. Where a SWIFT message fails STP Scrutiny. Bringing and taking of Indian Currency _____________________________________ _____________________________________ _____________________________________ .11 characters. REUTER – Computer based data Bank which provides access to real time data. 38. there will be a need for manual intervention which is technically known as REPAIR. as per its compensation policy. Standardized format MT stands for Message Type. the next two the code of the city and the last three – Branch code.Career Guide for IOBians 139 _____________________________________ _____________________________________ _____________________________________ 37. Foreign exchange can be released maximum 60 days ahead of the journey date. In case of delay. TC/in any other form without limit. 39. Of which first 4 indicates name of the Bank. Back to index 42. Compensation for delayed payment : Authorised Dealers shall pay or send Intimation. .any amount without any limit Foreign currency & Travelers Cheque up to US$ 2000. The limit is per person per visit. to the beneficiary in two working days from the date of receipt of credit advice / Nostro statement. if any.. Form – A4 In case of debit or credit exceeding USD 10000 – NRE accounts. Submission of returns. For every debit or credit.A2 Application form obtained for sale/release of foreign exchange for purpose other than for import for amount exceeding USD 25000 Form – A3 Application form sale/release of foreign exchange in INR by giving credit to Vostro A/c. Similarly a resident on a temporary visit abroad can bring in to India Indian currency up to Rs. However these limits are not applicable for visit to/from Nepal/Bhutan. STAT . 43. This return provides the details of international assets and international liabilities held by the country as a whole. (above USD 100000) IBS Quarterly International Banking Statistics.7500/-.10 Monthly Inflow/outflow of deposits in – RFC scheme.A1 Application form obtained from importers for sale/release of foreign exchange for the purpose of import. In respect of Nepal & Bhutan there is no limit of taking out or bringing in Indian Currency note up to denomination 100. ENC Fortnightly By AD branch to RBI giving details of export bills. (above USD 25000) BEF Half Yearly Statement giving details of default in nonsubmission of Bills of Entry in case of import. A resident can take outside India Commemorative coins not exceeding two coins each. XOS Half Yearly Details of all eXport Bills OutStanding beyond prescribed period of 6 months. EBW Half yearly Details of write offs of export bills direct to Regional Office of RBI Form . Similarly currency of Nepal & Bhutan can be taken out of India or brought to India without any limit. exceeding USD 25000. _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 140 _____________________________________ _____________________________________ _____________________________________ A resident can send or take out side India Indian Currency up to RS 7500/per person. Form . 44. Packing credit can be given at a concessional rate for a maximum of 360 days. FIRC (Foreign Inward Remittance Certificate) FEDAI advised that FIRCs may be issued at the written request of the customer specifying the purpose for which the same has been requested. insurance premium is borne by the exporters/customers. residents and non-residents. importers. SME units and resident individuals are permitted to book forward contracts even without underlying contract subject to conditions. • AD branches should issue FIRC on security stationery only duly signed by authorized officials in respect of the following cases. duly signed by authorized officials. Ad branches should obtain the forward contract agreements for every contract entered into with the customer and forward a copy of the same to Treasury(foreign) on the same day without fail.00 Crore (discretionary limits) in case of pre-shipment advances/post shipment advances. Inward remittances covering FDIs/FIIs • Validity of FIRC should clearly specified in security paper as 1 year • FIRC is issued for record purpose only and is not to be utilized for repatriation purpose. _____________________________________ _____________________________________ _____________________________________ . The same is available to all exporters. • As per ECIB policy. 47. on their letter head. Forward contracts: are hedging tools to insulate against the foreign exchange movements. no prior approval from ECGC is required subject to the terms and conditions of the ECIB. the premium under Whole Turnover post shipment has to be borne by Banks themselves. the same is to be notified to ECGC and their prior approval is to be obtained. incorporating full particulars of the remittance. Forward contracts can be booked based on the underlying contract or based on the past performance subject to conditions. Receipt of export proceeds by an AD bank other than the one who handles/handled GR form c. 46. insurance cover up to Rs. a. • The pre-shipment and post-shipment Export advances (excluding LC bills) of IOB are covered under Export Credit Insurance for Bank (ECIB). • For any limit sanctioned to any exporter customer exceeding the above discretionary limit. Advance payment for exports b. Export Credit Guarantee Corporation of India Ltd. For packing credit cover. • In all other cases. AD branches may issue a suitable certificate.Career Guide for IOBians 141 _____________________________________ _____________________________________ _____________________________________ 45.1. • As per RBI directive. For any other purpose. ii. For the purpose of computing the working days. For or on taking up employment outside India. or c. otherwise than a. Saturdays will be excluded. It states that: Persons Resident in India means: i. branch or agency outside India owned or controlled by a person resident in India. A person residing in India for more than 182 days during the course of the preceding financial year but does not includeA. For on taking up employment in India. An office. An office. the loss so incurred will be passed on to the branch. iii. For carrying on outside India as business or vocation outside India. If the contract is cancelled on the 3rd day at the instance of Treasury(foreign). Persons Resident in India: Section 2(u) of FEMA provides the definition of “Persons Resident in India”. in such circumstances as would indicate his intention to stay outside India for an uncertain period. If for any reason. the delivery could not be made by the customer before the due date of contract.Career Guide for IOBians 142 _____________________________________ _____________________________________ _____________________________________ AD branches should diarise for the due date of the contracts and ensure delivery as per contract terms. exporters are allowed to cancel and rebook forward contracts to the extent of 25 percent of the contracts booked in a financial year for hedging their contracted export exposures 48. or c. Forward contracts will be automatically cancelled on the 3rd working day after the maturity date of the contract. for recovery from the customer. A person who has gone out of India or who stays outside India. _____________________________________ _____________________________________ _____________________________________ . A person who has come to or stays in India. For any other purpose. delivery should be made after the due date. branch or agency in India owned or controlled by a person resident outside India iv. or b. AD branches should inform Treasury (foreign) about the same. in such circumstances as would indicate his intention to stay in India for an uncertain period. For carrying on in India a business or vocation in India. Any person or body corporate registered or incorporated in India. in either case: a. which will amount to cancellation. At no cost. in either case. B. or b. as hitherto. foreign security or any immovable property situated outside India if such currency. when a person resident outside India. 2001. 53. transfer or invest in foreign currency.P. employed by a foreign company outside India and in either case on deputation to the office/branch/subsidiary/joint venture in India of such foreign company may open. the said person has to file with the Reserve Bank a declaration in the form IPI to those regulations. resident in India. by credit to such account. who has established in India in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations. 55. hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/branch/subsidiary/joint venture in India of such company. The method of discharge of liability by the non-resident guarantor under the guarantee and the subsequent repayment of the liability by the principal debtor would continue. not later than ninety days from the date of such acquisition 50. (DIR Series) Circular No. Facility of non-resident guarantee under the general permission for non-fund based facilities (such as Letters of Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC) ) entered into between two persons resident in India is available.banks may be guided by the RBI Reference rate announced on the Reserve Bank’s web site at around 12:30 pm (instead of indicative rates announced by FEDAI at 12 noon). 52. being an employee of a foreign company or a citizen of India. For the purpose of converting foreign assets/deposits for reporting in Form A Return – for maintenance of CRR.05. 2000. as detailed in A. Remittance of salary A citizen of a foreign state. A person resident in India is free to hold. security or property was acquired. own. provided that income tax chargeable under the IT act 1961 is paid on the entire salary as accrued in India srn/01. A person resident outside India who is a citizen of India or a Person of Indian Origin (PIO) acquiring immovable property in India under General Permission need not submit Form IPI. 28 dated March 30. The change may be brought into effect from the reporting fortnight ending July 13. office or other place of business. acquires any immovable property in India in accordance with the provision of said regulation. 54. excluding a liaison office. 2012.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . An investor can retain and reinvest the income earned on investments made under the Liberalised Remittance Scheme.Career Guide for IOBians 143 _____________________________________ _____________________________________ _____________________________________ 49. 51. a branch. held or owned by such person when he was resident outside India or inherited from a person who was resident outside India. Eligibility Any person resident outside India (as per Section 2 of FEMA). Change of resident status of account holder (a) From Resident to Non-resident • When a person resident in India leaves India for a country (other than Nepal or Bhutan) for taking up employment or for carrying on business or vocation outside India or for any other purpose indicating his intention to stay outside India for an uncertain period. Types of accounts NRO accounts may be opened / maintained in the form of. In case the account has been maintained for a period more than six months.Resident (Ordinary) Account. applications for repatriation of balance will have to be made by the account holder concerned on plain paper to the Regional Office concerned of the Reserve Bank. may open and maintain NRO account with an Authorised Dealer or an Authorised bank for the purpose of putting through bonafide transactions denominated in Indian Rupees.Career Guide for IOBians 144 _____________________________________ _____________________________________ _____________________________________ Non-Resident Ordinary Rupee (NRO) Account A. • Opening of accounts by entities of Bangladesh / individuals & entities of Pakistan nationality / ownership require prior approval of the Reserve Bank. • Opening of accounts by individual/s of Bangladesh does not require prior approval of the Reserve Bank. B. his existing account will continue as a resident account. a. _____________________________________ _____________________________________ _____________________________________ . • When a person resident in India leaves for Nepal or Bhutan for taking up employment or for carrying on business or vocation or for any other purposes indicating his intention to stay in Nepal or Bhutan for an uncertain period. (a) current (b) savings (c) recurring or (d)fixed deposit accounts D. other than interest accrued thereon. b. The balance in the NRO account may be converted by the Authorised Dealer bank into foreign currency for payment to the account holder at the time of his departure from India provided the account has been maintained for a period not exceeding six months and the account has not been credited with any local funds. Such account should not be designated as Non-Resident (Ordinary) Account (NRO).Residents The accounts may be held jointly with residents and / or with non-residents C. • Foreign nationals of non-Indian origin on a visit to India can open NRO account with funds remitted from outside India through banking channel or by sale of foreign exchange brought by him to India. Joint Accounts with Residents / Non. his existing account should be designated as a Non. The resident Power of Attorney holder is not permitted to repatriate outside India funds held in the account other than to the non-resident individual account holder nor to make payment by way of gift to a resident on behalf of the non. and b. or for carrying on business or vocation or for any other purpose indicating his intention to stay in India for an uncertain period. Remittance of current income • Remittance outside India of current income like rent. Remittance outside India of current income in India of the non-resident individual account holder.Career Guide for IOBians 145 _____________________________________ _____________________________________ _____________________________________ (b) From Non. Facilities to a person going abroad for studies • Persons going abroad for studies are treated as Non-Resident Indians (NRIs) and are eligible for all the facilities available to NRIs. Sri Lanka. E. etc. Bangladesh. Operation of NRO account by Power of Attorney holder • Powers have been delegated to the authorized dealers/banks to allow operations on an NRO account by Power of Attorney granted in favour of a resident by the non-resident individual account holder provided such operations are restricted to: a. as applicable. • The remittance facility in respect of sale proceeds of immovable property is not available to citizens of Pakistan. the account should continue to be treated as non-resident during such visit. Nepal and Bhutan. c. Educational and other loans availed of by them as residents in India will continue to be available to them as per FEMA Regulations G. _____________________________________ _____________________________________ _____________________________________ . net of applicable taxes. Transfer of Funds from Non-Resident Ordinary (NRO) account to NonResident External (NRE) Account • NRI shall be eligible to transfer funds from NRO account to NRE account within the overall ceiling of USD one million per financial year subject to payment of tax. Iran. interest. All local payments in Rupees including payments for eligible investments subject to compliance with relevant regulations made by the Reserve Bank. • The facility of remittance of sale proceeds of other financial assets is not available to citizens of Pakistan. China. pension. Bangladesh.resident to Resident • NRO accounts may be re-designated as resident Rupee accounts on return of the account holder to India for taking up employment.resident account holder or transfer funds from the account to another NRO account F. in India of the account holder is a permissible debit to the NRO account. Nepal and Bhutan H. • Where the account holder is only on a temporary visit to India. Afghanistan. dividend. Career Guide for IOBians 146 _____________________________________ _____________________________________ _____________________________________ • Such credit of funds shall be treated as eligible credit to NRE accounts.02. applicable to vardhan scheme. • Senior citizens are not eligible for interest. srn/11. H.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . TDS on interest income • Government of India has entered into ‘Double Tax Avoidance Agreements’ (DTAA) with certain countries to mitigate the hardship faced by non residents who are subject to tax in both the countries • Tax to be deducted at source shall be at the general rate prescribed (30%) or the rate specified in DTAA whichever lower plus applicable surcharge/cess. under NRO term deposits. where applicable. • Non-Resident Indian (NRI). i. (Individuals / entities of Bangladesh / Pakistan nationality/ ownership require prior approval of RBI) 2. Currency in which account is denominated Indian Rupees 5. Such credit of funds shall be treated as eligible credit to NRE accounts. issued against encashment of foreign currency to the NRE account of the NRI account holder where the instruments issued to the NRE account holder are supported by encashment certificate issued by AD Category-I/II. Joint account • Joint accounts can be opened in the names of two or more non-resident individuals. The notes are tendered to the authorised dealer in person by the account holder himself and the authorised dealer is satisfied that account holder is a person resident outside India. Proceeds of account payee cheques in addition to demand drafts/bankers cheques. bank drafts etc c. Transfers from other NRE/FCNR accounts. f. d. NRI shall be eligible to transfer funds from NRO account to NRE account within the overall ceiling of USD one million per financial year subject to payment of tax. may be permitted to open NRE / FCNR(B) account with their resident close relative on ‘former or survivor’ basis. The nominee can be a resident or a non-resident or even a foreign national. the amount was declared on a Currency Declaration Form (CDF). Proceeds of personal cheques drawn by the account holder on his foreign currency account and of travelers cheques. and ii. provided. e.Career Guide for IOBians 147 _____________________________________ _____________________________________ _____________________________________ Non-Resident External Rupee (NRE) Account 1. Non-Resident Indian (NRI) and Persons of Indian Origin (POI) are eligible to open NRE accounts. ADs are delegated with powers to allow repatriation of settled funds to the non-resident nominee 4. Eligible credits in the NRE accounts a. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder. _____________________________________ _____________________________________ _____________________________________ . as applicable. Rupee proceeds of remittances to India in any permitted currency b. Proceeds of foreign currency/bank notes tendered by account holder during his temporary visit to India. 3. Nomination facility Available. i. Interest on Government securities and dividend on units of mutual funds. Fixed Deposit 8. Current. 2 years to less than 3 years.000/. Refund of application/earnest money made by the house building agencies on account of non-allotment of flat/plot. provided the original payment was made out of NRE/FCNR account of the account holder or remittance from outside India through normal banking channels and the authorised dealer is satisfied about the genuineness of the transaction. An individual resident in India may borrow a sum not exceeding USD 250. _____________________________________ _____________________________________ _____________________________________ . the repayment of such loan by the resident individual may be allowed to credit in NRE / Foreign Currency Non-Resident (Bank) [FCNR(B)] account of the lender concerned. 6. 2000. if any (net of income tax payable thereon). subject to the conditions mentioned in Regulation 5(6) of Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations. k. provided the securities/units were purchased by debit to the account holder’s NRE/FCNR account or out of inward remittance through normal banking channels. j. if the amount of subscription was paid from the same account or from other NRE/FCNR account of the account holder or by remittance from outside India through normal banking channels. If the loan to the resident individual was extended by way of inward remittance in foreign exchange through normal banking channels or by debit to the NRE / FCNR(B) account of the lender. Refund of share/debenture subscriptions to new issues of Indian companies or portion thereof. Period for fixed deposits Deposits are accepted for the following maturities. Interest accruing on the funds held in the account. provided the securities/units were originally purchased by debit to the account holder’s NRE/FCNR account or out of remittances received from outside India in free foreign exchange. Repatriability Balance available in NRE accounts is repatriable 7.Career Guide for IOBians 148 _____________________________________ _____________________________________ _____________________________________ g. l. Any other credit if covered under general or special permission granted by Reserve Bank. Type of Accounts Savings. m.or its equivalent from her / his close relatives outside India. together with interest. Maturity proceeds of Government securities including National Plan/Savings Certificates as well as proceeds of Government securities and units of mutual funds sold on a recognised stock exchange in India and sale proceeds of units received from mutual funds. h. Recurring. 1 year to less than 2 years. • If an overdue deposit renewed after paying the interest for the overdue period is closed before completing the minimum period for which such deposits are accepted. no interest is paid on the deposit and the interest paid for the overdue period is also recovered. Fixed Deposits : • Rate of interest in respect of the accounts is deregulated. The POA holder is allowed to withdraw for local payments. the amount left unclaimed with the bank will attract savings bank rate of interest • Conversion of NRE deposit into FCNR(B) deposit and vice versa before maturity should be subject to the penal provision relating to premature withdrawal • Banks are not permitted to allow the benefit of additional interest rate on any type of deposits of non-residents including staff members b.Deposit can be renewed from maturity date and the interest rate will be appropriate rate on the date of maturity. interest rates offered by banks on NRE and NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits • If a Fixed Deposit Receipt matures and proceeds are unpaid. 12.Career Guide for IOBians 149 _____________________________________ _____________________________________ _____________________________________ 3 years to less than 5 years 5 years up to 10 year 9. _____________________________________ _____________________________________ _____________________________________ .Interest for the overdue period is paid separately at simple rate prevailing on the date of deposit or renewal whichever is lower applicable for the period of overdue. Operations by Power of Attorney holder: For operational convenience. the NRI depositor can authorise a person through a power of attorney to operate his account. Savings Bank Account Interest rate on NRE/NRO Savings Bank accounts is deregulated. However. 10. • 11. Rate of Interest a. Foreclosure of term deposits Deposits for any amount: 1% less than the applicable interest for the period run is payable Renewal of Overdue Deposits • Overdue period up to and inclusive of 14 days . • The deposit amount should be placed as fresh deposit at least for the minimum period for which such deposits are accepted. • Overdue period is more than 14 days . • Transfer funds from the account to another NRE account.Career Guide for IOBians 150 _____________________________________ _____________________________________ _____________________________________ The power of attorney holder is not permitted to • Repatriate funds outside India from the account to a person other than the depositor himself. • Make payment by way of gift to a resident on behalf of the account holder.05.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . • Advances to third parties against such deposits should not be granted on the basis of Power of Attorney 13. the margin requirement shall be notionally calculated on the rupee equivalent of the deposits • The facility of premature withdrawal of NRE/FCNR deposits shall not be available where loans against such deposits are to be availed of. Loans • Rupee loans in India and Foreign currency Loan in India & outside India can be allowed to depositor/third party without any ceiling subject to usual margin requirements • In case of FCNR deposits. srn/01. 1956) on ‘former or survivor’ basis. may be permitted to open FCNR(B) account with their resident close relative (relative as defined in Section 6 of the Companies Act. Australian Dollar. Recurring Deposits should not be accepted under the FCNR(B) Scheme. In our Bank the Scheme covers deposits in Pound Sterling. e. Canadian Dollar. b. US Dollar. Nature of Deposit The deposits under the Scheme mean “term deposits” received by the bank for a fixed period and withdrawable only after the expiry of the said fixed period and includes Reinvestment Deposits and Cash Certificates or other deposits of similar nature. (DIR Series) Circular No. Japanese Yen. c. is permissible without the prior approval of Reserve Bank of India. AD banks in India are permitted to accept FCNR (B) deposits in any permitted currency by RBI A. 36 dt. C. It may be noted that 'Permitted currency' for this purpose would mean a foreign currency which is freely convertible as defined in FEMA. EURO.P. _____________________________________ _____________________________________ _____________________________________ . Newzealand Dollars(NZD) and Swiss Francs(CHF) from non-resident individuals of Indian nationality or origin (NRIs). Non-Resident Indian (NRI). D.Career Guide for IOBians 151 _____________________________________ _____________________________________ _____________________________________ Foreign Currency Non Resident (B) Deposits – FCNR (B) A. B.000 NZD : 1000 CHF : 1000 d.October 19. Repatriation of funds in foreign currencies is permitted. The deposits should be accepted under the Scheme for the following maturity periods: (a) One year and above but less than two years (b) Two years and above but less than three years (c) Three years and above but less than four years (d) Four years and above but less than five years (e) Five years only e. of the same account holder. Exchange risk in respect of FCNR(B) accounts is to be borne by the bank. Other features of the Schemes a. Minimum amount of Deposits: USD : 1000 AUD : 1000 GBP : 1000 CAD: 1000 EUR : 1000 JPY : 100. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder. Transfer of funds from existing NRE accounts to FCNR(B) accounts and vice versa. 2011. 3. Banks on request from the depositor should permit premature withdrawal of deposits under the FCNR(B) Scheme. Conversion of FCNR(B) deposits into NRE deposits or vice-versa before maturity should be subject to the penal provision relating to premature withdrawal Recovery of Swap Charges 1. the existing rules will be applied (SWAP charges or Penal interest whichever is higher will be recovered). 4.000 and above/EUR 50. Where premature withdrawal of FCNR(B) deposits take place before completion of the minimum stipulated period of one year. Branches should note that no interest is payable on such deposits as the deposit would not have run for the minimum period of 12 months as per RBI stipulation. 2. at intervals of 180 days each and thereafter for the remaining actual number of days. Manner of payment of Deposit a.Career Guide for IOBians 152 _____________________________________ _____________________________________ _____________________________________ E. G. b. ii. The interest on the deposits accepted under the scheme should be paid on the basis of 360 days to a year. the depositor will have the option to receive the interest on maturity with compounding effect. If the deposit has run for 12 months and above. in which case no interest is payable. no swap charges will be recovered and the Overdue interest paid. However. Premature withdrawal of deposits a. c. has run for more than 6 months but not for 12 months. Branches should note that no interest is payable on such deposits as the deposit would not have run for the minimum period of 12 months as per RBI stipulation. The benefit of additional interest on any type of deposits of nonresidents should not be allowed. If the FCNR (B) deposits (subject to the stipulation given in para 1 above). The interest on FCNR(B) deposits should be calculated and paid in the manner indicated below: i. if any at the time of renewal of the deposit will be recovered.000 and above/GBP 30. if any at the time of renewal of the deposit will also be NOT recovered. no swap charges will be recovered but overdue interest paid. In respect of deposits for more than 1 year.000 and above and JPY 7. F. if the deposit has not run for 6 months. b. The rules for recovery of swap charges on premature closure of FCNR (B)/RFC deposits are applicable where the principal amount of individual deposit is USD 50.000 and above. Quantum of loans • Rupee loans in India and Foreign currency Loan in India & outside India _____________________________________ _____________________________________ _____________________________________ .000. In the case of FCNR (B) deposits (subject to the stipulation given in para 1 above). the bank should pay simple interest at the applicable rate operative on the date of maturity. iii. At the contracted rate on the maturity of the deposit. for the period for which the deposit remained with the bank beyond the date of maturity. Interest payable on the deposit of a deceased depositor In the case of a term deposit standing in the name/s of - a. the bank should pay interest at the contracted rate till the date of maturity. Deceased individual depositor. the bank should pay interest at an applicable rate prevailing on the date of placement of the deposit. Two or more joint depositors. the margin requirement shall be notionally calculated on the rupee equivalent of the deposits • The facility of premature withdrawal of NRE/FCNR deposits shall not be available where loans against such deposits are to be availed of. the bank agrees to split the amount of term deposit and issues two or more receipts individually in the name/s of the claimant/s. from the date of maturity till the date of payment. The bank should ascertain the reasons from the applicants for doing so and also satisfy _____________________________________ _____________________________________ _____________________________________ . However. branches can allow the addition or deletion of name/s of joint account holder/s if the circumstances so warrant or allow an individual depositor to add the name of another person as a joint holder. it should not be construed as premature withdrawal of the term deposit for the purpose of levy of penalty provided the period and aggregate amount of the deposit do not undergo any change. However. iv. In the event of death of the depositor before the date of maturity of the deposit and the amount of the deposit being claimed after the date of maturity. Note: In the case of claimant/s being residents. without charging penalty. or b. If. the maturity proceeds may be converted into Indian rupees on the date of maturity and interest be paid for the subsequent period at the rate applicable to a deposit of similar maturity under the domestic deposit scheme. v. From the date of maturity to the date of payment. in no case should the amount or duration of the original deposit undergo a change in any manner whatsoever. In the event of the payment of the deposit being claimed before the maturity date. where one of the depositors has died. Addition or deletion of name/s of joint account holders At the request of all the joint holders.Career Guide for IOBians 153 _____________________________________ _____________________________________ _____________________________________ can be allowed to depositor/third party without any ceiling subject to usual margin requirements • In case of FCNR deposits. in the case of death of the depositor after the date of maturity of the deposit. H. H. ii. interest should be paid in the manner indicated below : i. the bank should pay interest at a rate operative on the date of maturity in respect of savings deposits held under RFC Account Scheme. on request from the claimant/s. 2013 ********************* Back to index _____________________________________ _____________________________________ _____________________________________ .e. I. Conversion of FCNR(B) Accounts of Returning Indians into RFC Account Waiver of Penalty The penal provisions would not be applicable in the case of premature conversion of balances held in FCNR(B) deposits into Resident Foreign Currency Accounts by Non-Resident Indians on their return to India. i. • Premature withdrawal of such FCNR(B) deposits should be subject to penal provisions of the Scheme. though of Indian origin. No additional interest for account of staff members also. • The benefit of additional interest rate on any type of deposits of nonresidents should not be allowed. such deposits should be treated as resident deposits from the date of return of the account holder to India. for all other purposes. • Banks should convert the FCNR(B) deposits on maturity into Resident Rupee Deposit Account or RFC Account (if eligible) at the option of the account holder. will require approval of the Reserve Bank from the exchange control angle. Further. • Except the provision relating to rate of interest and reserve requirements as applicable to FCNR(B) deposits. Rate of Interest Maturity Period 1 year to less than 3 years 3 . Payment of interest on FCNR(B) deposits of NRIs on return to India • Branches can allow FCNR(B) deposits of persons of Indian nationality/origin who return to India for permanent settlement to continue till maturity at the contracted rate of interest. srn/21. if desired.Career Guide for IOBians 154 _____________________________________ _____________________________________ _____________________________________ themselves about the bona fide nature of the request. branches are advised that interest on FCNR(B) deposits with maturity period upto one year is to be paid on simple interest basis.5 years Existing Revised LIBOR/Swap plus 125 basis points LIBOR/Swap plus 125 basis points LIBOR/Swap plus 200 basis points LIBOR/Swap plus 300 basis points • As per extant guidelines. opening of accounts in the names of Pakistani/Bangladeshi nationals. K. no compounding effect is to be permitted. Prohibitions • No branch should accept or renew a deposit over 5 years.04. H. J. 2012. This facility is not intended to enable exchange earners to maintain assets in foreign currency. as India is still not fully convertible on Capital Account. such resident Indian close relative. srn/10. shall not be eligible to operate the account during the life time of the resident account holder.02.2013 ********************* Back to index _____________________________________ _____________________________________ _____________________________________ . No credit facilities. 2012 and those balances that would accrue in the account with effect from August 1. Accordingly. Branches are also instructed to ensure before placing request for purchase of Foreign Currency from FED on behalf of the customer that the customer has fully utilized his balance in EEFC account and that there is no available balance in the said account. 1956 as a joint holder(s) in their EEFC/RFC bank accounts on ‘former or survivor’ basis. now being made eligible to become joint account holder. subject to the condition that. 2012 shall get converted to Rupee balances on or before close of business on September 30. However. AD Category – I banks may permit their exporter constituents to extend trade related loans / advances to overseas importers out of their EEFC balances without any ceiling AD Category – I banks may permit exporters to repay packing credit advances whether availed in rupee or in foreign currency from balances in their EEFC account and / or rupee resources to the extent exports have actually taken place Exchange risk in respect of EEFC accounts is to be borne by the Bank. Similar procedure may be followed for accruals during the subsequent months The facility of EEFC scheme is intended to enable exchange earners to save on conversion/transaction costs while undertaking forex transactions in future. An exchange earner is allowed to credit 100% of foreign exchange earnings to the EEFC account. The sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilisation of the balances for approved purposes or forward commitments. Resident individuals may be permitted to include resident close relative(s) as defined in the Companies Act. balances outstanding in an EEFC account as on July 31.Career Guide for IOBians 155 _____________________________________ _____________________________________ _____________________________________ Exchange Earners Foreign Currency Account A person resident in India may open with. shall be permitted against the security of balances held in EEFC accounts. an AD Category – I bank in India. This account shall be maintained only in the form of non-interest bearing current account. an account in foreign currency called the Exchange Earners’ Foreign Currency (EEFC) Account. either fund-based or non-fund based. • Overdue interest shall be recovered from the customer. Delhi. _____________________________________ _____________________________________ _____________________________________ .m.00 a. Fix business hours Rule 1 : Hours of Business • The exchange trading hours for Inter-bank forex market in India would be from 9. • In case of early realisation. A holiday that is not a “known holiday” is defined as a “suddenly declared holiday”.m. • Customer transactions are undertaken by the ADs only upto 4. is not applicable for cross currency transactions • For the purpose of Foreign Exchange business.m. Calcutta and Bangalore Objective: to regulate the dealings of ADs.Career Guide for IOBians 156 _____________________________________ _____________________________________ _____________________________________ FEDAI Rules FEDAI : Registered as non-profit making company under the provisions of Sec 25 of Companies Act Head Office at Mumbai and local offices at Chennai. interest for the unexpired period shall be refunded to the customer.00 p.30 p. to 5. Rule 2 : Export Transactions • Foreign Currency bills will be purchased/discounted/negotiated at the AD’s current bill buying rate or contracted rate • Interest for the normal transit period and/or usance period shall be recovered upfront simultaneously • For crystallisation of FC liability into Rupee liability. on all working days. both interse & with public.00 p. RBI & all other bodies. if payment is not received within normal transit period in case of demand bills and on/or before notional due date/actual due date in case of usance bills. brokers. the AD shall apply its TT selling rate of exchange • After receipt of advice of realisation.m. • Cut-off time limit of 05. the AD will apply TT buying rate or contracted rate (if any) to convert foreign currency proceeds. Saturday will not be treated as a working day • “Known holiday” is one which is known at least 2 working days before the date. • Normal transit period comprises of the average period normally involved from the date of negotiation/purchase/discount till the receipt of bill proceeds. 20 days d. Exports to Russia under L/C where reimbursement is provided by RBI . Bills in Foreign Currencies – 25 days Exports to Iraq under United Nations Guidelines – Max.000 shall be executed in foreign currency. if forward contract is in place or Prevailing Bills selling rate. Compensation for delayed payment : _____________________________________ _____________________________________ _____________________________________ . Foreign currency remittance up to an equivalent of USD 10.3 days b.Exchange rate as per forward sale contract.000/. • Payment of foreign inward remittance.20 days Bills in Rupees not under Letter of Credit . Rule 4 : Clean Instruments • Outward remittance shall be effected at TT selling rate of the bank ruling on that date or at the forward contract rate. Remittance in excess of equivalent of USD 10.7 days c.Career Guide for IOBians 157 _____________________________________ _____________________________________ _____________________________________ • Normal Transit period of some of the transactions are given below. The beneficiary has the option of presenting the related instrument for payment to the executing bank within the period prescribed under FEMA. in case there is no forward contract. Rule 3 : Import Transactions • Retirement of import bills . Where L/C provides reimbursement claim after certain number of days from the date of negotiation • The conversion of foreign currency proceeds of export bills sent for collection or of goods sent on consignment basis shall be done at prevailing TT buying rate or the forward contract rate. Reimbursement provided in India at centre different from centre of negotiation . Reimbursement provided by banks outside India . Where L/C provides for reimbursement by electronic means . Reimbursement provided at centre of negotiation . 120 days Bills drawn in Rupees under Letters of Credit (L/C) a.20 days TT reimbursement under Letters of Credit (L/C) a. The applicable exchange rate for conversion of the foreign currency inward remittance shall be T T buying rate or the contracted rate as the case may be. as the case may be.5 days b.shall be immediately converted into Indian Rupees. AD shall pay or send Intimation. • In case of suddenly declared holidays. buying rate of the contracting AD. _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 158 _____________________________________ _____________________________________ _____________________________________ a.T. to the beneficiary in 2 working days from the date of receipt of credit advice / Nostro statement. Extension and Cancellation of Foreign Exchange Contracts • Extension of contract: Foreign exchange contracts where extension is sought by the customers shall be cancelled (at an appropriate selling or buying rate as on the date of cancellation) and rebooked simultaneously only at the current rate of exchange. and the rate at which the contract is cancelled. Sale contracts shall be cancelled at T. selling rate of the contracting AD. the bank shall pay the beneficiary interest @ 2 % over its savings bank interest rate. the contract shall be deliverable on the next working day. The bank shall also pay compensation for adverse movement of exchangerate. as the case may be. duration of the contract being computed from spot value date at the time of transaction”. The difference between the contracted rate. • A forward contract is a contract deliverable at a future date. b. • Merchant quotations: The exchange rate shall be quoted in direct terms. Rule 5: Foreign Exchange Contracts • If the fixed date of delivery or the last date of delivery option is a known holiday. • A spot contract shall be deliverable on second succeeding working day following the contract date. shall be recovered from/paid to the customer at the time of extension. as per its compensation policy. • Settlement of all merchant transactions shall be effected on the principle of rounding off the Rupee amounts to the nearest whole Rupee. • Rate at which cancellation is to be effected: Purchase contracts shall be cancelled at T. In case of delay. if any. the last date for delivery shall be the preceding working day.T. RULE 6: Early Delivery. • “Value next day” contract shall be deliverable on the working day immediately succeeding the contract date. Such request for extension shall be made on or before the maturity date of the contract. for whatever reason. a contract which has matured shall be cancelled by the bank on the 3rd working day after the maturity date. When a contract is cancelled after the maturity date. • Settlement of Forward Contracts effective from 1 Oct 2012 All the member banks should become member of CCIL’s Forex Forward Guaranteed Settlement segment. Notwithstanding the fact that the exchange contract between the customer and the bank becomes impossible of performance. the appropriate forward T.04. interest for the number of days of delay (regardless of the causes for delay) shall be payable by the seller-bank. Multi Bank Portals (MBP). In the absence of any instructions from the customer. All interbank Forex Forward contracts should be subjected to the CCIL’s Forex Forward Settlement segment ********************************** srn/07. Rule 7: Business through Intermediaries • Exchange brokers.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 159 _____________________________________ _____________________________________ _____________________________________ Where the contract is cancelled before maturity. Electronic Order Matching Systems (EOMs) are some of the commonly used intermediaries in foreign exchange markets. the exchange contract shall not be deemed to have become void. in his favour. Rule 8 : Interbank Settlement • Interest for delayed delivery In the event of late delivery of any currency (including Indian Rupee) in foreign exchange contract.T. The interest for the overdue period shall be payable at the rate of 2% over the benchmark rate of the currency concerned The benchmark rates for INR is NSE – MIBOR overnight rate. if any. Hence the customer shall forthwith apply to the AD for cancellation. the customer shall not be entitled to the exchange difference. rate shall be applied. • DGFT operated under the Ministry of Commerce and it lays down policies and regulations relating to physical movement of goods into/from India. for exports declared to Customs Offices notified by the Central Government which _____________________________________ _____________________________________ _____________________________________ . shall furnish to the specified authority. for export promotion up to 2 % of the average annual exports of the applicant during the preceding three financial years subject to a ceiling of Rs. • If the goods to be exported are not under (Open General License) OGL. After the documents have been negotiated / sent for collection. • Declaration as regards export of goods and services:Every exporter of goods or software in physical form or through any other form. the AD Category – I banks should report the transaction to Reserve Bank in statement ENC. other than Nepal and Bhutan. to any place outside India. AD Category – I banks may consider requests for grant of GR waiver from exporters for export of goods free of cost. either directly or indirectly. exporter should lodge the duplicate copy together with relative shipping documents and an extra copy of the invoice with the AD Category – I banks named in the GR form. containing true and correct material particulars including the amount representing • GR forms GR forms should be completed by the exporter in duplicate and both the copies submitted to the Customs at the port of shipment along with the shipping bill. Within 21 days from the date of export. a declaration in one of the forms set out in the Schedule and supported by such evidence as may be specified.5 lakhs • SDF The SDF should be submitted in duplicate (to be annexed to the relative shipping bill) to the Commissioner of Customs concerned. The duplicate copy of the form together with a copy of invoice etc.Career Guide for IOBians 160 _____________________________________ _____________________________________ _____________________________________ Exports • Exporter should have a ten-digited importer-exporter code (IEC) number allotted by DGFT. shall be retained by the AD Category – I banks and may not be submitted to Reserve Bank. • Waiver of submission of GR Forms Export of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of GR/PP procedure from the Reserve Bank. the exporter should have the required license/quota permit to export the goods. AD Category – I banks may handle them without prior approval of Reserve Bank. • The duplicate copies of GR / SDF / PP / SOFTEX Forms should. The AD Category – I banks will countersign the forms after ensuring that the parcel is being addressed to their branch or correspondent bank in the country of import and return the original copy to the exporter. within the prescribed period of 21 days. on the basis of the standing and track record of the exporter and the arrangements made for realisation of the export proceeds.Career Guide for IOBians 161 _____________________________________ _____________________________________ _____________________________________ have introduced Electronic Data Interchange (EDI) system for processing shipping bills notified by the Central Government The manner of disposal of EC copy of shipping Bill (and form SDF appended thereto) is the same as that for GR forms. provided they are satisfied with the reasons for the delay • ACU Mechanism Participants in the Asian Clearing Union will have the option to settle their transactions either in ACU Dollar or in ACU Euro _____________________________________ _____________________________________ _____________________________________ . continue to be held by AD Category – I banks until the full proceeds are realised. who should submit the form to the post office with the parcel. Therefore. shall be retained by the AD Category – I banks and may not be submitted to Reserve Bank. PP forms should be first presented by the exporter to an AD Category – I banks for countersignature. AD Category – I banks may. countersign PP forms covering parcels addressed direct to the consignees. The duplicate copy of the form together with a copy of invoice etc. The duplicate copy of the PP form will be retained by the AD banks to whom the exporter should submit relevant documents together with an extra copy of invoice for negotiation/collection. however. • PP Forms The manner of disposal of PP forms is the same as that for GR forms. Postal Authorities will allow export of goods by post only if the original copy of the form has been countersigned by an AD Category – I banks. except in case of undrawn balances • Delay in submission of shipping documents by exporters In cases where exporters present documents pertaining to exports after the prescribed period of 21days from date of export. that he could do so. provided: An irrevocable letter of credit for the full value of the export has been opened in favour of the exporter and has been advised through the AD Category – I banks concerned or The full value of the shipment has been received in advance by the exporter through an AD Category – I banks or The AD Category – I bank is satisfied. Indo-Myanmar Trade. the corresponding GR form will remain outstanding and the amount should be shown outstanding in XOS statement. Further. Trade transactions with Myanmar can be settled in any freely convertible currency in addition to the ACU mechanism • Liquidation of Post-Shipment Rupee Export Credit The Post-shipment credit is to be liquidated by the proceeds of export bills received from abroad in respect of goods exported / services rendered. AD Category – I banks may accede to such requests if the aggregate amount of write off during a _____________________________________ _____________________________________ _____________________________________ . • Realisation and Repatriation of export proceeds It is obligatory on the part of the exporter that the amount representing the full value of goods or software exported should be realized and repatriated to India within a period of 9 months from the date of export (valid till 30.e. Even though the post shipment liability is liquidited by such repayment. subject to mutual agreement between the exporter and the Bank it can also be repaid / prepaid out of balances in Exchange Earners Foreign Currency Account (EEFC A/C) as also from proceeds of any other unfinanced (collection) bills. The Regional Office concerned of the RBI should be kept informed by the AD Branch. exporters with overdue export bills can also extinguish their overdue post shipment rupee export credit from their rupee resources. interest cost on overdue export bills). may approach the AD Category – I banks with a request for write off of the unrealised portion.2013) The stipulation of 9 months or extended period thereof for realisation of export proceeds is not applicable for units located in Special Economic Zones (SEZs).Career Guide for IOBians 162 _____________________________________ _____________________________________ _____________________________________ Relaxation from ACU Mechanism. The exporter’s liability for realisation would continue till the export bill is realised. quoting the reasons for the delay in realizing the proceeds. In order to reduce the cost to exporters (i.09. • Write off by AD Category – I banks An exporter who has not been able to realise the outstanding export dues despite best efforts. if any one of the following warning signals occur: The Exporter fails to arrange for delivery of the proceeds within 12 months or If the Exporter seeks extension beyond 12 months • Extension of time and Self write-off by the exporters For export proceeds due within the prescribed period during a financial year all exporters have been allowed to write off outstanding export dues which does not exceed 10% of the export proceeds due during the financial year for non-status holders and 5% for status holders. weighment or analysis of the goods. extension may be granted irrespective of the amount involved / outstanding.I banks to allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship and where the ‘export agreement’ provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment subject to the following conditions:i. provided: _____________________________________ _____________________________________ _____________________________________ . There should be no instance of refund exceeding 10% of the advance payment received in the last three years. In such cases. partly or fully. • Extension of Time Reserve Bank of India has permitted the AD Category – I banks to extend the period of realisation of export proceeds beyond 12 months from the date of export. quality.Career Guide for IOBians 163 _____________________________________ _____________________________________ _____________________________________ financial year does not exceed 10 % of the total export proceeds realised by the concerned exporter through the concerned AD Category – I banks during the previous financial year. up to a period of six months. to be ascertained after arrival and inspection. ii. iii. • Interest rate on export credit in foreign currency has been de-regulated with effect from May 5. • Part Drawings /Undrawn Balances In certain lines of export trade. it is the practice to leave a small part of the invoice value undrawn for payment after adjustment due to differences in weight. The rate of interest. the transaction is a bona-fide transaction. if any. no remittance towards refund of unutilized portion of advance payment or towards payment of interest should be made without the prior approval of the RBI. etc.e. The AD Category-I bank should ensure that export advance received by the exporter should be utilized to execute export and not for any other purpose i. In cases where the exporter has filed suits abroad against the buyer. In the event of the exporter's inability to make the shipment. AD Category – I banks may negotiate the bills. The documents covering the shipment are routed through the AD Category – I bank through whom the advance payment is received and v. iv.. 2012. • Advance Payments against Exports AD Category. at a time if the AD Category – I bank is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control. payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points. An undertaking is obtained from the exporter on the duplicate of GR/SDF/PP forms that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realisation. Libya. Russian Federation and other Republics of Commonwealth of Independent States. per export shipment subject to the following conditions: i.Career Guide for IOBians 164 _____________________________________ _____________________________________ _____________________________________ i.7500/. subject to a maximum of 10 % of the full export value. The export proceeds have been realized in full ii. • Project Exports and Service Exports Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as ‘Project Exports’ • Export of Currency Any export of Indian currency of value exceeding Rs. • Release of foreign currency & coins Authorised Dealers and Full Fledged Money Changers are permitted to sell foreign exchange in the form of foreign currency notes and coins. _____________________________________ _____________________________________ _____________________________________ . Export customer account – KYC compliant etc. The amount of undrawn balance is considered normal in the particular line of export trade. Russian Federation and other Republics of Commonwealth of Independent States.will require prior permission of Reserve Bank. ii. to the travellers proceeding to countries other than Iraq. up to USD 5. Authorised Dealers may accept payment in cash up to & inclusive of Rs. • Direct of dispatch of shipping documents – liberalization As a part of liberalization and to simplify the procedure.000 or its equivalent to the travellers proceeding to Iraq or Libya. 50. category-1 banks are allowed to regularize cases of dispatch of shipping documents by the exporter direct to the consignee or his agent resident in the country of the final destination of goods. Up to USD 3.000 (Rupees fifty thousand only) against sale of foreign exchange for travel abroad (for private visit or for any other purpose). out of the overall foreign exchange released Full foreign exchange may be released in the form of foreign currency notes and coins to the travellers proceeding to the Islamic Republic of Iran. Islamic Republic of Iran. upto USD 1 million or its equivalent.000 or its equivalent. Custom Assessment Certificate or Postal Appraisal form as evidence that the goods for which the payment was made have actually been imported to India. Bank Realisation Certificate is issued by Banks based on the realisation of payment against export by an Exporter Electronic Bank Realization Certificate e-BRC was made mandatory w. in case of 100% EOU units or c. EBW Statement – A half yearly return to report the details of write offs of export bills BEF Statement . a. in lieu of bill of lading.000 in respect of which importers have defaulted in submission of appropriate document evidencing import within 6 months from the date of remittance. to ensure that the importer submits. The exchange control copy of the bill of entry for warehousing. for negotiation/collection of shipping documents.Forwarder’s Cargo Receipt ADs may accept Forwarder’s Cargo Receipts (FCR) issued by IATA approved agents.f. it is obligatory on the part of the AD branches through whom the relative remittance was made.8. 17. In case of all imports. if the relative letter of credit specifically provides for negotiation of this document in lieu of bill of lading even if the relative sale contract with the overseas buyer does not provide for acceptance of FCR as a shipping document. The exchange control copy of the bill of entry for home consumption or b.e.Career Guide for IOBians 165 _____________________________________ _____________________________________ _____________________________________ • Submission of statements: XOS Statement – giving details of export bills outstanding beyond 6 months from the date of export as at the end of June and December every year. where value of foreign exchange remitted/paid for import into India exceeds USD 100000 or its equivalent. • Bank Realisation Certificate (BRC) Any Export Organization applying for benefits under Foreign Trade Policy is required to furnish valid BRC which is a conclusive proof of realisation of export proceeds. _____________________________________ _____________________________________ _____________________________________ . • Export of Goods and Services . in lieu of bill of lading.2012 by DGFT Details that are required for generation of Bank Realisation Certificate are culled out from the CBS by the System automatically during the Dayend Process for all the export bills realised during the day. This data is transmitted electronically to DGFT Online Server through a secured mode by Treasury -Central Office. in respect of export transactions backed by letters of credit.furnishing details of import transactions exceeding USD 100. Export documents supported by VPP. PPR.05. etc. Courier.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .. *************** srn/20.Career Guide for IOBians 166 _____________________________________ _____________________________________ _____________________________________ The e-BRC is applicable for the following: Direct Export Deemed Export Other . Softex Form. Exchange Control copy of the Bill of Entry.I banks may freely open letters of credit and allow remittances for import. exceeding USD 5000 or its equivalent. including suppliers and buyers credit.Career Guide for IOBians 167 _____________________________________ _____________________________________ _____________________________________ Import of Goods and Services • Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 • Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry. Postal Appraisal Form or Customs Assessment Certificate. while opening letters of credit for import into India on behalf of their constituents • Applications by persons. _____________________________________ _____________________________________ _____________________________________ . • Where foreign exchange acquired has been utilised for import of goods into India. and satisfy himself that goods equivalent to the value of remittance have been imported • Remittances against imports should be completed not later than six months from the date of shipment. interest payment is as per norms. 2000. The limit is per person per visit. etc. towards imports into India must be made in Form A1 • Except for goods included in the negative list which require license under the Foreign Trade Policy in force. However when he brings Foreign currency note above US$ 5000 or currency note & TC exceeding US$ 10000 (or equivalent) he is required to submit the customs authorities.. • Deferred payment arrangements. provided. firms and companies for making payments. “Currency Declaration form” (CDF).. Department of Commerce. • Remittances against import of books may be allowed without restriction as to the time limit. are treated as trade credits. etc. the AD Category – I bank should ensure that the importer furnishes evidence of import viz. AD Category . • Crystallisation foreign currency: As per FEDAI Rules • Import of Foreign exchange A person is permitted to bring India Foreign exchange in the form of Currency cheque. Government of India • AD Category – I banks should ensure that the imports into India are in conformity with the Foreign Trade Policy in force and Foreign Exchange Management (Current Account Transactions) Rules. TC/in any other form without limit. etc. • AD Category – I banks should follow normal banking procedures and adhere to the provisions of Uniform Customs and Practices for Documentary Credits (UCPDC). except in cases where amounts are withheld towards guarantee of performance. providing for payments beyond a period of six months from date of shipment up to a period of less than three years. 000 subject to a specific waiver from Ministry of Finance.000 and up to USD 500. irrevocable standby Letter of Credit or a guarantee from an international bank of repute situated outside India or a guarantee of an AD Category – I bank in India. may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan). currency notes of Government of India and Reserve Bank notes other than notes of denominations of above Rs. In case of the importer being a Public Sector or a Department/Undertaking of Government of India/State Government/s branches are permitted to waive overseas bank guarantee for effecting advance remittances of more than USD 2. customer’s capacity to raise funds..000 may be permitted by General Managers heading the respective Regions in respect of _____________________________________ _____________________________________ _____________________________________ .7.00.500/. Non-Customers. usefulness of the services to be imported in the business. should be obtained from the overseas beneficiary. Public Sector Undertakings and Customers. if such a guarantee is issued against the counter-guarantee of a bank of international repute situated outside India. • Procedure for waiver of guarantee for above USD 2. integrity. track record. Waiver of overseas bank guarantee for making advance remittances for import of goods above USD 200. Government of India.100 in either case. For Non-customers no waiver of overseas bank guarantee is permitted. For our customers.per person.000 or its equivalent.000 are as follows: The importers are classified into three. etc. import of services above USD 100.000 The guidelines for effecting advance remittances of more than USD 200.00.000. financial position including implications. • Advance Remittance for the import of services Where the amount of advance exceeds USD 500. sales turnover. line of business.000 and up to USD 500.Career Guide for IOBians 168 _____________________________________ _____________________________________ _____________________________________ • Import of Indian Rupees/currency notes Any person resident in India who had gone out of India on a temporary visit.000 or its equivalent. an unconditional. currency notes of Government of India and Reserve Bank notes up to an amount not exceeding Rs. The clearance/approval should be given duly taking a view on the customer’s standing. a guarantee from a bank of international repute situated outside India. or a guarantee from an AD Category – I bank in India. • Advance Remittance for import of goods If the amount of advance remittance exceeds USD 100. if such a guarantee is issued against the counter-guarantee of an international bank of repute situated outside India. viz. A person may bring into India from Nepal or Bhutan. • AD Category – I bank should forward a statement on half-yearly basis as at the end of June & December of every year. to the Regional Office of Reserve Bank under whose jurisdiction the AD Category – I bank is functioning. AD Category – I bank through whom the relative remittance was made. it is obligatory on the part of the AD Category – I bank through whom the relative remittance was made. to ensure that the importer submits Customs Assessment Certificate or Postal Appraisal Form. • AD Category – I bank should not make remittances where import bills have been received directly by the importers from the overseas supplier where the value of import bill exceeds USD 300.Non Physical Imports Where imports are made in non-physical form. in form BEF furnishing details of import transactions. i. where value of foreign exchange remitted/paid for import into India exceeds USD 100. • Evidence of Import . software or data through internet / datacom channels and drawings and designs through e-mail/fax..04.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . • Import documents received by the importer directly from overseas suppliers Import bills and documents should be received from the banker of the supplier by the banker of the importer in India.Career Guide for IOBians 169 _____________________________________ _____________________________________ _____________________________________ Regions headed by General Managers and the Corporate Credit General Managers in respect of other Regions. a certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer. may be obtained. Where import has been made by post.000 or its equivalent. • Documents evidencing import into India should be preserved by AD Category – I bank for a period of one year from the date of its verification by internal inspectors/auditors. exceeding USD 100.000 in respect of which importers have defaulted in submission of appropriate document evidencing import within 6 months from the date of remittance. to ensure that the importer submits the Exchange Control copy of the Bill of Entry.000. • Evidence of Import : Physical Imports In case of all imports. as declared by the importer to the Customs Authorities. within 15 days from the close of the half-year to which the statement relates. Waiver of overseas bank guarantee for making advance remittances for import of aircrafts/aviation related products in excess of USD 5 Mio but up to USD 50 Mio may be permitted by CMD. AD Category – I bank should advise importers to keep Customs Authorities informed of the imports made by them under this clause. *********** srn/04.e. The risks of the various legs of transport are assigned to the customer or seller in Incoterms.The E Term (Departure) EXW . INCOTERMS OUTLINED: There are 11 different INCOTERMS and they have been grouped into 4 different categories. Group 1 . _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 170 _____________________________________ _____________________________________ _____________________________________ INCOTERMS Trading between countries is fraught with difficulties. FOB Incoterms 2000). • Provision for relief from unforeseen events. They are simply a set of definitions and rules. • Shorten the contract of sale: simply refer to the term of delivery and the INCOTERMS edition (e. The standardized INCOTERMS: • Define responsibilities for carriage. several international "sets of rules" have been created. Such delivery may be a useful start point for any credit given to the customer. It follows that the party taking the risk will buy insurance for the risk of loss or damage in transit. most countries recognize INCOTERMS 1000. customs clearance and risk. This set of definitions was first published in 1936 and is now in its 6th revision. In order to facilitate exporting. • A means of transfer of property rights or a definition of transfer of property rights. and the production of documents. reducing cultural and language difficulties It is to be noted that Incoterms are not: • The contract. • The buyer arranges insurance against damage to the goods in transit. In the area of sending goods and responsibility for delivery and customs clearance. but should not be used where the buyer cannot carry out export formalities. including who pays for loading onto and from transport. • Under this shipping term the seller provides the goods for collection by the buyer at the seller's own premises.Ex Works • This group has only one term (EXW). • This term requires the least effort by the seller. published by the International Chamber of Commerce (ICC). • Are Internationally recognized. • Define delivery.g. EX-Godown): When such a price is quoted. 2. • These terms provide for the seller contracting for carriage on usual terms at his own expense. Ex-Works (Ex-Factory. FCA (Free Carrier-named point): This term is used particularly in case of "multimodal" transport.The F Terms (Free.Free alongside ship FOB . the exporter is responsible for the delivery of the goods at his works or factory.Cost. 1.The D Terms (Delivered/Arrival) DAT – Delivered At Terminal DAP – delivered At Place • In this group the seller has to bear all costs and risks of bringing the goods to the country of destination. • In the terms CIF and CIP the seller arranges and pays for insurance against damage to the goods in transit. Main Carriage Unpaid) FCA _ Free Carrier F AS . The other cost and risk involved in bringing the goods from the place of the exporter to the desired destination will be on the buyer's account.Free on Board • The seller must deliver the goods to a carrier appointed by the buyer and located in the seller's country. • The buyer arranges insurance against damage to the goods in transit. it is stipulated that the foreign buyer should take delivery of the goods at the exporter's premises and all the risks and expenses thereafter should be borne by him ie.Carriage and Insurance paid to • In this group the seller assumes the responsibility for the main contract of carriage. _____________________________________ _____________________________________ _____________________________________ . Group 3 . This term represents the minimum responsibility and obligation.Carriage paid to CIP .Cost and Freight CIF .The C Terms (Main Carriage Paid) CFR . Group 4 . • The seller arranges and pays for insurance against damage to the goods in transit. Insurance and Freight CPT .Career Guide for IOBians 171 _____________________________________ _____________________________________ _____________________________________ Group 2 . The seller's responsibility is fulfilled when he delivers the goods into the custody of the carrier at the named point. packing charges. T. which an exporter incurs while delivering the export goods to the foreign buyer on board the ship. In this term although the exporter bears the cost of carriage to the named destination. S. but does not include charges for loading the goods on board the vessel. 6. wharfage and portage. D. B. custom dues. But in this case the seller has to arrange and pay for the insurance against the risk or loss or damage to the goods during carriage. (Delivered at Terminal): This rate may be used irrespective of the mode of transport selected and may also be used where more than one mode of Transport is employed. DAT means the seller deliver the goods at a named terminal at the named port (or) place of destination.F. B. price plus cost of ocean freight and marine insurance up to the port of destination. (Free Alongside Ship): This price includes all the costs incurred in delivering the goods alongside the vessel at the port of export or other place named. It also does not include ocean freight charges and marine insurance premium. the exporter has to obtain insurance at his cost against the risks of loss or damage to the goods during the carriage.B. (Free On Board): Free on Board price is inclusive of Ex-Works price. 4. CPR (Cost & Freight): This price covers F. 9. The exporter's obligations are fulfilled as and when the goods have been placed by him alongside the vessel and notified to the buyer. CIP (Freight. cost of checking of quality measure. if any. Insurance and Freight) This type of contract includes F. 7. road and inland waterways. the risk is already transferred to the buyer at the port of shipment itself. (Cost.O. In this term. _____________________________________ _____________________________________ _____________________________________ . weight or quantity. The seller is responsible for the carriage of goods to the agreed destination and has to pay freight up to the first carrier/agreed point. F. 5. A. transportation charges up to the place of shipment. 8. value of the goods plus freight charges of transporting goods to the port of destination. In this type of term the Bill of Lading must carry the wording 'Shipped on Board' and it must bear the signature of the carrier or his authorised representative together with the date on which goods were 'boarded'. Carriage and Insurance paid): This term is similar to "Carriage Paid to”. CPT (Carriage Paid to) This term is used for land transport by rail. F. A. The buyer is responsible to bear all costs and risks of loss or damage to the goods thereafter. C.Career Guide for IOBians 172 _____________________________________ _____________________________________ _____________________________________ 3. export duties.O.I. O. DAP (Delivered AT Place) This may be used irrespective of mode of transport selected and may also be used where more than one mode of transport is employed. DDP (Delivered Duty Paid) Under this term seller is responsible to make the goods available to the buyer at his risk and cost at the buyer's premises or any other named destination and incur all costs including "duty” (taxes. fees. charges and Value Added Tax levied upon importation) and making the transport documents or warehouse warrant available to the buyer to enable him to take the delivery of goods. 11.2013 _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 173 _____________________________________ _____________________________________ _____________________________________ 10.04. *************** Back to index srn/04. (2) to incur a deferred payment undertaking and pay at maturity if the credit is available by deferred payment. The meaning of the term ‘honour’ includes (1) to pay at sight if the credit is available at sight payment. which negotiates the documents. Beneficiary: Beneficiary is normally the seller of goods in whose favour LC is opened and who has to get payment from the buyer. thereby undertaking the responsibilities of payment/ negotiation/acceptance under the credit. in addition to that of the Issuing Bank g. Article 9 (c) provides that an advising bank may utilize the services of another bank (second advising) to advise the credit to the beneficiary. Advising Bank: The Bank through whom the LC is advised to the beneficiary (seller) thereby assuring genuineness of the credit. (3) to accept a bill of exchange drawn by the beneficiary and pay at maturity if the credit is available by acceptance. The term ‘complying presentation’ has been defined by Uniform Customs and Practice for Documentary Credits (UCPDC) 600 to mean a presentation (of documents) that is in accordance with (i) the terms and conditions of the credit. which issue the LC undertaking to make payment upto the amount specified in the LC on submission of documents as per terms of LC d.Career Guide for IOBians 174 _____________________________________ _____________________________________ _____________________________________ Letter of Credit Letter of Credit: is an irrevocable arrangement which constitutes a definite undertaking of the issuing bank to ‘honour’ a ‘complying presentation’. Issuing/Opening Bank: The bank. c.from the issue of the LC till making payment of the bills to the seller as promised in the LC. Negotiating Bank : The Bank. Applicant: Normally applicant is the buyer of goods who submits application to the LC issuing Bank and on whose behalf LC is opened on the basis of terms and conditions of purchase agreement. Parties in an LC Transaction A transaction in a letter of credit may involve several parties at different stages i. The various parties with different rights and responsibilities are the following: a. f. received under the LC. e. (ii) the applicable provisions of these rules (articles of UCPDC 600) and (iii) international standard of banking practice. Second advising bank: Article 9 of UCPDC 600 introduced the concept of a second advising bank. b. A.e. Confirming Bank: This is a Bank normally in the exporters country which adds its confirmation to the LC. Advising Bank is normally situated in the country/place of beneficiary. _____________________________________ _____________________________________ _____________________________________ . provided the beneficiary complies with all conditions. 3. Irrevocable confirmed credit 3. Deferred Payment LC 1. from where payment will be made. Transferable LC : The beneficiary specified in the transferable LC has the option of requesting the transferring bank/advising bank to transfer the credit fully or in part to another beneficiary/many beneficiaries. Revolving credit 4. As per UCPDC 600. Different types of LC On the basis of availability of documents. Transferable LC 5. Red clause LC b. When a letter of credit does not require to have documents of title to bills drawn under it.Clean LC . Back-to-back credit 6. It is either cumulative or non-cumulative.Documentary Credit :It is made available to the beneficiary against submission of documents as stipulated in the LC by him.Career Guide for IOBians 175 _____________________________________ _____________________________________ _____________________________________ i. Reimbursing bank: The Bank authorised to honour the reimbursement claim in settlement of negotiation/ acceptance/payment. Acceptance Credit 10. Stand by LC 8. there are two types of LC s 1. 4. _____________________________________ _____________________________________ _____________________________________ . LC means only irrevocable LC. The revolving is restricted to certain number of times. Irrevocable confirmed credit: The confirming bank undertakes to honour its commitment regardless of whether or not the issuing Bank is in a position to reimburse the amount specified in the LC. Revolving credit: It is a commitment on the part of the Issuing Bank to restore the credit to the original amount after it has been utilised. Irrevocable credit: The issuing Bank commits itself irrevocably to honour its obligation under the credit. 1. Irrevocable credit 2. Paying Bank or Nominated Bank : The Bank nominated and authorised by the issuing Bank to make payment under the LC. Anticipatory Credit a. 2. 2. Green clause LC 7. e. Payment Credit 9. It is normally the Bank with which issuing Bank maintains an account. B. Transport documents 2. Certificate of origin 6. LC transactions are governed by Uniform Customs & practice published by International Chamber of Commerce (ICC). Beneficiary’s certificate D. 7. These credits are often used to allow time for the independent inspection of goods. Commercial invoice 5. Paris. non-transferable LC in favour of another beneficiary. Back-to-back LC: is a new LC opened on behalf of the beneficiary of a LC on the basis of an already existing.Career Guide for IOBians 176 _____________________________________ _____________________________________ _____________________________________ 5. Uniform Customs & Practice for Documentary Credits [UCPDC 600] Letter of Credit (LC) is one of the major components in International trade and it facilitates smooth flow of goods and its value simultaneously. even before negotiation of documents. Insurance documents 3. processing & packing of the goods to be shipped. Green Clause LC: In addition to the credit facilities available under red clause LC the exporter also gets finance for warehousing and insurance charges at the port where the goods are stored pending availability of ship. Bills of exchange 4. Deferred payment LC : A commercial letter of credit. Packing list 7. 8. Stand by LC: is a Performance guarantee declaration in the broadest sense. the issuing bank may incorporate a ‘RED CLAUSE’ in the LC whereby the exporter will be entitled to draw a portion or whole of the LC amount from his bank or the Bank named in the LC for purchase. such as food entering the country. because American banks are prevented from giving performance guarantees by the regulations in that country 9. ICC 2007 revision came into force from 1st July 2007. Acceptance Credit : If the bill under the LC is in usance terms 11. It is mainly used in USA. Payment LC : If the bill under the LC is payable at sight 10. Documents required: Generally the following documents are stipulated in LC 1. Uniform Customs & Practice for Documentary Credits (UCPDC) 600. 6. under which payment is deferred for a specified period of time after goods are shipped. _____________________________________ _____________________________________ _____________________________________ . with a provision that payment will not be made if goods are rejected C. Quality certificate 8. Red Clause LC: As per instructions from importer. Second advising Bank: UCPDC 600 also introduced the concept of a second advising bank. Negotiation: As per UCPDC 600. Article 9© provides that an advising bank may utilize the services of another bank (second advising) to advise the credit to the beneficiary. the obligation to reimbursement bank is due only at maturity. the LC advising bank has an additional responsibility to satisfy itself that its advice to the beneficiary accurately reflects the terms and conditions of the credit received. ***************** srn/ 04. confirming bank. purchase of drafts. issuing bank) for determining if the documents presented under the credit are in compliance with the stipulated terms.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . Responsibilities of Advising Bank: In terms of article 9(b) of UCPDC 600. Banking day: Banking day means a day on which a bank is regularly opened at the place at which an act subject to these rules (UCPDC 600) is to be performed.02. by negotiation (i. . 6.(nominated bank. it has not honoured or negotiated for an amount in excess of that permitted by the credit. by the nominated bank and giving of value thereof to beneficiary) ‘on or before the banking day on which reimbursement is due to the nominated bank’. 3. 5..is a maximum of five banking days following the day of presentation. Some changes made in UCPDC 600 1. 2.Career Guide for IOBians 177 _____________________________________ _____________________________________ _____________________________________ E. On this. 7. Nominated bank may accept invoices for an amount in excess of the credit provided. The significance of this definition is that if a bank is opened on a Saturday for business other than handling of trade related foreign exchange business (which would include acts covered by UCPDC). then. Commercial invoice: Beneficiary must present documents invoices in the same currency as in the credit. Amendments: Partial acceptance of amendment is not allowed and will be deemed to be notification of rejection of the amendment. etc. Period of time available with the bank for scrutiny of documents: UCPDC 600 says that the period of time available with each bank .e. in respect of documents received on Monday the maximum time of five banking days available with the banker for completing scrutiny of documents and notifying the presenting bank of its refusal to accept the document would expire as at the close of the following Monday – Saturday not being counted as if it would be a banking day not for UCPDC purposes. 4. Where the advance remittance exceeds this amount the AD can release the same after obtaining a guarantee from a bank of international repute.000. • For release of foreign exchange to persons resident in India for travel abroad. of India under Section 5 of Foreign Exchange Management Act. at their option. advertisements etc. Travel of residents outside India. 4. Thus all sales of foreign exchange result in outward remittances. 4. Restricted transactions: All restricted transactions are classified into three categories namely: (a) Transactions which are prohibited (b) Transactions to be permitted with prior approval of GOI (c) Transactions to be permitted with prior approval of RBI. 2000 notified by the Government of India. however. if they consider it necessary for their record. Remittances by foreigners' employed/ settled in India. 3. authorized dealers are to be guided by the Rules made by the Govt. education. 5. of foreign exchange released. Provided this amount doesn’t not exceed USD 200. _____________________________________ _____________________________________ _____________________________________ . Repatriation of proceeds out of NRE accounts. Advance remittance: ADs can allow advance remittance for any current account transaction for which release of foreign exchange is admissible. • Sale of foreign exchange may be required in the following cases: 1. tuition fees. • On the issue of endorsement of passports with a view to further simplifying the procedures. 2. seek endorsement on their passports.Career Guide for IOBians 178 _____________________________________ _____________________________________ _____________________________________ OUTWARD REMITTANCES 1. it has now been decided that henceforth ADs and FFMCs need not make any endorsement on the passports of the travellers availing of foreign exchange for tourism and private purposes. 1999 which are detailed in terms of Foreign Exchange Management (Current Account Transactions) Rules. 2. • Travellers can. For imports. 3. General Outward remittances refer to flow of foreign exchange out of India. Expenses incurred abroad like medical expenses. FEMA in its Sec 5 provides that there would be no restriction to sell or draw foreign exchange to/from an Authorised person if such sale or withdrawal is due to a current account transaction except to the extent of restrictions imposed by the GOI By making rules for this purpose. Career Guide for IOBians 179 _____________________________________ _____________________________________ _____________________________________ 5. partnership firms.000 9. Business travel USD 25000 6. But Corporates.000 2. the RBI introduced the scheme permitting the resident individual to remit upto USD 25. Liberalised individuals remittance can be released maximum 60 days ahead of the scheme upto USD 2.00. For specialized training USD 25000 8. Remittance for maintenance of close relatives abroad per annum USD 100.000 4.000 per financial year for current/capital account transactions. For private travels in one financial year (except to Nepal & Bhutan) USD 10000 5. Any resident individual intending to avail this remittance facility has to designate a branch of an AD through which he has to make all remittances under this scheme. Remittance for Gifts and donations can be included under Liberalised remittance scheme. • Foreign exchange journey date 6.000/- for resident In February 2004.00. For Going abroad for employment USD 100. For study abroad against self declaration USD 100. _____________________________________ _____________________________________ _____________________________________ . For emigration USD 100. Purpose AD’s discretion 1.000 per financial year. For attending conference USD 25000 7. Authorised dealers can release foreign exchange upto the respective prescribed limit as given below without RBI’s prior permission.000 in a calendar year for any current or capital account transaction. Only resident Indians are permitted to avail remittance facility under Liberalised Scheme.000 • RBI’s prior permission is required for release of foreign exchange exceeding this amount.00. Individual who are minors are also eligible under the scheme. residents are permitted to remit up to USD2. The amount was further enhanced on different dates and the latest during September 2007 to USD 2. For medical treatment abroad against self declaration (without doctor’s estimate) USD 100. HUFs . Trusts are not eligible Under Liberalized remittance scheme.000 3. promissory notes. for closure of loan taken abroad etc. 7.000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) for a resident individual. b) Any purpose prohibited under FEMA c) Remittance to individuals committing acts of terrorism. Time limit for surrender of foreign exchange Sl. 3 4 Source of foreign exchange Repatriation of assets/inheritance/ gifts and repatriation of lawful income/services rendered outside India foreign exchange received from a Non-resident on his visit to India Unspent/unused amount of foreign exchange taken for purpose other than travel Unspent amount of foreign exchange taken for travel Time limit for surrender 180 days from the date of receipt 180 days from the date of receipt 180 days from the date of acquisition 180 days from the date of return to India _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 180 _____________________________________ _____________________________________ _____________________________________ The remittances under the scheme are over and above all other remittances allowed to resident individuals as described in Schedule III of FEMA. Remittance under Liberalised scheme should not be made to: a) Nepal. 1 2. unrated debt securities. The gift amount would be within the overall limit of USD 200. A Non-resident can be issued foreign exchange by way of TC/DD/currency note without limit to the debit of their NRE/FCNR accounts. The amount should be credited to the Non-Resident (Ordinary) Rupee Account (NRO) a/c of the NRI / PIO and credit of such gift amount may be treated as an eligible credit to NRO a/c. Bhutan. 9. 8. Gift in Rupees by Resident Individuals to NRI close relatives A resident individual to make a rupee gift to a NRI/PIO who is a close relative of the resident individual [close relative as defined in Section 6 of the Companies Act. Resident can be issued /foreign exchange by way of TC/DD/currency note without any limit to the debit of their RFC/EEFC a/cs.No. 1956] by way of crossed cheque /electronic transfer. The remittance can be used for investment in mutual funds. Mauritius or Pakistan or any country declared by FATF (Financial Action Task Force) as non-cooperative countries. venture funds. It would be the responsibility of the resident donor to ensure that the gift amount being remitted is under the LRS and all the remittances under the LRS during the financial year including the gift amount have not exceeded the limit prescribed under the LRS. bank accounts. an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular No. interest. per financial year. out of the balances held in his NRO account / sale proceeds of assets (inclusive of assets acquired by way of inheritance or settlement). dividend. Afghanistan & Iran The facility of remittance of sale proceeds of immovable property/other financial assets is not available to citizens of Pakistan. interest. 2002. • Remittance of assets by a foreign national of non-Indian origin A foreign national of non-Indian origin who has retired from an employment in India or who has inherited assets from a person resident in India or who is a widow of an Indian citizen who was resident in India.10/2002 dated October 9. Back to index _____________________________________ _____________________________________ _____________________________________ . Facilities for NRIs/PIO/Foreign Nationals • Remittance of current income Remittance outside India of current income like rent. and on production of an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes vide their Circular No. Nepal and Bhutan. pension. • Remittance of assets by NRI/PIO A NRI or a PIO may remit an amount up to USD one million.Career Guide for IOBians 181 _____________________________________ _____________________________________ _____________________________________ 10. per financial year (April-March). dividend. in India of the account holder is a permissible debit to the NRO account. NRIs/PIO have the option to credit the current income to their NonResident (External) Rupee account. etc. certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for. pension. on production of documentary evidence in support of acquisition / inheritance of assets. subject to the satisfaction of the Authorized Dealer bank. may remit an amount not exceeding USD one million. provided the Authorized Dealer bank is satisfied that the credit represents current income of the nonresident account holder and income tax thereon has been deducted / provided for. of NRIs who do not maintain an NRO account in India based on an appropriate certification by a Chartered Accountant. 2002.10/2002 dated October 9. etc. • These remittance facilities are not available to citizens of Nepal and Bhutan. China. for all bonafide purposes. AD banks may allow repatriation of current income like rent. Bangladesh. The remittance facility in respect of sale proceeds of immovable property is not available to citizens of Sri Lanka. Career Guide for IOBians 182 _____________________________________ _____________________________________ _____________________________________ • Repatriation of sale proceeds of residential property purchased by NRIs/PIO out of foreign exchange Repatriation of sale proceeds of residential property purchased by NRI / PIO is permitted to the extent of the amount paid for acquisition of immovable property in foreign exchange received through banking channels. provided the original payment was made out of NRE / FCNR (B) account of the account holder.full exchange may be released _____________________________________ _____________________________________ _____________________________________ . Such funds may also be credited to the NRE / FCNR (B) account of the NRI / PIO.000 from close relatives in India.Resident Indians (NRIs) and are eligible for all the facilities available to NRIs under FEMA. The balance amount can be credited to the NRO account and can be remitted under USD one million facility. exchange in the form of foreign currency notes and coins may be sold up to the limit indicated below: a. without prior approval of the Reserve Bank. As non-residents. they will be eligible to receive remittances from India a. or remittance from outside India through normal banking channels and the Authorized Dealer bank is satisfied about the genuineness of the transaction. Such transactions may be settled by inward remittance or out of balances held in the cardholder’s FCNR(B) / NRE / NRO accounts. • AD banks may permit repatriation of amounts representing the refund of application / earnest money / purchase consideration made by the house building agencies / seller on account of non-allotment of flat / plot / cancellation of bookings / deals for purchase of residential / commercial property. • Release of foreign exchange Out of the overall foreign exchange being sold to a traveller. Up to USD 1 million per financial year. on self declaration. Travellers proceeding to Islamic Republic of Iran. up to USD 100. if any (net of income tax payable thereon). The facility is restricted to not more than two such properties. out of sale proceeds of assets / balances in their NRO account maintained with an Authorised Dealer bank in India. • Facilities for students Students going abroad for studies are treated as Non. together with interest. towards maintenance. • International Credit Cards Authorised Dealer banks have been permitted to issue International Credit Cards to NRIs/PIO. Russian Federation and other Republics of Commonwealth of Independent States . if they so desire. which could include remittances towards their studies also and b. Import of services Authorised Dealer may issue guarantee on behalf of their customers importing services. Wherever the sale of foreign exchange exceeds the amount equivalent to Rs. if such a guarantee is issued against the counter-guarantee of a bank of International repute situated outside India.000 or its equivalent. Travellers proceeding to Iraq or Libya . where the amount exceeds USD 500.not exceeding USD 5000 or its equivalent c. KYC/AML guidelines are complied with ii. a crossed cheque drawn on the applicant’s bank account. • Issue of Guarantee. provided: the guarantee amount does not exceed USD 500. 50. crossed cheque drawn on the bank account of the firm/company sponsoring the visit of the applicant. AD ensures submission of documentary evidence for import of services in the normal course. • Payment in Rupees ADs may accept payment in cash up to Rs. However. a guarantee from a bank of International repute situated outside India or a guarantee from an Authorised Dealer in India. Travellers proceeding to countries other than Iraq. should be obtained from the overseas beneficiary. sale of foreign currency / issue of foreign currency TCs is within the limits (credit / prepaid cards) prescribed by the bank and iii. Islamic Republic of Iran.not exceeding USD 2000 or its equivalent. AD is satisfied about the bonafides of the transaction. Banker’s Cheque / Pay Order / Demand Draft or d. The purchaser of foreign currency / foreign currency TCs and the credit/debit/prepaid card holder is one and the same person. Russian Federation and other Republics of Commonwealth of Independent States .000. _____________________________________ _____________________________________ _____________________________________ .000 (Rupees fifty thousand only) against sale of foreign exchange for travel abroad (for private visit or for any other purpose). the payment must be received only by a.000. Libya. or c. • Advance Remittance – Import of services Authorised Dealers may allow advance remittance for import of services.Career Guide for IOBians 183 _____________________________________ _____________________________________ _____________________________________ b. Debit / credit / prepaid cards provided i.50. and The guarantee is to secure a direct contractual liability arising out of a contract between a resident and a non-resident. or b. Career Guide for IOBians 184 _____________________________________ _____________________________________ _____________________________________ • International Debit Cards Banks authorised to deal in foreign exchange are issuing International Debit Cards (IDCs) which can be used by a resident for drawing cash or making payment to a merchant establishment overseas during his visit abroad. The AD branch will in turn forward a copy of the certificate and undertaking to the assessing officer concerned.tin-nsdl. Obtention of mandatory forms Remittances to Non-Residents a) As and when a customer approaches the branches for effecting any outward remittance. e) The duly signed Form 15CA and Form 15CB will be submitted in duplicate to the AD branch. b) The person making the payment (remitter) will obtain a certificate from a Chartered Accountant in Form 15CB. c) The remitter will then access the website www. Form 15CA can be signed by the person authorized to sign the return of income of the remitter or a person so authorized by him in writing. 11. 12. duly filled up Form 15CA will have to be submitted as per the procedure mentioned above.com to electronically upload the remittance details to the department in Form 15CA (undertaking). f) If a remitter has obtained a certificate from the Assessing Officer. d) The remitter will then take a print out of the filled up Form 15CA (which will bear an acknowledgement number generated by the system) and sign it. Form 15CB need not be submitted. CHINA EXPRESS • Routing of Payments to China through Deutsche Bank • Salient Features of China Express Automatic identification of payments to China . • Tie up with Deutsche Bank • Branches can send multiple currency payments using this product through Swift 13. Prioritisation and real time processing of payment _____________________________________ _____________________________________ _____________________________________ . The information to be furnished in Form 15CA is to be filled using the information contained in Form 15CB (certificate). However. the branch concerned should insist for submission of Form 15CA and 15CB. IDCs can be used only for permissible current account transactions and the item-wise limits as mentioned in the Schedules to Rules as amended from time to time. “FX4 CASH • For effecting remittances from India to various other countries. in non-conventional currencies. are equally applicable to payments made through use of these cards. Elimination of intermediary bank charges / deduction.Career Guide for IOBians 185 _____________________________________ _____________________________________ _____________________________________ MT 103 is sent directly to the beneficiary bank and not a correspondent Bank during China business hours which guarantees timely advising to the beneficiary bank. Also an SMS confirmation will be sent to the remitter by Deutsche Bank immediately after processing of payment.05. srn/18.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . Debit confirmation (MT 900) will be relayed to the Branch on real time basis as soon as the payment is processed. Automatic intermediary bank selection. L. Of which first 4 indicates name of the Bank.C.C.11 characters. 6. Abu Dhabi UAE Exchange Centre L. Electronic Funds Transfer Arrangements Under this arrangement. 150 200 1000 500 2. • We have “Electronic Funds Transfer” arrangement with the following Exchange Houses. SWIFT • SWIFT . Customer-customer funds transfer Advice of cheque/draft Request for stop payment Status of Request for stop payment Cash Letter Advice Letter of Credit Continuation of LC Request for statement of account MT MT MT MT MT MT MT MT . 7. Abu Dhabi _____________________________________ _____________________________________ _____________________________________ . Message type Payment messages MT 103 LC amendments Full text operative LC&LG For all other outward messages Charges in Rs. 3.Career Guide for IOBians 186 _____________________________________ _____________________________________ _____________________________________ Inward Remittance facilities for NRIs in IOB 1. Sl. 2.L. Treasury (Foreign) Dept. the next two the code of the city and the last three – Branch code.111 – 112 .700 . will receive secured electronic message daily from the exchange companies and will credit the beneficiaries’ account through CBS to the debit of the prefunded account of the private exchange company with us.Society for World Wide Inter-Bank Financial Telecommunication • SWIFT No. Abu Dhabi Bahrain Exchange Company.L. The next 2 the code of the country. Kuwait Habib Exchange Company L.701 .950 • SWIFT service is available for 24 hours in a day. MT stands for Message Type. • The current schedule of SWIFT charges are as follows. 8.450 . Abu Dhabi Wall Street Exchange Centre L. • Standardized format. 5. Abu Dhabi Al Razouki International Exchange Co. . Dubai Al Ahalia Money Exchange Bureau.110 .C.103 .No 1. Dubai Al Ansari Exchange. Name of Private Exchange House Al Fardan Exchange Co. 4. The remitter has to log on to our Bank’s web site www. City Exchange Company W. upon which an individual login-id unique to that particular remitter will be generated by the system. e. 4.06. Our Treasury (foreign) dept.Career Guide for IOBians 187 _____________________________________ _____________________________________ _____________________________________ 9.in and register himself/herself. 12.50.L. The unique feature of this product is that the remitter and beneficiary need not be a customer of IOB. Kuwait RBI regulations on internet/web based remittances: (Ref: FX / 42 /2012-13 dt 11.L. 11.. Sultanate of Oman Emirates India International Exchange. This product ensures hassle free remittance from U.C. 10. at Central Office.or its equivalent. _____________________________________ _____________________________________ _____________________________________ .) • Payments to the recipients in India should be made in Indian Rupees only.and above should be paid only by way of DD or direct credit to the account of the recipient.CASH HOME e-CASH HOME facilitates on line credit to accounts.S.000/. Dubai Al Muzaini Exchange Co. • Not more than 30 remittances shall be received by a single recipient in a year. • All payments of Rs. • FIRC should not be issued to the recipients at any cost 3. Thereafter the remittance particulars are keyed in after which the remitter authorises debit of the amount to his bank account.L. after sighting the respective credit in our nostro account will remit the proceeds to the branch concerned with whom the beneficiary maintains his/her account by way of an IBSA for the net amount. to reach the beneficiary within five working days. • Under Money Transfer Service Scheme (MTSS) the remitters and the beneficiaries are individuals only • Any single remittance under the scheme shall not exceed US$2500/. Doha Modern Exchange Co L.2012) • Only personal remittances such as remittances towards family maintenance and remittances favoring foreign tourists visiting India are permissible under this arrangement. MONEY HOME A lock box facility enables the remitter in the US to effect quick remittance to India.iob. The facility is also extended for credit to accounts not only with our Bank but also to accounts with any Bank in India. ) should be maintained for atleast 10 years from the date of transaction between the bank and the beneficiary. • The branch will make the payment after verification of transactions. the payment should not be made. • No payment should be made to Minors. • No charges shall be collected from the beneficiary at the time of payment. identity cards. driving licenses. Payment Procedure: • On receipt of claim in RN form from the beneficiary. PAN card. utility bills etc. treasury (foreign) dept. driving license.g. copies of documents like passports. • These remittances are not treated as foreign inward remittances and hence they should not be credited to NRE accounts and are not available for repatriation. • The beneficiary has to submit ‘Receive Now’ (RN) form to the designated branch for claiming the amount and shall prove his identity by producing valid photo identity.Career Guide for IOBians 188 _____________________________________ _____________________________________ _____________________________________ The debit is carried out through ‘Automated Clearing House (ACH) platform in vogue in USA and our nostro account is credited. _____________________________________ _____________________________________ _____________________________________ . voter’s ID. • Branches should ensure that records pertaining to the identification of the customer and his address (e. ration card. • If any of the required details is found missing or found to be incorrect. identity etc. Branch should call for and verify any one of the photo identity of the beneficiary such as passport. • The transaction details available in their Money Transfer Payment System is available for access to our designated branch concerned with Internet facility. Xpress Money • The remitter in UAE should make remittances UAE Exchange Centre branches in his country. DD should be issued in favor of receiver only. etc. The remitter is provided with a Xpin number (Xpress Money Personal Identification Number) which he can inform along with other remittance details to the receiver/beneficiary. PAN card. • Branches debits their TTPR a/c. 5. • No charges should be collected from the receiver at the time of payment even if the same is paid by way of DD. (TT Paid Reimbursable account – code 2567) while making payment to the beneficiary and eliminates the Debit Entry on receipt of IBSA from Rupee Section. (WUFS) to receive remittances from any part of the world to reach the beneficiaries within minutes under Electronic Money Transfer. 7. country of origin. etc. 6. • The product ‘MoneyGram’ is introduced as per the centralized System and procedures are same as that of ‘Xpress Money’. • These remittances are not treated as foreign inward remittances and hence they should not be credited to NRE accounts 8. • These remittances are not treated as foreign inward remittances and hence they should not be credited to NRE accounts and are not available for repatriation. The same would be passed on to the branches concerned periodically by retrieving the data from our system. name and address of beneficiary. “EZ REMIT” • Our Bank has entered into an arrangement with M/s BFC Forex & Financial Services Pvt Ltd. • Salient features: The remitter abroad shall use WUFS agent in his country to remit the amount along with the applicable charges in the necessary application form. • Make payment to the customer as per the procedure. when they are approached by beneficiaries of remittances under this Web Based Scheme. Mumbai promoted by Bahrain Finance Company. • No charges shall be collected from the beneficiary. etc. 8 digit reference number is given.). Bahrain for introduction of a web based remittance product named ‘EZ REMIT’. Western Union Money Transfer • Western Union Money Transfer’ is the product of Western Union Financial Services Inc.) filled up. Bangalore for introduction of a web based remittance product named ‘MoneyGram’. with the basic details like amount of remittance. and Agent Code (supplied by the service provider) through ‘CHAT’ facility. name of remitter. we follow for ‘Xpress money’ service. • Branches. The remitter is provided with a 10 digits Money Transfer Control Number and he has to inform the number and remittance details to the receiver/beneficiary. reference number (12 digit PIN number. • Branches should then take up with Treasury (Foreign) Dept. MoneyGram • Our Bank has entered into an arrangement with M/s UAE Exchange & Financial Services Ltd.Career Guide for IOBians 189 _____________________________________ _____________________________________ _____________________________________ • Our bank is entitled to commission on each transaction handled by the branches. will identify the customers and get the Forms (Receive Now. etc. _____________________________________ _____________________________________ _____________________________________ . Abu Dhabi UAE Exchange Center.. Dubai Gulf Bank. Kuwait Oman & UAE Exchange Center.. • The branches should use the program “Payment of DDs. Bank Code BCBKUA MASDUB GULKUW Name of the Bank Bank of Commerce. Oman Orient Exchange Co. _____________________________________ _____________________________________ _____________________________________ . • Presently we have arrangements to pay Rupee drafts issued by the following Private Exchange Houses (PEH) Bank Code AFABDB AFDOHA BECKUW BFCBAH GLOMOM OECKUW OMUAOM OREXDU UAEECE UAEKEW Name of the Private Exchange House Alfardan Exchange Co. Draft drawing arrangements with various Exchange Houses and Banks. • We have a system wherein the branches in the drawing arrangements will be permitted to view the details of the drafts payable by Exchange Houses & Banks and effect payment. UAE Exchange Center.. identity etc.. 240 510 525 • Treasury (Foreign) loads the DD-ISSUE DATA files that are being received from PEH into the core server on a daily basis. Berhad (CIMB Bank) Mashreq Bank. • Only the branches in the drawing arrangements should use this option and only for payment of Rupee drafts issued by PEH and the three banks. 110 107 109 97 113 77 112 114 86 111 And the following Banks. available in CBS menu (Module:fets Prog-name : exch).. Abu Dhabi Alfardan Exchange Co. Oman Oman Exchange Co. Kuwait A/c No. Kuwait Bahrain Finance Co.2009..Career Guide for IOBians 190 _____________________________________ _____________________________________ _____________________________________ The transaction is then entered by them into the central system of WUFS which will be accessible to any WUFS sub agent including IOB The beneficiary has the option of drawing the amount in any of the branches of IOB The branch will make the payment after verification of transaction. Kuwait A/c No. This system was effective from 08. Doha Bahrain Exchange Co. No charges shall be collected from the beneficiary at the time of payment 9.01. through CBS.Private Exchange Cos & Banks” only. Bahrain Global Money Exchange. the system would permit the users to pay the draft and the users should ensure that they enter the details in full in the relevant columns for prompt reconciliation. The facility has been initially introduced at Singapore and would be extended to other centres. [FX/82/2009-10 dt. 8. the system will generate a corresponding credit. in case of drafts issued by the three Banks listed above. our Bank advised all the Exchange Companies to restrict issuance of rupee drafts upto Rs. overseas branches will directly and instantaneously credit the account of the beneficiary. Direct Credit by our Overseas Branches Whenever a remitter approaches our overseas branches to effect a remittance to his own account or to accounts of third parties maintaining account with our branches. • Rupee drafts issued by Private Exchange Houses in excess of Rs.00 lacs.00 lacs should be returned with the reason “Exceeds arrangement”.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . which will be posted automatically.06.04.5.01. • In order to comply with AML requirements and for a better follow up.Career Guide for IOBians 191 _____________________________________ _____________________________________ _____________________________________ • The branches with drawing arrangements while matching the details of the draft in CBS menu.2010] **************** srn/07.5. • However. even if the data is not available. NBFCs. i. 1956. and v) Housing Finance Companies being regulated by the National Housing Bank (NHB).300 Crore assets. which have been exempted 15% of 20% of capital Funds from the requirement of registration by Capital Funds RBI viz.100 Crores Partnership firms Ship Breaking Industry* Film Industry* Aviation Industry* Rs. 1938.Career Guide for IOBians 192 _____________________________________ _____________________________________ _____________________________________ General Advances 1. Stock Broking Companies / Merchant Banking Companies registered under Section 12 of the Securities & Exchange Board of India Act. Rs. iii.300 Crores registered with NBFCs having gold loans to the extent of 50% or more of its total financial Rs. iv.400 Crores Rs. 15% of Capital 20% of capital All other borrowers Funds Funds _____________________________________ _____________________________________ _____________________________________ .400 Crores Rs. 2.100 Crores Rs. Maximum limit with approval of Board 20% of capital Funds 10%/15% of Capital Fund for single NBFC/NBFC AFC Asset Financing Company) 7. Loans sanctioned to NBFCs for on-lending to individuals or other entities against gold jewellery. Chit Fund Companies carrying on Chit Fund business as their principal business as per Explanation to Clause (vii) of Section 45-I(bb) of the Reserve Bank of India Act.Gupta Committee 3.V. ii.5% of Banks’ Capital Funds. Insurance Companies registered under Section 3 of the Insurance Act. Recommendations towards improvement of agricultural advances was given by R. Ceiling for single Borrower Limit (Other than Infrastructure Projects) Category of borrower Individual /Proprietary Concerns/ Trust/Society* Maximum Limit Rs. are not eligible for classification under agriculture sector. Nidhi Companies notified under Section 620A of the Companies Act. 1934.500 Crores NBFCS* RBI. 100 Crore Rs. 20% of Capital Funds @ 25% of capital Funds Maximum Limit Maximum limit with approval 45% of capital Funds 5.500 crore.) if the NBFC is lending to Infrastructure. Exposure ceiling to NBFC • In the case of NBFCs. NFB advances and investments. Maximum Limit Rs.300 Crore NBFCs having gold loans to Rs. All other borrowers Maximum limit with approval of Board @ 25% of capital Funds 15%/20% of Capital Funds for single NBFC/ NBFC . However aggregate limits to Proprietary and partnership firms in the group should not exceed Rs. • Single borrower limit for NBFCs predominantly engaged in lending against gold: Within the above ceiling a sub ceiling of 1% of gross domestic exposure for all such NBFCs.400 Crore Rs. For Infrastructure projects 40% of capital Funds. Single borrower limit for infrastructure projects Category of borrower Individual /Proprietary Concerns/Trust/Society Partnership firms NBFCs Registered with RBI.300 Cr. 55% of capital Funds 6.300 Crore the extent of 50% or more of its total financial assets. having gold loans to the extent of 50% or more of its total financial assets. taken together _____________________________________ _____________________________________ _____________________________________ . Group Borrower Limit Group borrower limit For projects other than infrastructure.500 crore. 50% of capital Funds However aggregate limits to Proprietary and partnership firms in the group should not exceed Rs. The exposure will include FB.5% of Banks’ Capital Funds. 12. the Bank will restrict its aggregate exposure to 10% of gross domestic advances subject to single borrower exposure not exceeding Rs.Career Guide for IOBians 193 _____________________________________ _____________________________________ _____________________________________ 4.AFC (Asset Finance Co. multipurpose commercial premises. development and construction etc.Career Guide for IOBians 194 _____________________________________ _____________________________________ _____________________________________ 7. retail space. loan and investment activities However. multi-tenanted commercial premises. Financing to Chit companies There is no ban on financing Chit Fund Companies. registered with RBI are eligible for Bank Finance Need based working capital facilities as well as term loans will be extended to all NBFCs registered with RBI and engaged in equipment leasing. Hospitals and investment in Mortgaged Backed Securities (MBS) and other securitised exposures Housing direct (includes total of residential mortgagesexcept indirect housing loans) Housing Indirect Non-Commercial Real Estate (Total) Real Estate – CRE & Non CRE (Total) 3% 10% 3% 3% 10% 4% 20% 30% 11. No Non Banking financial company shall contribute to the capital of a partnership firm or become a partner of such firm. Liquirent CRE Commercial Real Estate (Total) Liquirent – Non-CRE Hotels. 9. Finance can be extended to NBFCs against second hand assets financed by them Non-Corporate entities engaged in Non Banking Financial activities can be granted MCC limits against immovable properly as per norms applicable to MCC advances to others. 8. finance to Residuary Non Banking Companies (RNBCs) would be restricted to the extent of their Net Owned Fund (NOF). Exposure ceiling for real estate advances Sub-sector under Real Estate Advances Sub-ceiling Commercial Real Estate excluding liquirent CRE :Lendings secured by mortgages on commercial real estates (office buildings. multifamily residential buildings. hire-purchase.) (excluding liquirent CRE). is not engaged in schemes attracted by the provisions of the prize chits and money circulation schemes (Banning) Act 1978 10. However it should be ensured that the chit company. According to the guidelines of RBI. land 7% acquisition. to whom finance is made. NBFCs. Single/group Prudential exposure limits do not apply if the credit facilities proposed fall under the following categories: _____________________________________ _____________________________________ _____________________________________ . industrial or warehouse space. 17. Loans to Hotels and Hospitals • Loans to Hotels and Hospitals are not classified under Commercial Real Estate sector if the ventures are run by the borrower themselves.100 Crores. Loans and advances granted against the security of Bank’s own term deposits.100 crore fixed for Single Trust/Society and 3% fixed for aggregate Trust/Society accounts are not applicable in the following cases. 15.5 crore or above: grading has to be obtained from ICRA Ltd. i. _____________________________________ _____________________________________ _____________________________________ . Granted to weak/sick industrial units under rehabilitation. Financing MBA & Engineering Colleges New accounts where the aggregate of the proposed credit facilities (FB+NFB) is Rs. The ceiling of Rs. for food credit. This may however be increased upto 180 months for large projects involving longer gestation period. to whom limits are allocated directly by the Reserve Bank of India. To accounts specifically exempted by the Board In such cases (mentioned under i & ii above). b. Loans granted with repayment period (including holiday period) of 12 months and below are classified as Short Term Loans. 16. e. Borrowers. d. The maximum period for repayment of term loans other than Housing loan shall not generally exceed 120 months including the holiday period. 14. the exposure can be upto single borrower limit under prudential norms 13. c. Loans granted with repayment period (including holiday period) of more than 12 months are classified as Term Loans. Principal and interest are fully guaranteed by the Government of India.. Exposure to NABARD.Career Guide for IOBians 195 _____________________________________ _____________________________________ _____________________________________ Existing/additional credit facilities (including funding of interest and irregularities) a. In the case of exposure to Trusts/Societies constituted by State / Central Governments including Port Trust(s) or under Special Statutes for specific purposes like infrastructure development etc. Ceiling for Aggregate exposure limit for Trust/Society The exposure to Trust and Society put together shall not exceed 3% of gross domestic exposure subject to single borrower exposure not exceeding Rs. and ii. 12. Loan against Shares a. Where the securities are held in dematerialized form. Advances against shares and debentures to individuals and share & stock brokers shall be considered by the Bank in select regions.20 lakhs per borrower if shares are held in demat form.Hotels. plus total outstanding unsecured advances should not exceed 30% of its total outstanding global advances. b. • Current Ratio should be minimum 1. • Rating of the borrowers should be IOB 4 and above. sanctioning authorities can prescribe lower margin at 40% subject to RBI guidelines and subject to 2 out of 3 parameters mentioned below being complied with. 19. At present a minimum margin of 50% will be maintained on advances against shares/ Issue of guarantees on behalf of brokers. c.10 lakhs per borrower and Rs. as assessed by the Bank/approved valuers/Reserve bank’s inspecting officers is not more than 10 per cent. lien will be marked against such shares in DP. Instead.Career Guide for IOBians 196 _____________________________________ _____________________________________ _____________________________________ • Branches and ROs can sanction advances to these sectors viz. besides sending to the account holders. ab-initio. _____________________________________ _____________________________________ _____________________________________ . Stocks / Book Debts) coverage should be not less than 50%. and that too. • Collateral security (e. 23. Loans against the security of shares. of the outstanding exposure. The confirmation of balances in deposit and advances accounts of entities should be sent directly to the respective auditors. Unsecured exposure is defined as an exposure where the realizable value of security. Hospital and Liquirent Non-CRE under their discretion available to sanction limits for such category of borrower 18. debentures and PSU bonds if held in physical form should not exceed the limit of Rs. Granting Of Loans For Acquisition Of Kisan Vikas Patras (Kvps): No loans will be sanctioned for acquisition of/investing in Small Savings Instruments including Kisan Vikas Patras as per RBI guidelines • 20.20 & TOL/TNW upto 3:1. In respect of MCC against immovable properties. the requirement relating to transfer of shares in bank’s name will not apply. 24. Margin on loans & advances • Bank recognizes margin as the borrower’s share in the assets or security 21.g. Margin on MCC – 50% of value of immovable properties 22. • Bank’s outstanding unsecured guarantees. in specified branches in such Regions. d. branch should also ensure that the borrower(s) / guarantor(s) names do not appear in the CIBIL DETECT list which is available with Regional Offices.Career Guide for IOBians 197 _____________________________________ _____________________________________ _____________________________________ 25. 2. and 4. 26. Equifax Credit Information Services P. guarantees favouring single bank/FI will not exceed 1% of Tier 1 capital. • Credit Information Reports. Experian Credit Information Co. The repayment of the term loan should be restricted to a maximum period of 5 years or the residual life period of machinery/asset whichever is lower. Highmark Credit Information Services P. • Regional Offices should draw reports in Commercial segment with the User Ids they have. 28. Our Bank is a member in all the following 4 credit information companies. Back to index _____________________________________ _____________________________________ _____________________________________ . Financing second hand machineries is subject to . 1. • Bank will also extend bridge loans against the expected proceeds of NonConvertible Debentures. of India P. Global Depository Receipts and/or funds in the nature of Foreign Direct Investments. • After obtaining CIBIL report.. External Commercial Borrowings. • A cap of 10% on Bank's Tier 1 capital is fixed for the bank as a whole for issuing such guarantees. Ltd. • Of this. • All the Branches are provided with User Ids and password for drawing the reports in Consumer segment from CIBIL. Ltd. Guidelines for Sanctioning Bridge Loans: • Bank will sanction bridge loans to companies for a period not exceeding one year against expected equity flows/issues. • It is compulsory to draw Credit Information Reports (CIR) from Credit Information Company in respect of advances for Consumer as well as Commercial segment irrespective of the loan amount – for fresh sanction / enhancement / renewal. • CIBIL reports (commercial) should be generated at the time of renewal of credit facilities also. The Credit Information Bureau (India) Ltd (CIBIL). Guarantees In Favour Of Banks: • Banks issue guarantees favouring other banks/FIs/other lending agencies for the loans extended by the latter. 3. provided the borrowing company has already made firm arrangements for raising the aforesaid resources/funds 27. Ltd. • With the setting up of the committees individual delegated powers above the Branch Manager level cease to exist. • Proposals seeking enhancement of any amount (both FB and NFB and both for domestic and overseas credit) excluding adhoc limits falling under the powers of HLCC(ED). • At branch headed by AGM/DGM. the credit proposals will thereafter be put up to the appropriate sanctioning authority for disposal. or b. • The credit limits to be sanctioned above the delegated powers of Scale IV (Single/Group/Scheme-wise) should be routed through the Approval Grid. • At Central Office all new credit proposals falling beyond the powers of HLCC(GM) and Overseas credit proposals are referred to an “ Approval Grid “ before being recommended to sanctioning authorities. The delegated powers are vested with the committees.Career Guide for IOBians 198 _____________________________________ _____________________________________ _____________________________________ 29. 31. Regional Head shall nominate the members from nearby Branches and permit the Branch to constitute the grid. Report on Overseas Buyers And Sellers Branches can draw the reports either from a. _____________________________________ _____________________________________ _____________________________________ . Two Head Office Level Credit Approval committees at Central Office namely HLCC(ED) and HLCC (GM) to cater to all eligible proposals at Central Office level. Ltd. One committee at Regional office namely Regional Level Credit Approval Committee (RLCC) to consider proposals at Regional offices. • Approval Grid is only a recommendatory body. Wherever sufficient number of officers are not available on the roll for the constitution of approval grid at Branches. Based on the recommendations of the Approval Grid. 30. From Experian Services India Private Limited. • Restructure / rephasement / rehabilitation proposals (including CDR) will be routed through Approval Grid. Different committees for credit are: Credit Approval Committee (CAC headed by CMD). • It should be ensured that the Chairman of the Grid is not the credit sanctioning/processing authority. Approval grid : • As per Reserve Bank of India guidelines on Credit Risk Management. each Bank should consider formation of Credit Approving Committees at various operating levels. CAC and MCB are to be routed through “Approval Grid". Dun & Bradstreet Information Services India Pvt. • Entry Level Rating for new proposals: For considering sanction of new proposals of Rs. • The quorum of the committees : 3 _____________________________________ _____________________________________ _____________________________________ . • The system of routing the proposals through Approval Grid shall continue for sanctioning of proposals by the Committees. The rating should be in force (within 12 months from the date of rating / review) and should cover the total limit/exposure proposed. ‘AA’ and ‘A’ (This includes ‘+’ or ‘-‘symbols). Placing the minutes to next layer for review in the following month • Frequency Of Meeting: The committees shall meet on a weekly basis and as and when required.Career Guide for IOBians 199 _____________________________________ _____________________________________ _____________________________________ • 25% higher powers (for Secured and Unsecured advances) are delegated for single borrowers with external rating ‘AAA’. Keeping the minutes and original proposal under Safe Custody. • Minutes of the meetings of various committees at RO and CO shall be duly recorded and signed by the Head and other members of the respective committees. • The Convener for each committee shall be as under. Circulation of Agenda Notes serially numbered. • Hurdle Credit Rating for existing accounts: Proposals (existing account) involving enhancements. HLCC (GM) and HLCC (ED) shall be reported to next higher committee respectively. HLCC (ED) CSSD HLCC (GM) CSSD RLCC • Head of the Credit Department (RO) The convener is responsible for. Communication of Minutes to the respective Departments. should be referred to the next higher layer of sanctioning authorities • The decision of these committees shall be unanimous. where the rating of the borrower (existing account) is equivalent to IOB6 and below (internal RAM rating) or BB and below (external rating by RBI approved rating agency). • Minutes of the meetings of RLCC. the credit rating should be equivalent to IOB-5 and above (internal RAM rating) or BBB and above (external rating by RBI approved rating agency). Recording of Minutes.1 crore and above by Branches and RLCC. 1 crore (irrespective of Corporates or Others) shall be routed through Approval Grid at Branch / Regional Office before sanction by RLCC 35. ED and CMD. Pushpaka _____________________________________ _____________________________________ _____________________________________ . headed by Managers in Scale IV and above. GM. Demand Loan against NSC. Industrial and trade sectors require pre release clearance by the Regional Head. II line Managers in scale II and above can exercise the delegated powers as applicable to their scale in respect of the following advances. Delegation of powers • The sanctioning authority shall exercise his/her delegated powers only after regular loan proposals are prepared. 36. shall be reviewed by the 1st line Manager. • In single man branches. Advances against gold ornaments (Agri Jewel Loan and other jewel loan) Clean Loan to salaried employees. Since adhoc limits involve appraisal and documentation. compliance of KYC norms and duly recommended at least by one officer of the bank other than the sanctioning authority.Career Guide for IOBians 200 _____________________________________ _____________________________________ _____________________________________ 32. Demand Loan against domestic deposits to depositors and third parties. shall be reviewed by the 1st line Manager. such sanctions made. • Rejected/declined proposals by higher authorities should not be entertained at lower levels even if such sanctions fall within lower functionaries’ delegated powers. needs assessed. However. Proposals with limits above Rs. II line Managers can exercise discretionary powers as applicable to their scale. Powers to grant excess are vested with Regional Head. such limits shall be sanctioned by the respective Credit Approval Committees 34. 33. • Proposals declined by one Branch or RO should not be entertained by another Branch or RO without prior clearance of the Branch or RO which has declined the proposal earlier. policies of LIC and other private insurance companies approved by IRDA. However. Discretionary power – II line functionaries in branches • In Branches. • The powers delegated to Branch Heads to sanction credit limits are with reference to the scale of the sanctioning authorities only and not in relation to the size of the Branch. • In Branches headed by Scale III officers. such sanctions made. advances sanctioned by Branch Head under Special Credit Schemes. Margin 10% 41. Back to index _____________________________________ _____________________________________ _____________________________________ . The project launched in Tiruvallur and Nagapattinam Districts of Tamilnadu to achieve Total Inclusive Growth for integrated Rural development covering all aspects of social and economic life of people. These bench marks will generally be observed for new connections.5 to 4:1 and relaxation can be given on case-to-case basis. debt equity ratio of less than 2:1 and Total outside Liabilities to Tangible Net Worth (TOL/TNW) ratio of less than 4:1 will be considered as reasonable requirements for any credit proposal. : " Insta Fund ". With a view to simplify access to Bank Credit by exporters. Appraisal Of Infrastructure Projects The desirable debt equity ratio is 3. Debt Service Coverage Ratio: While the desirable ratio would be above 2:1. Trade Credit o Limit to traders upto which Balance sheet need not be insisted :Rs 1 lakh o Sanctioning limits to traders based on unaudited balance sheet : For limits upto Rs 25 lakhs. : IOB -Sampoorna' 38. 42. However on any account the gestation period should not go above 36 months. 37. Likewise while the desirable and ideal DSCR ratio would be above 2:1. o Non-insistence of approved valuers’ valuation on collateral securities offered for securing limits to traders: upto Rs 1 lakh etc 40.2: 1 can be accepted on merits. especially small and medium exporters. Term loan/project financing The maximum period for repayment of term loans shall not generally exceed 120 months including the holiday period. Solvency ratios: In general.Career Guide for IOBians 201 _____________________________________ _____________________________________ _____________________________________ Pensioners’ loan. average DSCR of 1. RBI has drawn up a scheme.0 with a minimum of 1.: Gold Card Scheme 39.50 in any year can be accepted. Kissan Credit Card scheme.5: 1 with minimum DSCR of 1. This may however be increased upto 180 months for large projects involving longer gestation period Gestation/Holiday period for various project loans will vary from 3 months to 36 months. in consultation with select Banks and exporters. A scheme for easy credit to High net worth Corporates will be continued to be given thrust. an average DSCR of 2. 1000/= and maximum of Rs. • Whenever customers approaches for revalidation of sanctioned limit and those limits are approved.50% p. • Branches are to obtain a certificate from the borrower’s auditors on an annual basis stating that all statutory dues including EPF dues have been paid by the borrower.5 lakh (plus service tax). a processing fee on revalidation of such sanction should be levied on the limits covered under the sanction. • No ceiling/maximum amount is fixed for the collection of upfront fee. Non Fund Based limits and Term loan of Rs. Upfront fee for Term loans • For Term Loans (for standalone Term Loan as well as Term Loan sanctioned with other facilities) upfront fee @1. The charges are applicable sanction-wise and not limit-wise. _____________________________________ _____________________________________ _____________________________________ . • Processing Fee on modifications effected on sanction terms: . who is sanctioned credit facilities and the terms of sanction have been accepted by him. strictly in compliance of the provisions of the relevant statutes. approaches the Bank for modification of certain terms of sanction already accepted. • Financial charges on term loan review/renewal : NIL Commitment charges • Commitment charges @0. at 0. • Such levy will be on the unutilised portion of the working capital FB and NFB limits subject to tolerance level of 20% of each limit. commitment charges will be levied on the undrawn amount if the undrawn amount is more than 20% of the amount committed for drawal 44. wherever the drawal is not made as per the draw down schedule by the borrowers. Lending Banks to ensure that the borrowing firms are making payments of their statutory dues in time. subject to minimum of Rs.25% on the total fund based and non-fund based limits approved under the sanction order should be levied subject to minimum of Rs.Career Guide for IOBians 202 _____________________________________ _____________________________________ _____________________________________ 43. a charge of 0.When a Customer. • Why because some legislations like the employees Provident Fund and Miscellaneous Provision Act 1952 declare priority to the dues over others.a will be levied uniformly for all the working capital Fund Based.02% should be collected in lieu of processing charges.50 lakhs and above from the Banking System.25% on the total fund based and non-fund based limits revalidated.1000/= and maximum of Rs. This will lead to security value erosion.5 lakh (plus service tax) whenever such modifications are approved by the sanctioning authority. • With regard to Term Loans. 7.7. • Borrowers enjoying working capital limits of above Rs.2 crore and upto Rs. Back to index _____________________________________ _____________________________________ _____________________________________ . The interest rate shall be mutually agreed between the issuing and participant banks The IBPCs are not transferable and the tenor shall be minimum 91 days and maximum of 180 days.Career Guide for IOBians 203 _____________________________________ _____________________________________ _____________________________________ 45. 10 Crore (above Rs. • For sanctioning CC against book debts the age of which are not more than 120 days. the minimum margin should be : 25% • Proposals involving advance against book debts of age above120 days and not exceeding 180 days can be sanctioned from selected level only. • Current Ratio: While it is desirable for a current ratio of 1.5 crore for Medium Enterprises – ME borrowers) will be assessed as per Nayak Committee recommendations i. lower current ratio can be considered acceptable on a case-to-case basis depending upon the components and quality of current assets and current liabilities.10 Crore for SME borrowers) will be assessed as per the existing traditional method of arriving at Maximum Permissible Bank Finance (MPBF) calling for the CMA data and • Borrowers enjoying working capital limits of above Rs.e.5 Crore and upto Rs.33:1 (1. • For industries like sugar and tea wherein the pattern of financing the peak cash deficit(s) is followed all along. option will be given to the borrower to be assessed as per the cash budget method or as per MPBF method.10 Crore.25:1 for MSE) as a benchmark. Construction Industry: In case of construction industries the extant RBI guidelines based on Accounting Standard (AS.2 crore (Rs. the existing system of assessment under the cash budget method will be followed. 47. 46.7) issued by Institute of Chartered Accountants of India (ICAI) is followed to arrive at the permissible bank finance for borrowers with fund based working capital limits beyond Rs 2 crore. Lending By Inter Bank Participation (IBP) With Risk Sharing: The Bank may participate in IBPCs with Risk Sharing issued by scheduled commercial Banks with the approval of MCB to increase the credit portfolio as and when required as per the guidelines for the scheme outlined by RBI from time to time. CC against book debts 48. turnover method. Working capital Finance • Banks have been given freedom in evolving their own method of lending and the Bank has evolved its own lending policy • Working capital limits upto Rs. • The pricing of loan facilities above a prescribed cut-off are linked to the rating of the borrowal account. • The Watch Category/ Restructured borrowal accounts with fund based outstanding of Rs. • Borrowers [Standard Assets] in Private Sector whose fund based working capital limits [inclusive of receivables] are Rs. with outstanding of Rs. • It is a decision–enabling tool that helps the sanctioning authority to take a view on acceptability of a credit proposal or otherwise. Bills Financing Bills financing facilities will be treated as a part of working capital finance and accordingly. 5 crore and above . • Stock audit should be conducted for non-fund based advances pertaining to trading in goods for non-fund based exposures of Rs. STOCK AUDIT: 51. • In respect of NPA accounts. 5 crore and above stock audit is to be done once in a year as on October 31st of every year. they will be construed as secured advances only for balance -sheet /audit purposes 52. which are under Private or Public sector. in consultation with the participating bank and share the recoveries proportionately.once in a year as on 31st October every year. MCB alone has discretionary powers to finance to any of the other associates in the group. 50. the bills limit shall be assessed and appraised within the overall working capital limits sanctioned to the borrower The Bills purchased/ discounted in respect of 'services'' will be treated as unsecured advances for the purpose of exercise of discretionary powers. However. the issuing bank will take necessary action. or a suit filed account then irrespective of the quantum of the limits.once in year i.5 crore and above. In case where there is default in the underlying advances. Rating of Borrowal Accounts under Risk Assessment Model (RAM) • Credit Rating is a process which enables the Bank to assess the inherent merits and demerits of a credit proposal. 49.Career Guide for IOBians 204 _____________________________________ _____________________________________ _____________________________________ The aggregate amount of such participation in any account shall not exceed 40% of the outstanding in the account at the time of issue and it shall be maintained during the currency of participation.1 crore and above . Group/associates financing-NPS In a group if any entity or associate is a non performing asset. wherever such facilities are supported by collateral securities. as on October 31st every year. _____________________________________ _____________________________________ _____________________________________ . was granted OTS with sacrifice.e. _____________________________________ _____________________________________ _____________________________________ . • In our bank. consortium is not mandatory. Granting of loans to officers: • No officers or any committee comprising inter alia. while exercising powers of sanction of any credit facility.000/. the bank is required to internally rate all eligible borrowal accounts (as decided by bank) continuously every year.25% on the applicable rate.e. car advances. Government securities Life Insurance policies Fixed or other deposits Temporary overdrafts for small amount i. In lending under consortium/multiple banking.Career Guide for IOBians 205 _____________________________________ _____________________________________ _____________________________________ • The process of implementing Basel II framework and migrating towards Internal Rating Based (IRB) approach. as it is an important component to estimate Probability of Default (PD). 2 crore and above in case of Micro and Small Entrepreneurs accounts) • TOP ratings of SMERA. 1 Crore and above (Rs. granted to an officer of the bank under any scheme applicable generally to officers. • In the case of Advances to Officers of Bank and their relatives.25. it has been put in place to rate all eligible performing borrowal accounts with credit limits (Fund based and / or Non Fund based) of Rs. In order to achieve this.000/ Casual purchase of cheques upto Rs. • NSIC with a view to encourage rating provides 75% subsidy in the fee charged by top rating agencies for the first year 53. consumption loans.at a time. an officer as member. upto Rs. CRISIL. As per extant guidelines of RBI.5. sanction any credit facility to himself or to his /her relative. the term ‘credit facility’ will not include loans or advances against. Branches should obtain the following certificates. 2013 should be done only after obtaining/sharing necessary information. 55. • Certification of borrowal companies by chartered Accountants/ Company Secretary/cost accountants • Any sanction of fresh loans/adhoc loans/renewal of loans to new/existing borrowers with effect from January 1. shall. etc. • Diligence Report from Company Secretary/firm. CARE. the historical internal credit rating would play a vital part. ICRA & BRICK WORK enjoy interest concession of 0. 54. • Such a facility shall ordinarily be sanctioned only by the next higher sanctioning authority. Loans and advances such as housing loans. Whenever the limits in the nature of loan for acquisition of capital assets (other than working capital limits) sanctioned to a public limited company or to a private limited company which is its subsidiary. In case of common guarantors if they have substantial interest i. where the repayment primarily depends on the operating profit from the business operations. then they are not to be treated as associates falling within the purview of group concept. • Gold coins are of 24 carat fineness sold by Banks only. Where common director /partners are employees/ institutional nominees/ or have no financial stake. A group is defined by invoking associate/sister concern concept. c. quality of goods and services. Every such general body resolution delegating power to borrow must specify the total amount outstanding at one time up to which moneys may be borrowed by the company. Where a proprietor or partner of a firm/director of one company is proprietor or partner of another firm/director of another company. need not be treated as Commercial Real Estate (CRE). Advance against gold coins • Branches are permitted to extend Agricultural Jewel Loans and Jewel Loans for other purposes including Jewel Loans to staff against pledge of gold coins. b. together with its other term loan borrowings exceed its paid up capital and free reserves. Banks and notified All India Financial institutions are required furnish details on wilful defaulters to RBI. 60. 58. The exposure to hotels.e 51% or more stakes in one or any of the common concerns.25 lacs and above. The cut off limit for reporting willful defaulters is Rs. the group concept will not apply. e. 59. f.Career Guide for IOBians 206 _____________________________________ _____________________________________ _____________________________________ 56. hospitals etc. d. Definition Of Group: a. 57. the approval of such company in General Body Meeting is to be obtained for such excess borrowings. they are called as associates falling within the purview of group concept. the concept of “Group” and the task of identification of the borrowers belonging to specific industrial groups is left to the perception of banks / financial institutions. Branch should take an undertaking from the borrower that he / she has no objection to the gold coins being taken _____________________________________ _____________________________________ _____________________________________ . As per RBI guidelines. Where a proprietor or partner of a firm /a director of one company/ a company is the guarantor of another partnership firm/another company where the guarantor has no financial stake (or has no commonality of management and effective control ). The guiding principle in this regard being commonality of management and effective control. then the account should be treated as associate concern. • All the coins offered for loan should be appraised properly as done in case of other jewel loans. • Per gram advance rate will be as applicable to 22 carat hallmarked Jewellery.Career Guide for IOBians 207 _____________________________________ _____________________________________ _____________________________________ out of the sealed packets for the purpose of appraisal and is fully aware that the coins cannot be repacked.00. jewel loans etc. 62. gold coins.00. 61.05.2013 Disposal time from the date of receipt of application 15 days Sanctioning authority Br/RO 4 weeks Br/RO 30 days 45 days 90 days BR RO CO Back to index _____________________________________ _____________________________________ _____________________________________ . • Interest is to be charged and compounded monthly on advances except the above including Demand loans (including load against deposits). No advances should be granted by the Bank for purchase of gold in any form. Charging/Compounding Of Interest On Loans And Advances • As per RBI guidelines. Advance against bullion: Gold loan in the form of Bullion can be extended to domestic jewellery manufacturers /traders for 3 months to 6 months for working capital purposes. interest for all the loans and advances are to be charged at monthly rests except agricultural advances and DRI Small loans. 000 srn/10. units of gold Exchange Traded Funds (ETF) 63. gold jewellery. Time frame Export Credit: Branches / Offices should also adhere to the following time frame prescribed by RBI for disposal of loan applications involving export credit.000 Above 2. Small loans. gold bullion.25000 Above 25000 – upto 2. 64. including primary gold. Loan amount Disposal time frame Fresh sanction/enhancement 45 days Renewal 30 days Adhoc limits 16 days The following time-frame has to be adhered for disposal of applications seeking finance from bank to avoid delay in implementation of project Loan amount Up to Rs. Career Guide for IOBians 208 _____________________________________ _____________________________________ _____________________________________ RATIO ANALYSIS • A RATIO is an arithmetical expression of relationship between two related or inter dependent items. These assets are convertible into cash within the operating cycle of the business within a period of 12 months. E. profitability etc. Current Ratio Current Ratio = Current Assets Current Liabilities Current Assets include inventories. Liquidity Ratio Solvency Ratio Profitability Ratio Activity ratios or Turnover Ratios Leverage ratio A. Types of Ratios The financial position of a firm can be described by studying its long term and short term liquidity position. • Traditionally two ratios are used to highlight the business liquidity. • Ratios should be computed only for those relationships that are significant from a banker’s point of view. • Ratios are only financial indicators. • Ratio Analysis diagnoses the financial health by evaluating liquidity. trade receivables. These indicators point the necessity for investigation. Therefore the ratios can be generally classified into the following five broad categories: A. a. B. They are Current Ratio and Quick Ratio. _____________________________________ _____________________________________ _____________________________________ . solvency. Short Term Investment. • The relationship may be shown as a percentage or as a quotient or even as a ratio. C. Cash & Bank Balance etc. Sundry Debtors. Deposit with Post Office. D. profitability and its operational activity. short term Loans and Advances. Liquidity Ratios • Liquidity Ratio indicates the ability of the business to pay its short term liability. • RATIO ANALYSIS is a systematic interpretation of the financial statements through the use of ratios between balance sheet items and profit & loss items so that the strengths and weakness of the firm vis-à-vis other firms in the industry as well as historical performance can be determined (trend analysis). Quick Assets = Current Assets . Net Working Capital (NWC) : It is a common practice among banks to determine the portion of funds invested in current assets from long term sources. A poor current ratio can be improved either by bringing in fresh term funds or by ploughing back profit. NWC = Current asset – Current Liability a. Book overdrafts. Short Term Loans. outstanding expenses etc. Quick Assets Quick Ratio = Current Liabilities Quick Assets consist of only cash and cash equivalents. This is determined by calculating NWC as follows. Solvency Ratio is determined to find out Long Term solvency of a firm. Diversion of funds reduces the current ratio badly. • Main ratios under this category are . Debt Equity Ratio = Long Term Funds Tangible Net worth _____________________________________ _____________________________________ _____________________________________ .33 : 1 Higher ratio may be good in the point of view of creditors. SOLVENCY RATIOS • Generally. Debt equity ratio It gives the relation between borrowed funds (debts) and Net owned funds (TNW).Career Guide for IOBians 209 _____________________________________ _____________________________________ _____________________________________ Current Liabilities include Creditors for goods and services. Bench mark of this ratio is 1. a. Quick Ratio: It is also known as acid test ratio. These liabilities mature for payment within next 12 months. The objective of finding of this ratio is to know as to whether the business unit does have enough current assets to meet the payment schedule of its current debts with a margin for possible losses. It is a more exacting measure than Current Ratio. It concentrates on really liquid assets with value fairly certain.Inventories Quick Ratio of 1: 1 is considered satisfactory B. in percentage terms Net Profit Ratio = Net Profit after Tax Net Sales X 100 c. Operating Profit ratio d. Operating Profit Ratio Operating Profit Ratio = Operating Profit Net Sales X 100 _____________________________________ _____________________________________ _____________________________________ . Proprietary Ratio • Gives the relationship between own funds and total assets. Net Profit Ratio It establishes the relationship between net profit and sales. PROFITABILITY RATIOS • The efficiency in business is measured by profitability. Proprietary Ratio = Share Holder’s funds Total Assets (excluding fictitious assets) C.Career Guide for IOBians 210 _____________________________________ _____________________________________ _____________________________________ The purpose of calculating this ratio is to determine the relative stake of outsiders and share holders. • Some of the profitability ratio are : a. Return on Investment e. DER is also calculated by dividing total outside liabilities by Tangible Net Worth (TNW). Net Profit Ratio c. Gross Profit Ratio It gives the relationship of Gross Profit to Net Sales of a firm. Gross Profit Ratio b. in percentage terms Gross Profit Ratio = Gross Profit Net Sales X 100 Gross Profit = Net Sales – Cost of sales (COS) b. Debt Equity Ratio = Total Outside Liability TNW b. Return on Assets a. It is a profitability ratio. This indicates how effectively the facilities available to the firm are being utilized. e. Return on Investment (ROI) This is also known as Return on Capital employed. Return on assets indicates the profit earned on the amount invested in assets. ROA = Net Profit After Tax Average Total Assets Average total assets are calculated by dividing the sum of total assets at the beginning and at the end of the financial year by 2. TURNOVER RATIOS • These are also known as performance ratios. ROI = PBIT Capital Employed X 100 Capital employed = TNW + term Liability + Current Liability This measures the efficiency in use of funds employed. • These ratios are usually calculated on the basis of sales or cost of sales. Thus higher values of return on assets show that business is more profitable. It measures efficiency of the business in using its assets to generate net income. When a firm proposes to acquire expensive plant and equipment analysis is made on its profitability using this ratio. It establishes the relationship between Net Profit before interest and tax (PBIT) and capital employed. _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 211 _____________________________________ _____________________________________ _____________________________________ Operating profit = Gross profit – operating expenses d. Return on Assets (ROA) Return on assets is the ratio of annual net income to average total assets of a business during a financial year. Total assets at the beginning and at the end of the year can be obtained from year ending balance sheets of two consecutive financial years. D. This ratio should be used only to compare companies in the same industry. Debtor’s velocity Debtors velocity = Net Credit sales Average receivable Average receivable includes debtors + Bills receivable Purpose is to calculate average time taken to collect credit sales.Career Guide for IOBians 212 _____________________________________ _____________________________________ _____________________________________ • Turnover ratio for each type of asset is calculated separately. Month (or days) in a year Debtor’s velocity The period may increase due to reduction in demand due to poor quality. • Higher Turnover Ratio indicates better utilization of resource. d. Some of the important ratios are : a. Cost of goods sold = Sales . poor collection mechanism etc. Debt Collection period = c.Gross Profit Average Stock = Opening stock + Closing stock 2 b. b. c. Inventory Turnover Ratio Debtor Turnover Ratio (Debtors velocity) Creditors Turnover Ratio (Creditors velocity) Capital Turnover Ratio a. Inventory Turnover Ratio Also known as stock turnover ratio Establishes relationship between cost of goods sold during a given period and average amount of inventory carried during that period Indicate the efficiency in usage of investment in stock Inventory Turnover Ratio = Cost of goods sold Average stock Where. Creditors Velocity Shows relation between net credit purchases and average payables (trade creditors & bills payable) Net credit purchases Creditor’s velocity = Average Payables Debt Payment period = Month (or days) in a year Creditors velocity _____________________________________ _____________________________________ _____________________________________ . industry recession. By the time the statement is prepared/audited/published/analysed the value of assets would have undergone changes. The position may not be the same on other days. Evaluation of ratios depends largely on the intention and the ability of the person who handles it. • Utilizing borrowed funds to give an increased return to share holders is known as financial leverage. At the same time. Capital Turnover Ratio shows efficiency of capital employed in the business Capital Turnover ratio = Net sales Capital employed E. Capital gearing ratio = • Fixed charge bearing long term funds TL + NW A high ratio increases yield on equity. 3. 4. Ratio is only an arithmetical expression and by itself has very little meaning unless it is compared with some appropriate standard viz. 2. This makes comparison difficult. 6. _____________________________________ _____________________________________ _____________________________________ . Inventory management/pricing is different from firm to firm within the industry. Balance sheet is a statement of assets and liabilities as on a particular date. LEVERAGE RATIOS: • Also known as gearing ratio. The functionaries of the firm may succeed in bringing financial position of the firm as on the date of balance sheet. But evaluation is subject to certain limitations: 1. • Capital gearing ratio is one leverage ratio. historical and external.Career Guide for IOBians 213 _____________________________________ _____________________________________ _____________________________________ d. the debt may not be serviced and push the firm to debt crisis. Personal bias can affect the evaluation. • A company is said to be highly geared when its fixed charge bearing funds are disproportionately higher compared to shareholder’s funds. 5. if the firm is not able to earn adequate profit. Limitations of Ratio Analysis Ratio Analysis is a widely used technique to evaluate financial health of a firm as also its performance. for evaluation of financial strength of a firm. Management & Financial Policies of firms may differ from one another.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . historical values are only considered. 13. Hence. Any wrong classification may mislead evaluation. 11. 9. Accounting principles of firm may differ which makes inter-firm comparison difficult. ****************** srn/11. Ratio Analysis is made only on money-value basis. In Balance Sheet analysis. a group of ratios are to be considered. A ratio in isolation may not be useful to review the whole business.Career Guide for IOBians 214 _____________________________________ _____________________________________ _____________________________________ 7. Hence similar ratio may not reflect similar state of affairs. Classification of an item in Balance Sheet depends as nature and tenor of the transaction. Hence not realistic in approach. Ratios depend on the correctness of accounting.02. 12. The changes in price levels are ignored. 10. 8. Hence the ratios are unreliable. indirect lending in excess of 4. whichever Exposure. Of this. i. all agricultural loans under the categories 'direct' and 'indirect' will be reckoned in computing achievement under the overall priority sector target of 40 percent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure. Categories under priority sector • Agriculture • Micro and Small Enterprises • Education • Housing • Export Credit • Others Targets: Categories Total Priority Sector Total agriculture Enterprises (MSE) Micro & Small Domestic commercial banks / Foreign banks with less Foreign banks with 20 and above than 20 branches branches 40 percent of Adjusted Net Bank Credit 32 percent of ANBC or [ANBC defined in sub paragraph (iii) credit equivalent amount of below] or credit equivalent amount of Off-Balance Sheet Off-Balance Sheet Exposure. Small Farmers: Farmers with a landholding of more than 1 hectare but less than 2 hectares. higher. whose share of landholding is within above limits prescribed for “Small and Marginal Farmer”. Forms part of total priority sector target.Career Guide for IOBians 215 _____________________________________ _____________________________________ _____________________________________ Priority Sector Credit Classification . whichever is is higher. whichever is higher. whichever is higher. part of total priority sector target.5% of ANBC or credit equivalent amount of Off-Balance Sheet Exposure. whichever is higher. will not be reckoned for computing achievement under 18 percent target. _____________________________________ _____________________________________ _____________________________________ . • For the purpose of priority sector loans ‘small and marginal farmers’ include landless agricultural labourers. oral lessees and share-croppers. However. 18 percent of ANBC or credit equivalent No specific target. tenant farmers.Targets & Guidelines Priority Sector lending classification Marginal Farmers: Farmers with landholding of up to 1 hectare. Advances to micro and small enterprises sector will be reckoned in computing achievement under the overall priority sector target of 40 percent of ANBC or credit No specific target. Forms amount of Off-Balance Sheet Exposure. Description of the Categories under priority sector Agriculture (Both Direct and Indirect) Direct Agriculture • Loans to individual farmers [including Self Help Groups (SHGs) or Joint Liability Groups (JLGs). iii. • For foreign banks with 20 and above branches. Forms part of total priority sector target. Advances to 10 percent of ANBC or credit Weaker equivalent amount of Off-Balance Sections Sheet Exposure. No specific target in the total priority sector target. 20 percent of total advances to micro and small enterprises sector should go to Micro (manufacturing) enterprises with investment in plant and machinery above 10 lakh and up to 25 lakh. whichever is higher. 40 percent of total advances to micro and small enterprises sector should go to Micro (manufacturing) enterprises having investment in plant and machinery up to 10 lakh and micro (service) enterprises having investment in equipment up to 4 lakh. Export credit to eligible activities under agriculture and MSE will be reckoned for priority sector lending under respective categories. For the purpose of priority sector lending.Career Guide for IOBians 216 _____________________________________ _____________________________________ _____________________________________ equivalent amount of Off-Balance Sheet Exposure. priority sector targets and sub-targets have to be achieved within a maximum period of five years starting from April 1. provided banks _____________________________________ _____________________________________ _____________________________________ . and micro (service) enterprises with investment in equipment above 4 lakh and up to 10 lakh Export Credit Export credit is not a separate category. groups of individual farmers. 2013 and ending on March 31. investments in securitised assets). • No specific target. i. ANBC denotes The outstanding Bank Credit in India minus bills rediscounted with RBI and other approved Financial Institutions plus permitted non-SLR bonds/debentures in Held to Maturity (HTM) category plus investments in other categories. whichever is higher.e. ii. 2018 • The targets for Micro Enterprises within the Micro and Small Enterprises segment (MSE) will be computed with reference to the outstanding credit to MSE as on preceding March 31st. which are eligible to be treated as part of priority sector lending (eg. loans for irrigation and other developmental activities undertaken in the farm. poultry. plantations.. purchase of agricultural implements and machinery. 7. animal husbandry. dairy. for crop loans. Loans to farmers up to 50 lakh against pledge/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months. This will include traditional/non-traditional horticulture and allied activities. i. • This will include traditional/non-traditional horticulture and allied activities. 5. harvesting. bee-keeping and sericulture (up to cocoon stage) up to an aggregate limit of 2 crore per borrower for the following purposes. Medium & long-term loans for agriculture and allied activities (e. i. purchase of agricultural implements and machinery. Loans to farmers for pre-harvest and post-harvest activities. irrespective of whether the farmers were given crop loans for raising the produce or not. poultry. 9. 4. loans for irrigation and other developmental activities undertaken in the farm. spraying. partnership firms and co-operatives of farmers directly engaged in Agriculture and Allied Activities. 8. dairy.e. fishery. _____________________________________ _____________________________________ _____________________________________ . 6. Farmers’ Service Societies (FSS) and Large-sized Adivasi Multi Purpose Societies (LAMPS) ceded to or managed/ controlled by such banks for on lending to farmers for agricultural and allied activities. weeding. • Loans to corporates including farmers' producer companies of individual farmers. viz...g. plantations. Medium & long-term loans to farmers for agriculture and allied activities (e. Loans to distressed farmers indebted to non-institutional lenders. for crop loans. b. Loans to farmers under Kisan Credit Card Scheme. fishery. 2. and development loans for allied activities). sorting. Loans to small and marginal farmers for purchase of land for agricultural purposes. 3. viz. beekeeping and sericulture (up to cocoon stage). and development loans for allied activities). a. 1.g. Short-term loans to farmers for raising crops. grading and transporting of their own farm produce. Bank loans to Primary Agricultural Credit Societies (PACS). Export credit to farmers for exporting their own farm produce.Career Guide for IOBians 217 _____________________________________ _____________________________________ _____________________________________ maintain disaggregated data on such loans] engaged in Agriculture and Allied Activities.e. animal husbandry. Short-term loans for raising crops. viz. spraying. harvesting. • partnership firms and institutions engaged in Agriculture and Allied Activities [dairy. grading and sorting. Loans upto 5 crore to Producer Companies set up exclusively by only small and marginal farmers under Part IXA of Companies Act. Loans up to 50 lakh against pledge/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months. combines.. iii. bulldozers. Loans up to 5 crore per borrower to dealers /sellers of fertilizers.Career Guide for IOBians 218 _____________________________________ _____________________________________ _____________________________________ c. poultry feed. pesticides. fishery. poultry. seeds. Farmers’ Service Societies (FSS) and Large-sized Adivasi Multi Purpose Societies (LAMPS) Other indirect agriculture loans i. Loans to Custom Service Units managed by individuals. Export credit for exporting their own farm produce. weeding. etc. iv. Bank loans to Primary Agricultural Credit Societies (PACS). irrespective of whether the farmers were given crop loans for raising the produce or not. bee-keeping and sericulture (up to cocoon stage)] i. iv. v. weeding. Indirect agriculture • Loans to corporates: If the aggregate loan limit per borrower (loans to corporates) is more than 2 crore the entire loan should be treated as indirect finance to agriculture. Loans for pre-harvest and post-harvest activities. 1956 for agricultural and allied activities. cattle feed. animal husbandry. wellboring equipment. grading and sorting.. harvesting. vi. Loans for setting up of Agriclinics and Agribusiness Centres. d. Loans for pre-harvest and post-harvest activities such as spraying. _____________________________________ _____________________________________ _____________________________________ . viz. agricultural implements and other inputs. institutions or organisations who maintain a fleet of tractors. Loans up to 5 crore to cooperative societies of farmers for disposing of the produce of members. ii. partnership firms and institutions for exporting their own farm produce. iii. and undertake farm work for farmers on contract basis. Medium & long-term loans for agriculture and allied activities ii. Export credit to corporates. threshers. Micro and small enterprises . Loans sanctioned to RRBs for on-lending to agriculture and allied activities. vi. market yards. Loans to persons involved in assisting the decentralised sector in the supply of inputs to and marketing of outputs of artisans. Loans to cooperatives of producers in the decentralised sector viz. which are SHG Promoting Institutions. location and amount of original investment in plant and machinery. godowns and silos). viii. Loans for construction and running of storage facilities (warehouse. ii. Back to index _____________________________________ _____________________________________ _____________________________________ . The all inclusive interest charged by the NGO/SHG promoting entity should not exceed the Base Rate of the lending bank plus eight percent per annum. village and cottage industries. for on-lending to members of SHGs under SHG-Bank Linkage Programme for agricultural and allied activities.Career Guide for IOBians 219 _____________________________________ _____________________________________ _____________________________________ v. vii. Khadi and Village Industries Sector (KVI) • All loans sanctioned to units in the KVI sector. iii. Micro and small enterprises – Direct finance • Under Manufacturing Sector : Loan /advances granted to Micro & Small enterprises • Under service sector : Loans/advances upto Rs. Such loans will be eligible for classification under the sub-target of 60 percent prescribed for micro enterprises within the micro and small enterprises segment under priority sector. ix. If the storage unit is a micro or small enterprise. artisans village and cottage industries. Loans sanctioned by banks to MFIs for on-lending to MSE sector as per the conditions specified. Loans sanctioned to NGOs. Loans to MFIs for on-lending to farmers for agricultural and allied activities as per the conditions specified.Indirect Finance i. irrespective of their location. such loans will be classified under loans to Micro and Small Enterprises sector. irrespective of their size of operations. 5 crore granted to Micro and small enterprises. including cold storage units designed to store agriculture produce/products. approved by NHB for their refinance. on an ongoing basis. Housing i. Bank loans to Housing Finance Companies (HFCs). Bank loans to any governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum dwellers subject to a ceiling of 10 lakh per dwelling unit. The maturity of bank loans should be co-terminus with average maturity of loans extended by HFCs. Export Credit • Export Credit extended by foreign banks with less than 20 branches will be reckoned for priority sector target achievement. irrespective of the location. For the purpose of identifying the economically weaker sections and low income groups. ii. Back to index _____________________________________ _____________________________________ _____________________________________ . Banks should maintain necessary borrower-wise details of the underlying portfolio.urban areas.Career Guide for IOBians 220 _____________________________________ _____________________________________ _____________________________________ Education • Loans to individuals for educational purposes including vocational courses upto 10 lakh for studies in India and 20 lakh for studies abroad. the total cost of which do not exceed 10 lakh per dwelling unit. iii. The loans sanctioned by banks for housing projects exclusively for the purpose of construction of houses only to economically weaker sections and low income groups. Loans for repairs to the damaged dwelling units of families up to 5 lakh in urban and metropolitan areas and up to 2 lakh in rural and semi.000 per annum. for on-lending for the purpose of purchase/ construction/ reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers. the family income limit of 1. The eligibility under priority sector loans to HFCs is restricted to 5% of the individual bank’s total priority sector lending. Loans to individuals up to 25 lakh in metropolitan centres with population above ten lakh and 15 lakh in other centres for purchase/construction of a dwelling unit per family excluding loans sanctioned to bank’s own employees. provided the all inclusive interest rate charged to the ultimate borrower is not exceeding lowest lending rate of the lending bank for housing loans plus two percent per annum. iv. is prescribed.20. subject to an aggregate loan limit of 10 lakh per borrower. 000 per borrower to prepay their debt to non-institutional lenders. iii. now National Rural Livelihood Mission (NRLM). not exceeding 50. such loans should be classified under respective categories of Micro and Small Enterprises. ii. Beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY). Weaker Sections Priority sector loans to the following borrowers will be considered under Weaker Sections category: Small and marginal farmers. _____________________________________ _____________________________________ _____________________________________ .000/-. Overdrafts.20. granted against 'no-frills' / basic banking / savings accounts provided the borrowers household annual income in rural areas does not exceed Rs.and for nonrural areas it should not exceed Rs.000/.20. Loans to distressed persons. provided the borrower’s household annual income in rural areas does not exceed 60. If the loans under GCC are sanctioned to Micro and Small Enterprises. Artisans.60. Loans. Beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY). export credit is not a separate category under priority sector. Loans outstanding under loans for general purposes under General Credit Cards (GCC). Loans sanctioned to State Sponsored Organisations for Scheduled Castes/ Scheduled Tribes for the specific purpose of purchase and supply of inputs to and/or the marketing of the outputs of the beneficiaries of these organisations.Career Guide for IOBians 221 _____________________________________ _____________________________________ _____________________________________ • As regards the domestic banks and foreign banks with 20 and above branches. Loans sanctioned by banks directly to individuals for setting up off-grid solar and other off-grid renewable energy solutions for households.and for nonrural areas it should not exceed 1. iv. not exceeding 50. Beneficiaries of Differential Rate of Interest (DRI) scheme. 50.1. vi. up to Rs. Scheduled Castes and Scheduled Tribes. village and cottage industries where individual credit limits do not exceed 50. v.000.000/-.000 per borrower provided directly by banks to individuals and their SHG/JLG. Others i.000 (per account).000/. micro and small enterprise. The loan is to be extended to a borrower whose household annual income in rural areas does not exceed Rs. Loan does not exceed Rs. _____________________________________ _____________________________________ _____________________________________ .in the first cycle and Rs. representing loans to various categories of priority sector.000/. ii.000 per borrower to prepay their debt to non-institutional lenders. aggregate amount of loan. is not less than 75% of the total loans given by MFIs. Loans to distressed persons other than farmers not exceeding 50.20..000 per borrower. iv. the Scheme for Rehabilitation of Manual Loans to Self Help Groups.000/.000/.000/-.Career Guide for IOBians 222 _____________________________________ _____________________________________ _____________________________________ Beneficiaries under Scavengers (SRMS). 2011 for on-lending to individuals and also to members of SHGs / JLGs are priority sector advance under respective categories viz.35. • A “qualifying asset” shall mean a loan disbursed by MFI. as indirect finance. v. extended for income generating activity. government securities and money market instruments) are in the nature of “qualifying assets”. Tenure of loan is not less than 24 months when loan amount exceeds 15. which satisfies the following criteria: i. and 'others'. Investments by banks in securitised assets Investments by banks in securitised assets. not less than 85% of total assets of MFI (other than cash. or after.50.60. balances with banks and financial institutions. are eligible for classification under respective categories of priority sector (direct or indirect) depending on the underlying assets subject to certain conditions: Bank loans to MFIs for on-lending • Bank credit to MFIs extended on. except 'others' category. Loans to distressed farmers indebted to non-institutional lenders.000/-.while for nonrural areas it should not exceed Rs.000/. The loan is without collateral. Loans to individual women beneficiaries upto 50.with right to borrower of prepayment without penalty.in the subsequent cycles iii. April 1. Total indebtedness of the borrower does not exceed 50. 1. provided. In addition. agriculture. rejection should be at a level higher than that of Branch Manager. Receipt. Sanction/Rejection/Disbursement Register A register/ electronic record should be maintained by the bank.000. Service charges No loan related and adhoc service charges/inspection charges should be levied on priority sector loans up to 25. • The foreign banks with less than 20 branches.000. The register/electronic record should be made available to all inspecting agencies. Loan is repayable by weekly. • Non-achievement of priority sector targets and sub-targets will be taken into account while granting regulatory clearances/approvals for various Common guidelines for priority sector loans Banks should comply with the following common guidelines for all categories of advances under the priority sector. _____________________________________ _____________________________________ _____________________________________ . 4. Rate of interest The rates of interest on various categories of priority sector loans will be as per DBOD directives issued from time to time.Career Guide for IOBians 223 _____________________________________ _____________________________________ _____________________________________ vi.000. which fail to achieve the priority sector targets are required to contribute to funds with SIDBI or with other Financial Institutions. as specified by the Reserve Bank. 1. Penal interest No penal interest should be charged by banks for loans under priority sector up to Rs 25. 2. in terms of the above guidelines. should be recorded. fortnightly or monthly installments Non-achievement of priority sector targets • Domestic scheduled commercial banks and foreign banks with branches 20 and above having shortfall in lending to overall priority sector target/agriculture target and weaker sections target shall be allocated amounts for contribution to the Rural Infrastructure Development Fund (RIDF) established with NABARD or Funds with NHB/SIDBI/other Financial Institutions. sanction/rejection/disbursement with reasons thereof. 3. banks will be free to levy penal interest for loans exceeding Rs 25. wherein the date of receipt.. etc. for such other purpose as may be stipulated by RBI. However. In the case of proposals from SC/ST. 000 by way of – (b) • • Composite loans to artisans.000 Fire & other risks Type of Assets Equipment and current assets Advances to Small Enterprises up to and inclusive of Rs.000/= need not be waived if such insurance is a condition under any law or norms of any scheme. Insurance against fire and other risks Banks may waive insurance of assets financed by bank credit in the following cases: Type of Risk No.05. 25. village and cottage industries • All term loans • Working capital where these are against non-hazardous goods Fire Fire Fire Equipment and current assets Equipment Current Assets However.Career Guide for IOBians 224 _____________________________________ _____________________________________ _____________________________________ 5. Category (a) All categories of priority sector advances up to and inclusive of Rs. srn/08. 6. 10.2013 ************** Back to index _____________________________________ _____________________________________ _____________________________________ . insurance of vehicle or assets even for loans up to Rs 10. Issue of Acknowledgement of Loan Applications Banks should provide acknowledgement for loan applications received under priority sector loans. Bank Boards should prescribe a time limit within which the bank communicates its decision in writing to the applicants. 10 lac and upto Rs. • Loans granted to micro and small enterprises under manufacturing sector and loans upto Rs.investment in plant and machinery (original cost excluding land and building) does not exceed Rs.10 lacs but does not exceed Rs. whose investment in equipment (original cost excluding land and building and furniture. 4 lac b. 20% of total advances to small enterprises sector should go to micro (Manufacturing) enterprises with investment in plant and machinery above Rs.25 lacs but does not exceed Rs.2 crore but does not exceed Rs.5 crore but does not exceed Rs. 10 lacs. • A Medium (manufacturing) enterprise .5 crore per unit granted to micro and small enterprises under service sector are reckoned for computing achievement of priority sector advances. fittings and other items not directly related to the services rendered is more than Rs. fittings and such items not directly related to the service rendered -does not exceed Rs. • All advances granted to units in the KVI sector.5 Crore The mandated targets are.2 crore. whose investment in equipment (original cost excluding land and building and furniture.10 crore • Micro Service enterprise is an enterprise rendering services. fittings and other items not directly related to the service rendered is more than Rs.25 lacs.Career Guide for IOBians 225 _____________________________________ _____________________________________ _____________________________________ MSME advances • A Micro (manufacturing) enterprise .investment in plant and machinery (original cost excluding land building) is more than Rs. whose investment in equipment (original cost excluding land and building and furniture. 40% of total advances to small enterprises sector should go to micro (manufacturing) enterprises having investment in plant and machinery upto Rs.whose investment in plant and machinery (original cost excluding land and building) is more than Rs. location and amount of original investment in plant and machinery will be brought under Small enterprises segment within the priority sector • Target: a. irrespective of their size of operations. irrespective of the location of the unit • A Small (manufacturing) enterprise .10 lacs.5 crore. 25 lac and micro (service) enterprises with investment in equipment above Rs. • Small service enterprise is an enterprise rendering services. 10 lac and micro (service) enterprises having investment in equipment upto Rs. _____________________________________ _____________________________________ _____________________________________ . 4 lac and upto Rs. • A Medium service enterprise is an enterprise rendering services. 7. After clearance such proposals will be sanctioned by the respective sanctioning authorities The proposals once cleared by Screening Committee. need not be referred again at the time of renewal.10 Crore.5 Crore For SME units requiring working capital limits over Rs7. : Ganguly Committee recommendations • SME policy in banks is framed in compliance of direction issued by RBI based on recommendations of the K. For above Rs 2 crore working capital facilities in respect of non Small Enterprises and Small Enterprises with credit limits of above Rs. Thus. Software proposals will continue to be cleared by Screening Committee in Central Office. • Appraisal of proposal relating to Information Technology As per RBI’s guidelines while assessing working capital limits for borrowers engaged in Information Technology . • IOB SME Policy covers only the MSE (Micro and Small Enterprises) • Collateral free loan up to an amount of Rs.Chakrabarty Committee. the limits will be considered as per monthly cash budget. if the borrower wishes. 60% of small Enterprises advances should go to the micro enterprises. Cash budget system or MPBF method. _____________________________________ _____________________________________ _____________________________________ . • Assessment of working capital finance Simplified procedures will be adopted for sanction of working capital limits on the basis of 20% of the projected annual turnover to MSME units requiring aggregate fund based working capital limits upto Rs.7.10.5 Crore and upto Rs. Technical evaluation of IT/software industry proposals are done by IT dept.5 crore for Small Enterprises) may be assessed on the basis of 20% of projected turnover or. the Maximum Permissible Bank Finance (MPBF) method based on Credit Monitoring Arrangement (CMA) data will be followed For SME units requiring working capital limits over Rs.Career Guide for IOBians 226 _____________________________________ _____________________________________ _____________________________________ c. limits upto Rs 2 crore (Rs 7.C. if the enhancement does not exceed 50% of the limits and if there is no change in the activity of the borrower. will continue to be followed.00 lac • The committee recommended for Cluster based approach in extending finance to SME Sectors.5 crore the assessment is to be made uniformly as per cash budget and credit would be made available on the basis of deficits. at the option of the borrower.10 Crore. 25 is acceptable while lending under Nayak Committee Norms • Margin: No margin for loans upto Rs. • The interest payable up to six months after commercial production will be included as part of the project cost for assessment of credit requirements.5 Lac -15% b.and up to Rs.5 Lac -20% • Working Capital against Book Debts/Receivables Margin to be taken as per our Bank’s general loan policy document. a.2 crore and above. • Branch Managers upto the level of scale IV can sanction secured credit facilities to MSE units by taking collateral securities to a minimum extent of 60% of the limits sanction. Above Rs.000/Loan above Rs. For loans above Rs.and up to Rs.TERM LOANS (margin) a.5 Lac -10% b. upto their per borrower limits.50.10 lakh long term loan 3:1 • Internal Scoring Model to be used for credit limits upto Rs.50000/.50000/.5 Lac -15% Working Capital against hypothecation of raw materials.000/. work in Process. finished goods etc. with out any concession – 25% • Minimum cash margin of 10% will be prescribed in respect of non fund based limits such as LG and LC. _____________________________________ _____________________________________ _____________________________________ .2 crore and Risk Assessment Model for limits of Rs. Above Rs. • Current ratio of 1.Career Guide for IOBians 227 _____________________________________ _____________________________________ _____________________________________ • Debt Equity Ratio Road Transport operators having National Permit 5:1 Single Vehicle Operators 5:1 MSME upto Rs. For loans above Rs.Secured advances with cover under CGTMSE scheme for Micro and Small Enterprises : Scale III – 100 lacs Scale II – 50 lacs Scale I - 25 lacs • All Branch Managers can sanction collateral free loans to MSE sector with CGTMSE cover. • Discretionary powers for branches managers .50. receipt of MSME applications has to be compulsorily ONLINE and branches have to not only acknowledge receipt of applications online but also update the status of MSME applications received and processed to enable the applicant to track the status of the application. As per IBA guidelines.25 % SE 2B.25% on the applicable rate The interest concession for top three ratings of SMERA is as follows. CRISIL 3. Rs. SE 3A 0. The applicant should submit hard copy of the application along with all requisite documents within 7 days from the days from the date of uploading his application to the branch chosen in the online application. SMERA 5.D & B . a unique application ID number will be generated and this number has to be noted for tracking the application status and for all future correspondence. 25 crores from CRISIL or Dun & Bradstreet • Online application facility is available in the website in MSME module under Corporate Banking. Under NSIC .25 % _____________________________________ _____________________________________ _____________________________________ . On submission.CARE 2. This application can be filled in and submitted ONLINE by a MSME borrower to the branch of his choice and location. • Credit Ratings And Interest Concession: Our Bank extends interest rate concessions to MSME borrowers rated by the following 5 external rating agencies only: 1.Career Guide for IOBians 228 _____________________________________ _____________________________________ _____________________________________ • IOB SME Advance Term Loan Sanction Scheme – to fulfill the felt needs of SME borrowers and is designed to facilitate our SME borrowers to procure the new/additional machinery without delay or hassle. BRICKWORK Top ratings of all the above rating agencies enjoy interest concession of 0. SE 2A 0.25 lacs • Branches may seek "Due Diligence" report for SMEs with turnover of Rs.1 core lakhs to Rs. ICRA 4.25 % SE 1B.SMERA Ratings Rating Indicator Interest concession on the applicable rate SE 1A 0. Max amount. BRICKWORK have been empanelled by NSIC under the scheme for rating of the Small Enterprises..25 % NSIC with a view to encourage rating provides 75% subsidy in the fee charged by top rating agencies for the first year. • Time frame for Disposal of loan application: For limits upto Rs.Career Guide for IOBians 229 _____________________________________ _____________________________________ _____________________________________ SMERA Ratings: Rating Indicator Interest concession on the applicable rate MSME 1 0. NSIC outlets will forward the credit proposals to the nearest regional office of the Bank. CRISIL. ICRA.5 lacs within a reasonable frame of time • MOU With National Small Industries Corporation Ltd.2013 for extending their credit facilitation support services to MSME borrowers through our bank branches all over India.2 lacs within 2 weeks For limits above Rs. MSMERA-D&B.1.2 lacs and upto Rs. the reasons for rejection shall be informed to NSIC only and not to the customer. India Ratings.5 lacs within 4 weeks For limits above Rs. When a loan application is rejected. ICRA. Regional Office will scrutinize and forward the applications to the nearest branch location of the applicant. Our _____________________________________ _____________________________________ _____________________________________ .25 % MSME 3 0.25 % MSME 2 0.. (NSIC) NSIC is a Government of India enterprise established in 1955 for promotion of Small Scale Industries NSIC has entered in to a MOU with our Bank on 16. CARE. at the request of NSIC. Branch shall appraise and sanction of the loan application purely on merit after complying with KYC norms. Seven rating agencies viz. Our arrangement with NSIC is on the following terms and conditions: Bank will furnish blank SME credit application forms and the check list for submission of applications to NSIC. Career Guide for IOBians 230 _____________________________________ _____________________________________ _____________________________________ branches. It may be noted that NSIC’s role will cease once they forward the loan applications to us and avail their share of processing fee on sanction of the loan. etc. under their sole discretion.05.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . may refer our customers to any one of the seven rating agencies as desired by the applicant. Within 30 days from the date of sanction. monitoring. branch shall remit 50% of the processing fee collected from applicants referred by NSIC. recovery. all necessary follow up actions in respect of documentation. disbursement. After sanction. lies with the branches ************************* srn/17.. Kapoor. Government of India and SIDBI had jointly set up a new Guarantee Corporation. • Loan granted to SHGs are not eligible • With effect from 1. Further CGTMSE guaranteed portion of the advance carries Zero risk weight and attracts no provision in case the advances become NPAs 1.2003 there is no minimum threshold limit fixed for guarantee cover by CGTMSE. Eligible borrowal accounts • Credit facilities extended to single borrower for credit upto Rs. Subsequent to the enactment of MSMED Act 2006 the Trust has been renamed as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and the Scheme is known as the ‘Credit Guarantee Fund Scheme for Micro and Small Enterprises’ The credit guarantee Scheme offers a better alternative to collateral based lending as major portion of credit risk is shared by CGTMSE.S. 3.10 lacs. if any in the prescribed form in time. • Bank shall obtain prior permission of Trust before entering into any compromise or arrangement which may have the effect of discharge or waiver of personal guarantee or security. Responsibilities of the bank under the scheme • Limit would have been sanctioned by using prudent banking judgment. • All MSE credit upto Rs. 2.2000 to cover advances to SSI units. Credit policy of our Bank on collateral free loans • No Collateral security and third party guarantee are to be taken for loans granted to Micro & Small enterprises for an amount up to Rs.L. • Bank shall closely monitor the borrower's account • Bank shall safe guard the primary securities in good and enforceable condition.Career Guide for IOBians 231 _____________________________________ _____________________________________ _____________________________________ Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) In terms of the recommendations made by the High Level Committee on Credit to SSI(1998) headed by Shri. Collateral security can be taken only if CGTMSE cover is not available for the unit like Retail trade or where the borrower prefers to offer collateral security. • Advances extended without obtaining any Collateral Security and or third party guarantees. 1 crore may also be granted without any collateral security where CGTMSE guarantee is available. _____________________________________ _____________________________________ _____________________________________ .8.100 lacs by way of Term Loan and/or working capital to a New or Existing Micro & Small enterprises including IT and Software industries. Such loans will be covered under CGTMSE." Credit Guarantee Fund Trust for small Industries (CGTSI) with effect from 1. • Bank shall lodge the claim.9. 5 Lakh and 0. the following guidelines apply. • Instead of Guarantee Fee and Annual Service Fee. In respect of credit facilities sanctioned by member Lending Institutions (MLIs)on or after January 01.75% 1. within the period specified by the Trust. the account should be internally rated and should be of investment grade. Annual Service Fee structure • The annual service fee at specified rate (currently 0. 5.75% in the case of credit facility above Rs.10 lakhs and subsequently due to enhancements if the limits are above Rs. On good conduct of the account the one time guarantee fee remitted by the borrower will be reimbursed to them after a period of five years from the date of remittance or at the closure of loan/ facility whichever is earlier.50% in the case of credit facility upto Rs.00% Above 5 lacs and upto 100 lacs 0. Micro Enterprises and units in North East Region (incl. Guarantee Fee • A onetime guarantee fee at specified rate (currently 1. In case if the original limits are less than Rs. of every year.5 lacs 0. a composite. _____________________________________ _____________________________________ _____________________________________ . • Guarantee will not be available in the case the MLI failed to pay AGF as above.5% in the case of credit facility above Rs. on or before May 31.10 lakhs and covered under the CGTMSE.50 lacs and above.5%) should be initially borne by the borrower. 6. 5 Lakh and 1. the onetime guarantee fee (Presently 1.10 lakhs .10 lakhs then the reimbursement is restricted only for limits upto Rs.00% • Annual Guarantee fee (AGF) is to be paid upfront by the Member lending institution (MLI) to the Trust. all-in Guarantee Fee is to be paid on the amount sanctioned. • In respect of SSI borrowers who are enjoying credit limits upto Rs. 4.00% in the case of credit facility upto Rs. as under :Annual Guarantee GF Credit Facility Women. 5 Lakh) of the credit facility sanctioned (comprising term loan and / or working capital facility) shall be paid upfront to the Trust by the institution availing of the guarantee within 30 days from the date of first disbursement of credit facility. 5 Lakh) of the credit facility sanctioned (comprising term loan and / or working capital facility) shall be paid by the lending institution within 60 days ie. Sikkim) Others Upto Rs.Career Guide for IOBians 232 _____________________________________ _____________________________________ _____________________________________ • For loans of Rs.2013.85% 1. Payment of Fees • Annual Service Fee For the guarantees issued up to March 31.e. The AGF/guarantee cover would be valid for 1 year from the material date In the subsequent financial year. or at such rates specified by the Trust from time to time. The demand on MLIs for AGF in respect of fresh guarantees would be raised upon approval of guarantee cover.50 lakh. ASF for FY 2013-14 and subsequent years. would be demanded and collected “in advance” from the MLIs. demand for AGF( i. Material date would be the date on which proceeds of AGF are credited to Trust`s Bank account.e. _____________________________________ _____________________________________ _____________________________________ . • Extent of the guarantee For General category of borrower : The maximum cover available per eligible borrower. with effect from the due date.e at the beginning of the year and is to be paid by the MLIs. at 4% over Bank Rate. 62. • 7. for the period of delay.Career Guide for IOBians 233 _____________________________________ _____________________________________ _____________________________________ • If the Trust agrees to continue the guarantee. Demand for ASF would be made in April itself. ASF needs to be paid. Annual Guarantee Fee of all new borrowal accounts under MSE sector upto a credit limit of Rs 1 crore is borne by our Bank w. per annum. The AGF demands for subsequent years would be on “Full Financial Year basis” excepting for the terminal year of guarantee where AGF demand would be till validity of guarantee cover.2012. The guarantee start date is termed as ‘material date’ by CGS.2013 against the credit facilities sanctioned / approved / renewed by MLIs up to December 31.2013. the MLI has to pay penal interest on the fee due and unpaid.. i.50 lacs and 50% for the rest amount in default in respect of credit facility extended by the lending institution.02. • “Annual Guarantee Fee (AGF) Annual Guarantee fee (AGF) is to be paid upfront by the Member lending institution(MLI) to the Trust in respect of credit facilities sanctioned on or after January 01. subject to maximum of Rs.f 25. for 2nd AGF) would be raised in the month of April for the guarantees approved in the previous financial year (till March 31st) for which the AGF has been received till March 31. which shall not exceed 75 per cent for first Rs.2013. _____________________________________ _____________________________________ _____________________________________ .2013) from the date of expiry of lock-in period g. b. which shall not exceed 80 per cent for first Rs. "Amount in Default" means the principal and interest amount outstanding in the account(s) of the borrower in respect of term loan and amount of outstanding working capital facilities (including interest) as on the date of the account becoming NPA or the date of lodgment of claim application whichever is lower or such of the date as may be specified by CGTMSE for preferring any claim against the guarantee cover subject to a maximum of amount Guaranteed. f.000 /. For credit facility upto Rs. a. As per modified CGS If the account has become NPA after lock.50 lacs and 50% for the rest amount in default in respect of credit facility extended by the lending institution.25 lacs. c.01.2013) from the date of NPA.in period.initiation of legal proceedings as a pre-condition for invoking of guarantees shall be waived for credit facilities upto Rs.2013. 9. The guarantee is in force. The lock in period of 18 months from either the date of last disbursement of the loan to the borrowers or the date of payment of guarantee fee whichever is later. The loan facility has been recalled and the usual recovery proceedings have been initiated.Career Guide for IOBians 234 _____________________________________ _____________________________________ _____________________________________ For women entrepreneurs with credit facility above Rs.50.5 lacs : The maximum cover available per eligible borrower.subject to the bank taking a decision for not initiating legal action and filing claim under the Scheme. CLAIMS Invocation of guarantee The Banks may invoke the guarantee in respect of eligible credit facility if the following conditions are satisfied.4. Updation of NPA details NPA details are to be updated in the system by the end of the subsequent quarter for all accounts that may be classified as NPA using the option Member login area -> Guarantee maintenance -> Periodic Information -> NPA details. If the account has become NPA within the lock-in period. In respect of loans sanctioned on or after 01. 65 lakh. the claim should be made within one year (2 years in case of loans sanctioned on or after 01.01. claim should be made within one year (2 years in case of loans sanctioned on or after 01. 8. e. subject to maximum of Rs.5 lacs : 85% of the amount in default subject to a maximum of Rs.01. The amount due and payable to the bank in respect of the credit facility has not been paid and the dues have been classified by the lending institution as NPA d. Otherwise. after adjusting towards the cost incurred by the bank for recovery of the amount.Career Guide for IOBians 235 _____________________________________ _____________________________________ _____________________________________ h. 100 lacs and upto Rs. if the bank recovers money through recovery proceedings initiated by it. The trust will pay interest on the eligible claim amount at the prevailing Bank rate for the period of delay beyond 30 days.as soon as the decree in respect of the civil suit is awarded. Closure DAN (Demand Advice Notice) can be generated and the DAN amount is to be passed on to CGTMSE.01. The Balance 25%of the guaranteed amount will be paid on conclusion of recovery proceedings by the Bank.e. SC/ST. in respect of any guaranteed account.2013. the fee is at 0. and safeguarding the interest of the Trust in all the ways open to it as it might have exercised in the normal course as if no Guarantee had been furnished by the Trust. In case of loans sanctioned on or after 01. Closure of account The date of closure of guaranteed accounts should be informed then and there by Banks to CGTMSE. • Subsequent to receiving claim amount from CGTMSE . i. On receipt of DAN amount. 11. should undertake to refund any amount received from the unit after payment of full guaranteed amount by CGTMSE. ASF even after closure will be claimed. • The guarantee fee will be 1 % and for special category borrowers. however.200 lacs through select MLIs. 10. the balance 25 % of the guaranteed amount will be paid on conclusion of recovery proceedings by the MLI or after 3 years of obtention of decree of recovery.75 % of the credit facility. Recovery & OTS • The lending institution shall. the account will be marked as ‘CLOSED’ in the records of CGTMSE. i. The trust shall pay 75% of the guaranteed amount within 30 days. _____________________________________ _____________________________________ _____________________________________ . the same shall be deposited with the Trust. Minority. etc) the cover will be 60%. • Credit rating to be obtained under Investment Grade as per internal rating and/or external rating through Reserve Bank of India accredited Rating Agencies. WOMEN. exercise the same diligence in recovering the dues. Our bank has agreed to be a partner in the RSF II scheme and we have signed a MOU with CGTMSE • The extent of coverage will be 50% of the amount in default or guaranteed amount whichever is lower and for special groups (NER. which may have the effect of discharge or waiver of personal guarantee(s) or security. MLIs. 12. The lending institution should intimate the Trust before entering into any compromise or arrangement. Once the request is approved by CGTMSE. whichever is earlier? j. Risk Sharing Facility – II: • RSF II facility will provide guarantee cover to MSE borrowers with a credit limit of above Rs. 200 lacs will range from Rs.100 lacs to Rs.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .05. *************************** srn/07.120 lacs (amount in default) • All other terms are as applicable under the existing credit guarantee scheme of CGTMSE • The scheme will be in operation upto 30th June .Career Guide for IOBians 236 _____________________________________ _____________________________________ _____________________________________ • Total claim payable for overall credit limit of Rs.2013 and shall be extended as may be decided by CGTMSE. c. Deferred payment guarantees a. Issue of Deferred Payment Guarantees in favour of foreign manufacturers or suppliers of goods for payments against imports into India under import licenses issued on deferred payment basis require prior approval of the Reserve Bank of India and are subject to the Exchange Control Regulations in force from time to time. 2. c.Career Guide for IOBians 237 _____________________________________ _____________________________________ _____________________________________ Letter of Guarantee General Guarantees shall be issued by the Bank on behalf of customers only. Deferred Payment Guarantees. Of the above. No bank guarantee will normally have duration of more than 10 years Bank Guarantees can be classified as under: 1.. the Bank will be called upon to make good the monetary loss arising out of the non-fulfillment of the guarantee obligation. These Guarantees normally arise in the case of purchase of machinery or such other capital equipment by industries from suppliers in India or abroad. Financial Guarantees. b. the quantum of the pecuniary obligation is reduced to money terms and a Guarantee is called for. Performance guarantees and Deferred Payment Guarantee are very common. and d. Guarantees issued in lieu of Earnest Money Deposit. take the form of Financial Guarantees. a. Shipping and Railway Guarantees. Specific guarantees: Bank Guarantees may be issued to cover a single transaction only. Continuing guarantees: A Guarantee which extends to a series of transactions is called a Continuing Guarantee. Advance payment Guarantees. in the event of non-performance of any of the obligations. financial guarantee. Financial guarantees These are Guarantees which are given in lieu of purely monetary obligations. Although these Guarantees are for performance. In such Guarantees. • Bank Guarantees can also be classified as a. b. Security deposits etc. _____________________________________ _____________________________________ _____________________________________ . Performance Guarantees. Performance guarantees These are Guarantees issued in respect of performance of a contract or obligation. b. • • By Branch Managers. By RLCC. if the validity period including claim period is upto and inclusive of 5 years. when term loans are sanctioned for import of machinery under EPGC Scheme and LC limits are sanctioned favouring DGFT. In respect of Export Advances / Export Oriented Units.05.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . if the validity period including claim period is above 5 years. Letters of Guarantee with less than 100% margin by way of deposits or cash and /or any other immovable properties of any value or personal guarantee as per terms of sanction may be issued provided there is no onerous clause in the LG. sanctioning authority will have the power to sanction / issue LG with a validity period to cover the period within which the export obligations is to be completed even though the same is more than the period indicated above. • By Branch Manager if the validity period including claim period is upto and inclusive of 3 years • By RLCC if the validity period including claim period is upto and inclusive of 5 years. srn/11.Career Guide for IOBians 238 _____________________________________ _____________________________________ _____________________________________ Margin: Minimum cash margin for Performance Guarantee is : 10% Minimum cash margin for financial guarantee : 25% Discretionary Power: Letter of Guarantee with 100% margin by way of Cash/Deposit as per terms of sanction may be issued provided there is no onerous clause in the L.G. • By HLCC (GM) if the validity period including claim period is more than 5 years. .11. disputes among partners / promoters. beyond the accepted timeframe. should not be classified as sick units. • In case such a unit is declared unviable. • The declaration of the unit as unviable. having investment in plant and machinery upto Rs. etc. willful default. 5 lacs and Micro (Service) Enterprises having investment in equipment upto Rs. • An account may be treated to have reached the `handholding stage`.RBI vide their notification 01. • Units becoming sick on account of willful mismanagement. along with the justification • The rehabilitation package should be fully implemented within 6 months from the date the unit is declared as `potentially viable` /’viable`. • The MSE units which could not be revived after intervention by branch at the `handholding stage` need to be classified as sick subject to complying with any one of the two conditions as given below and based on a viability study the viable/potentially viable units be provided rehabilitation package. if any of the following events are triggered: There is delay in commencement of commercial production by more than 6 months for reasons beyond the control of the promoters. should have the approval of the next higher authority/present sanctioning authority for both Micro and Small units. _____________________________________ _____________________________________ _____________________________________ . the Branch Manager may take a decision on viability and record the same. branch is advised to do `holding operation` for a period of 6 months. if: Any of the borrowal account of the enterprise remains NPA for 3 months or more OR There is erosion in the net worth due to accumulated losses to the extent of 50% of its net worth during the previous accounting year. an opportunity should be given to the unit to present the case before the next higher authority. • The decision on viability of the unit should be taken at the earliest but not later than 3 months of becoming sick under any circumstances.2012 has advised fresh guidelines for rehabilitation of sick MSE units for implementation by banks. unauthorised diversion of funds. • While identifying and implementing the rehabilitation package. The company incurs losses for 2 years or cash loss for one year. • Enterprises. 2 lacs. as evidenced by the viability study.Career Guide for IOBians 239 _____________________________________ _____________________________________ _____________________________________ Rehabilitation of sick Micro & Small Enterprises • In order to identify the sick viable units at an early stage and to implement rehabilitation package to such viable units . • Definition of Sickness: A Micro or Small Enterprise (as defined in the MSMED Act 2006) may be said to have become Sick. Some or all of the following need-based concessions shall be given to sick MSE units under Nursing and Rehabilitation. At the concessional rate allowed for working capital assistance. Longer repayment periods from 3 to 5 years may be considered depending on their cash flow for purchase of Gensets by MSE units. Interest on Contingency Loan Assistance to meet escalations in capital expenditure under the rehabilitation scheme. The NON FUND BASED LIMITS reduced margin should not be less than 15% for stock and 20% for receivables. 3 4 5 6 Nature of concession as existing Reduced margin of say 15% may be stipulated for purchased at Gensets by MSE units. In such cases. period of 2 years with a moratorium of 6 months during which only interest will have to be Serviced. Interest on fresh Rehabilitation Term Loan (RTL).Career Guide for IOBians 240 _____________________________________ _____________________________________ _____________________________________ The capacity utilisation is less than 50% of the projected level in terms of quantity or the sales are less than 50% of the projected level in terms of value during a year. Reduction in margin by 5% to 10% from the stipulated level in respect of Non Fund Based Limits such as LC/LG may be considered in deserving cases. Reduction in margin will not give relief to units where stocks/receivables are accumulated due to stretched sales cycle. whichever is the least subject to minimum of base rate. 1% over base rate or 1% below applicable rate or as prescribed by SIDBI / NABARD where refinance is obtained. specialty in power deficit states. Financing for purchase of Gensets on soft terms.case basis wherever warranted. _____________________________________ _____________________________________ _____________________________________ . Micro and Small Enterprises 1 2 7 Interest on fresh and existing (renewed) working capital Interest shall be reduced by 3% for Micro Sector and 2 % for other units subject to floor Base Rate Interest on existing Term Loan Reduction of Interest on Term Loan to be reduced by 3% in case of Micro and 2% in the Case of other SMEs subject to floor rate. stretched w o r k i n g capital The adhoc loan will be repayable within in a maximum cycle and reduced sales. adhoc limits may be sanctioned up to 30% of existing fund based Increasing the Working limits based on merits and subject to availability of Capital limits due to drawing power. Relaxation in Margin Norms Margin requirements on inventory/ stock/ receivables may be reduced up to 10% from the stipulated level FUND BASED LIMITS on case-to. (For Small manufacturing units f o r start up expenses and margin for working capital). In deserving cases. the re pay me n t pe rio d s h ou ld n o t exceed 10 years from the date of restructuring.03. To be repaid within 7 years from the date of commencement of implementation of rehabilitation Programme. 10 years. 1% over base rate or 1% below applicable rate whichever is lower subject to a minimum of Base Rate. 9 Interest on Funded Interest Term Loan (FITL). 12 Repayment Period for Working Capital Term Loan (WCTL). 13 14 Waiver of Penal Interest Rephasement of existing Term Loan 15 Approval from ECGC/CGTMSE wherever applicable . 10 Repayment period for Funded Interest Term Loan.Career Guide for IOBians 241 _____________________________________ _____________________________________ _____________________________________ 8 Interest on Working Capital Term Loan (WCTL).2013 Back to index _____________________________________ _____________________________________ _____________________________________ . For Micro Enterprises. Staggered or ballooning repayment may also be permitted so that the installments are aligned to the cash flows. RO can repayment period up to 15 years extend the ECGC/CGTMSE should approve the package for such units covered under the scheme srn/17.do Waiver of Penal Interest from the date of account becoming NPA or started incurring cash losses whichever is earlier. NIL for a period of 3 years at the discretion of the bank. 11 Should not normally exceed 7 years from the date of restructuring and 15 years from the date of first disbursement of original loan. Repayment period for Funded Term Loan (FTL). 00 lacs (Cash Credit + Term Loan with a ceiling of Rs.02.2011 _____________________________________ As applicable to SME term loan • • • To be covered under CGTMSE Scheme and the fee to be borne by the borrower Processing charge: Upto Rs. Up to Rs 2 lakhs BR + 0.11.00 lacs and upto Rs.100 Lacs As applicable to working capital facility for MSE from time to time. The borrower is required to make an advance estimate of the term loan requirement for purchase of machinery during next one year period.. 5000/-.00 lacs .22.BR + 1. Prime: Assets created out of loan Collateral : NIL IOB MICRO ONE (Modified) MICRO ENTERPRISES (only new connections under Micro Sector and the scheme is not applicable to existing borrower clients) ONLY NEW UNITS seeking credit facilities with investment norms satisfying micro & small units Maximum Rs. Rs.ADV/ 89/2011-12 Dt: 10 .25 lacs whichever is the least.10. Quantum Rate of Interest 10% of original cost of existing plant and machinery or cost of machinery to be purchased less stipulated margin or Rs. Rs. Per borrower limit or maximum specified in the scheme whichever is lower. MAXIMUM LOAN Rs.75% Rs 2 lakhs to Rs 25 lakhs . Single documentation for entire amount ADV/ 521/ 2010-11 Dt: 11. Above Rs.Career Guide for IOBians _____________________________________ 242 _____________________________________ _____________________________________ Different Credit Schemes under SME Name IOB SME Advance Term loan Sanction scheme Target Group Existing SME borrowers with good track record Purpose A standby credit facility exclusively for SME borrowers.75% Prime: Assets created out of loan Collateral : NIL 15% for Working Capital and 25% for Book debts & Term Loan 84 EMIs for Term Loan (for combined facility as well) Cash Credit to be renewed annually Security As applicable to SME advances Margin As applicable to other SME advances Repayment As applicable to SME term loan 5 to 10 years (including holiday period) depending on the project.50. Holiday period As applicable to SME term loan Moratorium of 6 to 18 months depending on the project Priority status Yes Yes Yes Discretion Overall limits sanctioned including advance term loan should be within the discretionary powers of the sanctioning authority.50. Remarks CGTMSE cover may be sought for eligible accounts For shed: 30% For plant & machineries : 15% • • • • _____________________________________ We may accept average DSCR of 1. Per borrower limit or maximum specified in the scheme whichever is lower.75 with minimum DSCR of 1. 1000/-... (for both CC&TL) Ref.50 lacs for Term Loan) Both for Working Capital and Term Loan Base Rate + 1.2011. 10. Construction/ purchase of work sheds/factory premises 2. _____________________________________ ..75% IOB MSE PLUS Micro and Small enterprises engaged in manufacturing/service activities which are eligible for classification under MSE sector as per MSMED Act 2006. 1. Working Capital needs. Loan should be compulsorily covered under CGTMSE Guarantee Scheme. and which are eligible for CGTMSE Cover.5 in any year. Acquisition of plant and machinery/equipment 3.00 lacs .. 2002 Financing Bajaj /TVS autorickshaws and commercial three wheelers Prime: Hypothecation of the vehicle Collateral: NIL TL-5-7 years-maxi.III 40 lacs. • A reduction of 0.vans/cars etc Quantum Rs. Mixer Machines. • No processing charge.. As applicable to SME finance. • Processing Charges: 0.P Rollers. Spans.2 crores for Nursing homes/hospitals in metro/urban areas Rs.75% BR + 1. of three years/corporates promoted by such persons-IT assessees Purpose To set up new hospital/nursing home or for acquiringequipments for an existing hospital/ nursing homes/ working capital requirement for purchase of equipments/ ambulances. plotters. For construction upto 10 yrs with initial moratorium upto 12 to 18 months only.25 % of loan amount subject to a minimum of Rs.Career Guide for IOBians _____________________________________ Name Sanjeevini Target Group Qualified/registered individual medical practitioners from reputed universities or by a group of such persons practicing in India for a mini. Partnership Firm. 50 lacs in Semiurban area-Rs.2013 Per borrower limit or maximum specified in the scheme whichever is lower. • To construct office premises • To purchase furniture & fixtures.< Rs 25 lacs - BR + 0..C. Should not be RBI Defaulters List. books & Other accessories etc. drillers. Vibrators. etc. AGM Br/SRM/CRM/RGM-full ADV/96/1.50 % on the applicable rate if collateral overage is 100% or above. Up to 1 crore per unit Per borrower limit or maximum specified in the scheme whichever is lower.IV – 100.2014/02.10 years _____________________________________ 243 _____________________________________ _____________________________________ _____________________________________ _____________________________________ .00% Security Margin Repayment Holiday period Priority status Discretion Remarks Hyp.04. • Members of Civil Engineers Association Affiliated to the federation of All Civil Engineers Associations of the respective State. upto 10 lacs in other areas with sub limit for working capital 3 lacs and 2 lacs Scale I -5 lacs. • CIBIL report should be satisfactory.requirement on case to case basis. Partnership with Limited Liability. Maximum eligible amount depending up on the category .II-10 lacs. • As applicable to SME advances.4. • To be covered under CGTMSE • MOU covers all authorized dealers of Bajaj Auto Ltd/TVS and all branches of our bank. • To Purchase Centering sheets.06.75% 15% of the on-road price as the proforma invoice IOB ENGINEER • • • • Civil Engineers (Individuals upto 65 yrs of age) Proprietorship Concern. fittings and office equipments such as computers.5. Column box etc. earth Rammers. • To purchase Constructional Machineries like J. printers.000/- Between 3-5 years Based on income generation Upto 15 lacs in Rural/semi-urban reas. MOU is valid upto 08. props. As applicable to SME finance 6 months for bajaj/3 months Maximum of 7 years(should not exceed the age limit of 72 yrs of the borrower) in equal Monthly Instalments including moratorium period of 3 months. of equipments Upto 2 lacs –nil : > 2 lacs Immovable property/NSC/LIC to cover 100% of advance Equipments-15-25% Construction-25-30% Individual Transport operators – 3 wheeler To finance purchase of Bajaj autorickshaws/commercial three wheelers 85% of on-road price – as per proforma invoice Up to Rs 2 lakhs Rs 2 lakhs to. 3 months/12 to 18 months Yes Yes. 10 lacs in rural area( working capital not more than 20% of Project cost Rate of Interest BR + 3. Other equipments. grading.1.07. processing and selling / dry fish / dried and packed fish-Fish and fishery product processing: shell craft production Fish fast food counters.Above Rs. fish feed and other fish based products.artisans who have joined to form SHGs-Beneficiaries of Govt. _____________________________________ 244 _____________________________________ • • The current assets created out of the loan should be hypothecated /charged to us.18. 1. 12. Indi. 25000as per RBI guidelines/Bank’s policy Revolving CC-term loan component attracts repayment schedule Priority As applicable to Priority Sector advances Card validity three years-require renewal No fee for renewal/fresh _____________________________________ .000 : Nil More than Rs. drying.09. 2 lacs and having satisfactory dealings/artisans involved in production/manufacturing process. 000 : 15 – 25% Within 5 years in monthly installments including initial holiday period not exceeding 3 months. 2 lacs. Not exceeding 3 months.00.00. TL/WC Prime: Assets created by using the loan and margin amount. Circular No./Proprietary/Partnership firm. discretionary powers etc. _____________________________________ Hypothecation of assets financed-No need to submit stock statement and other financial statements-Group insurance for beneficiaries who are registered with Development Commissioner @ 60: 40 premium paid by Govt & Beneficiary Upto Rs.00 lac to Rs 10 lacs – 1 % upfront for TL and Rs 200 per lac for working capital.1. ADV/ 64 / 2011-12 Dt. COLLATERAL: Nil – To be covered under CGTMSE Guarantee Scheme wherever eligible Up to Rs.No margin .10. PROCESSING CHARGES Up to Rs. Kindly refer circular No. Based on Credit rating & Period of Satisfactory Banking Relationship. sponsored loans are not eligible To meet working capital requirement of an Micro/Small Enterprises unit enjoying credit facilities with the Bank to execute additional /bulk orders over and above the regular orders (for both manufacturing & Service units ) To provide adequate and timely assistance to meet the investments and working capital requirement in a flexible & cost effective manner in Rural and urban areas. Contract cleaning of fish markets.00 lac .000 By way of working Capital / Term Loan for equipments.e 20% of the anticipated turn over for Working capital requirement & term loan component subject to a maximum of Rs. Breeding and selling of decorative fish for aquarium.00 Cr Based on Nayak committee recommendation i.00.Nil Above Rs. 1.2011.Career Guide for IOBians _____________________________________ Name Target Group Purpose Quantum Rate of Interest Security Margin Repayment Holiday period Priority status Discretion Remarks _____________________________________ IOB SAGARLAKSHMI IOB SME INSTA FUND existing Micro/small enterprises customers IOB’s ARTISAN CREDIT CARD SCHEME All existing artisans borrowers enjoying credit limit upto Rs. NA Yes Per borrower limit or maximum specified in the scheme whichever is lower. Maximum Rs. Applicable system margin as applicable to respective limits Maximum Six months with the option to extend it for another six months on merits or till the current credit facilities are due for review/renewal. Yes Per borrower limit or maximum specified in the scheme whichever is lower. Based on classification viz. Existing collateral should be charged as security for the insta fund. 50%/30%of the existing working capital with the cap of Rs 5.75% Women who are engaged in processing of fish into dry fish. Sorting. 25000/.2011 for quantum of finance . As applicable to SME finance Up to Rs 2 lakhs – BR+ 0. ADV / 41 / 2011-12 Dt. agri/SME /trade and nature of limit viz. Working Capital 25%. Up to Rs 2 lakhs BR + 0.5000/• To be covered under CGTMSE upto 10 lacs..75% Above RS 25 Lakhs . if not covered under CGTMSE guarantee scheme.below Rs 2 Cr BR +2..25% Rs 1 Cr .75% Rs 2 lakh to below Rs 25 lakhs BR+ 1. engaged in the profession of Accounting/Audit etc. Limited Companies.10 Lacs to Rs 125 Lacs depending on the category.10 Lacs. construction of office premises. Books and other accessories. Partnership firms.75% Between 3-7 years Between 3-5/3-7 years 3 months 3 months Yes Per borrower limit or maximum specified in the scheme whichever is lower..25% Rs 1 Cr .25% of loan amount subject to a minimum of Rs.75% Above RS 25 Lakhs . fittings and office equipments. • No prepayment charges _____________________________________ .75% Rs 2 lakh to below Rs 25 lakhs BR+ 1. Term Loan . Purpose To finance purchase of TATA Motor commercial Transport vehicles Quantum 85% of on-road price – as per proforma invoice To finance purchase of Commercial Transport vehicles 85% of on-road price – as per proforma invoice Rate of Interest Up to Rs 2 lakhs BR + 0.75% Rs 2 lacs to below Rs 25 lakhs BR+ 1.2014 ALL is valid upto • Post dated cheques to be obtained. • No processing charge. • To be covered under CGTMSE • MOU with 13.applicable. MOU covers all authorized dealers of TML and all branches of our bank. acquire ready built office premises. Initial Moratorium 18-24 months Yes.25% Rs 1 Cr . • Processing charge . cover cost of land and construction.below Rs 1Cr BR+ 2.100 lacs Prime: Hypothecation of the vehicle Collateral: NIL upto Rs.75% No collateral security up to Rs. • To be covered under CGTMSE • Our bank has entered into a MOU with TATA Motors Ltd. • Above 10 lacs CGTMSE subject to nonavailability of security.below Rs 1 Cr BR+ 2.05.below Rs 2 Cr BR +2.75% Security Prime: Hypothecation of the vehicle Collateral: NIL upto Rs. 100 lacs Margin 15% of the on-road price as the proforma invoice 15% of the on-road price as the proforma invoice & DOST – 10% Repayment Holiday period Priority status Discretion Remarks Up to Rs 2 lakhs BR + 0. • Processing charge: 0.CA Chartered Accountants & Practicing Cost and works accountants individually / jointly or Proprietorship concern or a Partnership Firm/Partnership with Limited Liability registered with ICAI. Trusts and Societies.10 Lacs. Purchase Car. LLP. computers. Collateral security may be taken for loans above Rs. towards working capital and financing receivables Varies from Rs.20%. Utp to 1 crore per unit Per borrower limit or maximum specified in the scheme whichever is lower. etc.75% Above RS 25 Lacs . MOU is valid upto 21. Maximum of 10 years by EMI ( Including Moratorium period).Career Guide for IOBians _____________________________________ Name Target Group 245 _____________________________________ _____________________________________ Financing TATA Motor commercial Transport vehicles Financing Ashok Leyland Commercial Transport vehicles Individual Transport operators Individual Transport operators.below Rs 2 Cr BR +2.2013 _____________________________________ Yes Per borrower limit or maximum specified in the scheme whichever is lower.below Rs 1 Cr BR+ 2.03. _____________________________________ IOB . purchase furniture & fixture. 75% Rs 2 lakhs to below Rs 25 lakhs BR+ 1. Our bank has entered into a • To be covered under CGTMSE MOU with PIAGGIO Vehicles Pvt • Our bank has entered into a MOU Ltd. MOU is valid 15.2013 • Ref: ADV / 118 / 2011-12 dt 24 /12/2011 _____________________________________ • • • • 15% on road cost Between 3-5 years As applicable to SME financing As applicable to SME financing with with CGTMSE cover CGTMSE cover No Processing charges To be covered under CGTMSE • Processing charge waived.07. limited Liability Partnerships. MOU is valid upto 23.00% Rs 2 lacs to < Rs 25 lacs BR+ 1. registration.75% BR +1. accessories et. limited Companies.2014 upto 30.Career Guide for IOBians _____________________________________ Name Target Group Purpose Quantum Rate of Interest Security Margin Repayment Holiday period Priority status Discretion Remarks _____________________________________ Financing Mahindra & Mahindra LCVs Financing PIAGGIO vehicles (APE) Individual Transport operators Individual Transport operators. insurance.12. • To be covered under CGTMSE • Our bank has entered into a MOU with Mahindra & Mahindra Ltd. Partnerships.) Between 3-5 years Prime: Hypothecation of the vehicle Collateral: NIL But with GTMSE cover 3 months 3 months 3 months Yes Yes Yes As applicable to SME financing with CGTMSE cover • 50% processing charge waived. MOU is valid upto with ATUL Auto Ltd.00% Up to Rs 2 lakhs : BR + 0.2014 Permit to operate the vehicle issued by competitive authority _____________________________________ _____________________________________ . Proprietorships.75% Prime: Hypothecation of the vehicle Collateral: NIL But with CGTMSE cover 10% of the on-road price (cost + insurance + registration + genuine OEM accessories) Between 5-7 years Prime: Hypothecation of the vehicle Collateral: NIL But with CGTMSE cover 15% on road cost (including taxes.75% BR+2. Trusts and Societies To finance purchase of Auto rickshaws & LCVs of ATUL Auto Ltd 85% of on-road price – as per proforma invoice Up to Rs 2 lakhs : BR + 0.75% 246 _____________________________________ Financing ATUL vehicles Individuals. partnerships To finance purchase of Mahindra & Mahindra LCVs 90% of on-road price – as per proforma invoice To finance purchase of Auto rickshaws & LCVs of PIAGGIO 85% of on-road price – as per proforma invoice <= 5yrs > 5 yrs Up to Rs 2 lakhs : BR + 0.05. proprietorships.75% Rs 2 lakhs to below Rs 25 lakhs BR+ 1. body building. Individual (running rice mills on own or lease basis) • Qualified women(minimum graduate ) n the age group of 21 to 50 • Proprietorship Concern or a partnership with women in the lead • Vt. RAM rating is compulsory but not linked to interest rates upto Rs 5 Crores. • Ref: Cir.2012 _____________________________________ .11. others 3 months Yes under MSME Similar to MSME Rs 200 per lac both for WC and TL with a maximum of Rs 20000 Ref: ADV/ 271 /2012-13 dt 23. 5 Crores BR + 1. purpose or enduse verification purely based on assessment of cash flow. Maximum of Rs. or JLG Proprietary.12 months for term loan Yes – under MSME Per borrower limit or maximum specified in the scheme whichever is lower.Career Guide for IOBians _____________________________________ Name Target Group Purpose Quantum Rate of Interest Security IOB GENERAL CREDIT CARD (IOB – GCC) IOB SME RICE MILLS PLUS IOB SME MAHILA PLUS Bank’s customers of Rural & Semi-Urban areas to purchase goods & Services on credit and to make cash withdrawals.50 % i. 12% at present. • Processing charges: Rs. ADV/ 249/ 2012-13 Dt : 08. Prime: Assets acquired out of loan amount & Collateral Security to cover 50% of the Banks exposure wherever CGTMSE cover not available For stock: 25%. CC:To be renewed annually TL:10 years for construction 7 years in Equal Monthly Instalments New unit: 12 months. Partnership.25000/-.100 per lac with a maximum of Rs. • RTGS free of charges upto Rs.under Indirect SME Advances – if the borrower engaged in SME activity Per borrower limit or maximum specified in the scheme whichever is lower. GL-CODE 4156 to be introduced. Ltd companies with woman as the MD/or a Director in a key position • Existing units fully managed by a woman entrepreneur To provide hassle-free credit to our bank’s customers in rural & Semi-urban areas without insisting for security.50 % for TL for construction of factory /business premises BR + 1.e. Poha Mills and Dal Mills. member of well functioning SHG financed by us already for productive purpose.10.000/- Holiday period Priority status Discretion Remarks • To meet financial requirements of rice mills.75% Margin Repayment 247 _____________________________________ _____________________________________ Max.. 25.3 years.25 % for working capital BR + 1. Base Rate + 1. 5 lacs. Purcahse of new & second hand machineries etc.75 % for purchase of Machineries / Equipments • • • • As per other MSME finance As per extant guidelines for lending to MSE sector.2012 _____________________________________ • • • To set up mfg/service units To upgrade units Fresh and additional working capital • Composite loan upto Rs 2 crores for a Manufacturing enterprise Composite loan upto Rs 1 crore for a Service enterprise BR +1. proper assessment of cash flow while fixing the limit to avoid problems in recovery later _____________________________________ • up to Rs. Company. Book debts: 35% & TL: 25% No Security Nil The Term Loan repayable in 84 monthly instalments excluding holiday period To be operated as Cash Credit with regular operations Nil Yes . To set up new rice mills and to acquire existing rice mills. 134/Above Rs. new and existing facing shortfall in promoter’s contribution (margin money) for capital investments.04.e. Partnership & Limited Companies.12.000 to Rs.2013 248 _____________________________________ IOB Bounty ATMs/Cash Dispenser Vendors/ Manufacturers/ Suppliers who are in operation for more than 3 years in the field of installation & maintenance of ATMS/Cash Dispensers Term Loan for ATMs/Cash Dispensers (installed & maintained by Vendors) under transaction cost model 75% on the total cost of machine including cost of preparation and erection of the site subject to a maximum of Rs 4. depends on investment Discretion As per SME finance As per SME finance Margin Repayment Holiday period Remarks 15% on road 3 to 5years Upto 3months MOU is valid upto 26.2013 1 % of the loan amount or Rs 10000 whichever is lower SME/ADV/331/2013-14 dt. 1crore can be covered under CGTMSE Processing charges : Non-rural branches: Amount Rs.00. Partnership and Limited Companies) To meet the shortfall in promoters contribution for starting a new unit or for expansion of the existing unit Is restricted to 10 % of the project/capital cost or Rs 50 lacs whichever is lower BR+1.25 % w. Spread over 10 years for new units and 9 years for existing units including the holiday period. the amount is not directly received from the Sponsor Bank through Escrow Account. Yes.19. • The Loan will be secured by hypothecation of ATM/Cash Dispenser • The receivables of the Vendor to be charged to the Bank.25 % PRIME: The SME Equi-P term loan will be secured by extending our charge on the fixed assets acquired out of regular term loan CGTMSE : as applicable to other Micro and Small Enterprises Priority status Yes Being a soft loan. 25% on the total cost of machine including cost of preparation and erection of the site 60 months 6 moths Yes Sanction of Loan can be considered only at the Regional Office Level • Processing charge as applicable to fund based advances • Loan amount upto Rs.168/.2013.50 Lacs per machine Base Rate + 3. • Personal Guarantee of the Directors in their individual capacity must be obtained.02.Career Guide for IOBians _____________________________________ Name Target Group Purpose Quantum Rate of Interest Security _____________________________________ Financing AMW vehicles Individuals.& Rural branches Rs.204/lac & Rs.2013 _____________________________________ Back to index _____________________________________ _____________________________________ .2 lacs – Rs.000 . All units engaged in transportation under HCV segment purchase of Trucks / Tippers Cost of the vehicles less margin amount As applicable to SME advances Collateral: upto 25 lac NIL9Only CGTMSE coverage) Above25lacs: security required IOB SME Equi-P scheme (Margin Money Assistance Scheme) All MSME units. Collateral equivalent to the loan amount to be obtained by the Branch in the form of liquid/immovable properties.2. 25.Rs. Holiday period of 2 years for new units and not more than 12 months for existing units. (Proprietorship.153/lac Present Base rate of our Bank is 10. srn/19.05. the eligible amount will be funded 100 % by the bank.f 18.00%. In case. Proprietary. 2. branch Managers are vested with discretionary powers to grant overdraft of not more than Rs. TOD in basic Small Savings SB accounts: In order to meet financial commitments of such SB account holders.Career Guide for IOBians 249 _____________________________________ _____________________________________ _____________________________________ Financial Inclusion . • RBI has issued directions to the bank on financial inclusion and is made mandatory. individual owners of kirana/ medical /Fair Price shops. • Indian Overseas Bank views this as an emerging business opportunity • This is a new business model which will provide low cost banking services to a vast population • Indian Overseas Bank implements Information and communication (ICT). Business Correspondent :The following organisations / individuals can be enlisted as BCs: a.1000/. authorized functionaries of well run Self Help Groups (SHGs) which are linked to banks. any other individual including those operating Common Service Centres (CSCs). individual Public Call Office (PCO) operators.Initiative of IOB (ICT based financial inclusion) 1.(Rupees One Thousand only) which should be adjusted within a maximum period of Sixty Days. through intermediaries like Business Correspondents (BCs) and Business Facilitators (BFs) . retired government employees and ex-servicemen. 4. financial inclusion through Steps to ensure Financial Inclusion • Opening small/Basic savings Bank accounts • Issuing General Purpose Credit Cards • Granting Overdraft facilities in SB accounts • Providing banking services at the door step of villagers through Smart Cards 3. individuals who own Petrol Pumps. Individuals like retired bank employees. retired teachers. • Information and Communication Technology (ICT) based financial inclusion is the mechanism of allowing people to transact basic banking business without coming to the Bank. Financial Inclusion : connecting people (particularly the under privileged] to the Banking system. agents of Small Savings schemes of Government of India/Insurance Companies. _____________________________________ _____________________________________ _____________________________________ . • The DCC of the district is directed by RBI to form a Financial Inclusion Sub-Committee to identify all unbanked villages with population above 2000 to provide them such banking facilities. Collection of small value deposits. Sale of micro insurance / mutual fund products / pension products / other third party products.Career Guide for IOBians 250 _____________________________________ _____________________________________ _____________________________________ b. Cooperative Societies registered under Mutually Aided Cooperative Societies Acts/ Cooperative Societies Acts of States/Multi State Cooperative Societies Act d. Disbursal of small value credit. excluding Non Banking Financial Companies (NBFCs). Distance from his place of business to the base Branch should not exceed 30 Kms in rural. but conducted through the Business Correspondents at places other than the bank premises/ATMs. Other Terms and Conditions: a. 7. Receipt and delivery of small value remittances / other payment instruments. Companies registered under the Indian Companies Act. b. c. 6. Association of Mutual Funds of India etc) and Reserve Bank of India. semi-urban and urban areas. subject to the regulations by the concerned authorities (like Securities Exchange Board of India. Recovery of principal / collection of interest. d. Business Correspondents will be attached to a designated base Branch. 1956 with large and widespread retail outlets. NGOs/ MFIs set up under Societies/ Trust Acts and Section 25 Companies c. Scope of activities of Business Correspondents Functions / Services: In addition to the activities listed under Business Facilitators model the scope of activities of Business Correspondent will include the following. In respect of Metropolitan centers the distance could be up to 5 Kms. _____________________________________ _____________________________________ _____________________________________ . Regional Manager can reduce the amount / waive security deposit depending on merits • To execute a letter of agreement on stamp paper • The tenure of agreement is for a period of one year initially and can be renewed by the Regional Office concerned.25000 in the name of BC should be held under lien to our Bank. Post Offices e. e. b. a. • The activities to be undertaken by the BCs would be within the normal course of the bank's banking business. 5. Security Deposit and Letter of Agreement for BC • Fixed Deposit of Rs. Insurance Regulatory Development Authority. g. m. Co-operatives d.000/-) to the debit of the transit account of the branch to enable withdrawals. IT enabled Rural Outlets of Corporate Entities f. Insurance Agents h. Village knowledge Centres _____________________________________ _____________________________________ _____________________________________ . BC should not charge any fee to the customers for the services rendered by them on behalf of the Bank. Farmers’ Clubs c. Bank will remain responsible to the customer for the acts of omission and commission of the BC/BF. j. which shall also be the competent forum for metropolitan areas. Where such relaxations cover adjoining districts. Branch and the Business Correspondent concerned. 8. A separate Cash Credit account under “CC Smart scheme” (under GL Code 3007) will be opened by the branch in the name of approved BC for routing all smart card based operations of customers. Post-Offices g. This is only a transit account and no interest is charged. BC should remit cash into his Transit account at the branch at the end of every day or whenever the cash on hand exceeds the prescribed limit l. A Board should be displayed at the place of the Business Correspondent with details of name of the Bank.Career Guide for IOBians 251 _____________________________________ _____________________________________ _____________________________________ c. Community based Organisations e. BC should function at a specific address.25. Business Facilitator The services of the following individuals / organisations may be utilized as BF for undertaking the activities mentioned below. i. No cheque book is issued under CC Smart Scheme. d. k. the matter may be referred to the State Level Bankers' Committee (SLBC). Non Governmental Organisations b. f. h. In case a need is felt to relax the distance criterion. a. the BC may be given a sum (say up to Rs. e. Well functioning Panchayats i. Cash-on-hand limit with the Business Correspondent is now fixed at Rs.25000/-. which can be shifted with the prior consent of the Bank. the matter can be referred to the District Consultative Committee (DCC) of the district concerned for approval. Before commencement of Smart Card Banking at the terminal. Creating awareness about savings and other products and education and advice on managing money and debt counseling. Have to execute a Letter of Agreement on stamped paper. Security Deposit and Agreement (BF) No security deposit will be insisted upon.1/. Agri Clinics / Agri Business Centres k.00% of the loan amount Recovery of loans : 1.2000 for card base upto 300 and Rs. 11.(Rs. Transaction based : Rs.00% of the amount recovered and payable in 2 installments _____________________________________ _____________________________________ _____________________________________ .Help Groups / Joint Liability Groups. h. Monitoring and handholding of Self -Help Groups / Joint Liability Groups / Credit Groups / Others. c.per account. g. Promotion and nurturing Self. Note: Business Facilitators are not permitted to undertake any cash transactions. e. Identification of borrowers and selection of activities (suitable economic activity for income generation). Post-sanction monitoring.3000 for card base above 300.10/. 10. b.3000 per month based on scale of performance.One only) per transacted account per day irrespective of any number of transactions in the account on the same day Collection and preliminary processing of loan applications including verification of information /data : 1.1000 to Rs. Units of Khadi & Village Industries Commission / Khadi & Village Industries Board 9. Follow-up for recovery. Processing and submission of applications to banks. f. Fees and commission for business intermediaries Opening of SB and other deposit accounts: Rs. Scope of activities of Business Facilitators : a. d. Rs. Krishi Vigyan Kendras l. Collection of preliminary processing of loan applications including verification of primary information / data.Career Guide for IOBians 252 _____________________________________ _____________________________________ _____________________________________ j. Fixed remuneration : Rs. • To minimize the cost of Financial Inclusion Initiative. hence. the profitability of the Bank. • He can receive or pay cash anytime during day or night as per mutual convenience of himself and the account holder • No licence from RBI or any other authority is required 13. Ultra Small Branches (USBs) • Ministry of Finance (MOF). • For furthering the Financial Inclusion efforts of Banks. • Account holders are issued Smart cards and BCs are issued master smart card and POS by the service provider. • To see that the cost has a relationship to the growth in business and. Every centre will function like an extension counter run by an intermediary without involving any bank staff. Government of India has directed that Ultra Small Branches be set up by Banks where opening of a Brick and Mortar Branch is presently not viable.2000 with a minimum of Rs. • For close supervision and mentoring of the Business Correspondent Agents by the respective Branch. • To ensure that a range of banking services are available to the residents of FI villages. • There is no limit on the number of centres at which such services can be provided. • The Business Correspondent can provide door step service by moving around or operate from his own house/shop or sit in a common place like Panchayat Office etc. • BC or Business Correspondent Agent (BCA) shall operate from the Ultra Small Branch _____________________________________ _____________________________________ _____________________________________ .50 at present. • M/s Tata Consultancy Services (TCS) Ltd is the service provider of our Bank. • Transactions are done by swiping through Hand Held Devices (small POS machines) with the assistance of a Business Correspondent who receives or gives cash under a prior arrangement with the Bank. • The maximum transaction per account per card per day is pegged at Rs. with the following objectives. Transactions through Smart Cards • This is done through biometric Smart Cards and the POS machines which get linked to the central server through mobile connectivity • Our Bank had launched a system of enabling the account holders to operate their accounts at their own place without visiting the branches.Career Guide for IOBians 253 _____________________________________ _____________________________________ _____________________________________ 12. Career Guide for IOBians 254 _____________________________________ _____________________________________ _____________________________________ • The Branch covering a village under Financial Inclusion should depute a specific officer to visit such village on a pre. field inspections. business development etc. • It is also with the objective that on getting training. • Branch official visiting the village should be equipped with a laptop with Virtual Private Network (VPN) connectivity to the CBS. _____________________________________ _____________________________________ _____________________________________ . IOB-Sampoorna.. loans. • Each RSETI should offer 30 to 40 Skill Development Programmes in a financial year in various avenues. farmers club. • Under this scheme. skill training etc. All the programmes should be of short duration ranging preferably from 1 to 6 weeks. preferably. particularly those below the poverty line. and for periodically upgrading their skill. • The project comprises loans to individuals. • The State Government will in consultation with the banks in SLBC. • The connectivity between the laptop at Ultra small branch and bank’s networks should be established through GPRS/2000 1X. SHG linkage. to the respective Lead Banks in the States to set up RSETIs. youth will launch profitable micro-enterprises and enhance their own standards of living and thereby contribute to the overall national economy. social forestry. • Laptops should mandatorily deploy atleast Windows 7 operating system or higher versions. IOB Sampoorna • IOB has launched a unique programme in the year 2008 to facilitate Total Village Development viz. rural tourism. Rural Self Employment Training Institutes’ (RSETI). 14. extension of banking services. 15. assign districts.notified fixed day and time every week. clearing applications for opening of new accounts. an identified branch gives credit facilities and noncredit inputs in the village. • To promote self employment for the unemployed rural youth. • IOB Sampoorna provides solution for a rural branch with limited infrastructure to effectively serve in a number of villages by leveraging the core competency of various institutions who have necessary expertise in their particular field and also have corporate social responsibility. RSETIs are set up. recovery follow – up. healthcare. It aims at total inclusive growth for Integrated Rural Development covering all aspects of social and economical life of people.. • The Business Correspondents (BC) / BCA would be responsible for the cash transactions and the visiting officer will be providing the other services viz. To make the people aware of the advantages of being connected with the formal financial sector . fax. To educate the people in rural and urban areas with regard to various financial products and services available from the formal financial sector.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . ********************* srn/23. as per convenience of the interested persons. mobile. Financial Literacy and Credit Counselling Centres (FLCCs) • The broad objective of the FLCCs is literacy/education and credit counselling.04.Career Guide for IOBians 255 _____________________________________ _____________________________________ _____________________________________ 16. etc. • To provide financial counselling services through. particularly in those districts where they have lead bank responsibility. • Some of the specific objectives of the FLCCs would be. To formulate debt restructuring plans for borrowers in distress and recommend the same to formal financial institutions. • Banks have set up FLCCs. etc. to provide free financial Face-to-face interaction and also through other available media like email. medical and other emergencies. The loan is without collateral. fortnightly or monthly installments at the choice of the borrower.60. Loans are extended to borrowers whose household annual income does not exceed Rs. e.e. 30% of the total loan can be for other purposes such as housing repairs.in non rural areas. • All new companies desiring NBFC-MFI registration will need a minimum NOF of Rs. 000/. society.2 crore. Loan does not exceed Rs. • NBFC-MFIs are required to maintain not less than 85 % of their net assets as Qualifying Assets. education. Self Help Groups.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .15000/-. • MFI has to be a member of at least one Credit Information Company (CIC) • The maximum variance permitted for individual loans between the minimum and maximum interest rate cannot exceed 4 %.35000/.MFIs are to ensure that. srn/15. had recommended to continue with the categorisation of bank loans to MFIs under the priority sector provided they comply with the certain stipulated criteria in this regard. Joint Liability Groups etc.20. f. tenure of loan is not less than 24 months with right of prepayment without penalty. Non banking finance company.Career Guide for IOBians 256 _____________________________________ _____________________________________ _____________________________________ NBFC-Micro Financial Institutions (MFIs) • A Micro Finance Institution is “ ANY INTERMEDIARY” who is engaged in On lending to individuals. When loan amount exceeds Rs. It includes any person.in the first cycle and Rs. • When NBFC is functioning as MFI.in rural areas and Rs. NBFC . b. it is known as a NBFC-MFI • Y.5 crore except those in the North Eastern Region of the country which will require NOF of Rs. a. • NBFC-MFIs were also required to ensure that the aggregate amount of loans given for income generation is not less than 70 % of the total loans extended. inter alia.03. c.50000/-.000/. 85% of the total assets are in the nature of “Qualifying Assets” i. Malegam committee constituted to study issues and concerns in the MFI sector. etc.1. trust. Total indebtedness of the borrower does not exceed Rs. H. group of persons.. Loan is repayable by weekly. section 25 Company.50000/in the subsequent cycles. d. Selection Criteria for JLG • Members should be of similar socio economic status and background carrying out farming activities and who agree to function as a Joint Liability Group. if the JLG chooses to undertake savings as well as credit operations through the group mechanism.Career Guide for IOBians 257 _____________________________________ _____________________________________ _____________________________________ JOINT LIABILITY GROUPS (JLGs) 1. • JLG should not be formed with members of the same family and more than one person from the same family should not be included in the JLG. 4. • Therefore savings by the JLG members is voluntary. • However. • The members should be residing in the same village / area and should know and trust each other well enough to take up joint liability for Group / Individual loans. 3. • All the JLG members may be encouraged to open an individual "Basic savings Bank" account. 2. such groups should open a savings account in the name of JLG with atleast 2 members authorised to operate the account on behalf of the group. Savings by JLGs • The JLG is intended primarily to be a credit group. Objectives • To augment flow of credit to tenant farmers cultivating land either as oral lessees or sharecroppers and small farmers who do not have proper title of their land holding through formation and financing of JLGs. _____________________________________ _____________________________________ _____________________________________ . The selection of a good / able / active leader for the JLG is an essential need which will ultimately benefit all the JLG members. • The groups must be organised by the likeminded farmers and not imposed by the bank or others. • The group member should not be a defaulter to any other formal financial institution. • The members should be engaged in agricultural activity for a continuous period of not less than 1 year within the area of operation of the Branch. Definition of JLG • A Joint Liability Group (JLG) is an informal group comprising preferably of 4 to 10 individuals coming together for the purpose of availing bank loan either singly or through the group mechanism against mutual guarantee. • There is a need for a very active member of the group to ensure leadership role and ensure the activities of the JLG. depending on the crops to be cultivated. there has to be mutual agreement and consensus among all members about the amount of individual debt liability that will be created. • The group would be eligible for accessing one loan. • However. • The quantum of credit need not be linked to groups’ savings as in the case of SHGs. marketing and other agricultural productive purposes. Purposes of loan JLG members may be financed for crop production. • Branch could assess the credit requirement. 6. • JLG is mainly a credit product. which could be combined credit requirement of all its members. • JLGs that undertake savings apart from credit are required to maintain books of accounts. Model B: Financing the Group: • The JLG would consist preferably of 4 to 10 individuals and function as one borrowing unit. available cultivable land and credit absorption capacity of the individual. • The credit assessment of the group could be based on the available cultivable area by each member of the JLG. • The JLG would prepare a credit plan for its individual members and an aggregate of that is submitted to the Branch.Career Guide for IOBians 258 _____________________________________ _____________________________________ _____________________________________ 5. • But if the members want to save through the group. • All members would jointly execute the document and own the debt liability jointly and severally. Branches can open savings account in the name of the JLG to be operated by two members of the group as decided through a resolution by the JLG. • All members would jointly execute one inter-se document (making each one jointly and severally liable for repayment of all loans taken by all individuals in the group). consumption. Credit Linkage Branches can finance JLGs by adopting any of the following models:Model A: Financing Individuals in the Group: • The group would be eligible for accessing separate individual loans from the financing Branch. _____________________________________ _____________________________________ _____________________________________ . • The individual members of JLG would be eligible for loan after the Branch verifies the individual members’ credentials. under both the above models A & B.000/.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . handicrafts making etc. It may be ensured that the mutual guarantee offered by the JLG members is obtained. (PAIS). Personal Accident Insurance All the farmers are to be covered under Personal Accident Insurance Scheme. 10. 9.Career Guide for IOBians 259 _____________________________________ _____________________________________ _____________________________________ 7. Maximum amount of loan is restricted to Rs.50. short-term loan or term loan depending upon the activity and Quantum of Loan.per individual. • The management of the JLG should be simple with little or no financial administration within the group. maximum amount of loan etc as like that of JLG for agriculture purpose. Type of Loan Branches may consider cash credit. Security No collateral may be insisted upon. Type of loan. srn/04. NON -FARM SECTOR JOINT LIABILITY GROUPS (JLGs) • The JLG members are expected to engage in similar type of economic activities like weaving.04. 8. • The members should be residing in the same village /area and should know and trust each other well enough to take up joint liability for Group/Individual loans • JLGs/ JLG Members can also be financed under Central /State Government sponsored schemes with subsidy • Credit linkage. (ARID/ADV / 245 / 2012-13 dt.10. the promoting VAs / NGOs provide training. it is desirable that the additional savings by group members does not entitle the concerned members to seek proportionately higher dosage of credit for themselves.04. Reserve Bank of India has recognised the concept of Self. Thrift and Credit Concept • SHGs create their own fund/corpus with the thrift received from members. However. • The SHGs should have freedom to decide as to whether the voluntary savings by members of the group are eligible for proportionate share in the interest income or dividend from the group 3. As a part of group corpus and utilized for intra group lending. voluntarily formed to save small amounts out of their earnings. 1. _____________________________________ _____________________________________ _____________________________________ . Characteristics of SHG The membership of the group should preferably be between 10-20 and should not exceed 20 at any time. 2. • SHG members with greater savings potential may be allowed to park their surplus fund within the group in the form of voluntary savings over and above the compulsory savings mandated in the group and a suitable accounting system may be started in the SHG for this purpose.2012) • Voluntary savings can be reckoned in two ways. not forming a part of the group corpus b. Promotion of SHGs SHG may be organised in a village or cluster of villages either by reputed Voluntary Agencies (VAs). Normally.Help Groups for rural lending as a part of routine activity of banks and declared lending to Self Help Groups as a component of Priority Sector Advances under loans to weaker sections. • SHGs meet the smaller consumption and emergent needs of members from the common fund generated from the savings of members. a. extension and support facilities to the group and its members. The members should preferably have a homogenous background and interest. it will also be reckoned for assessing the quantum of loan to the group from bank. NABARD provides 100% refinance for advances under Bank-SHG linkages.Career Guide for IOBians 260 _____________________________________ _____________________________________ _____________________________________ Self Help Group [SHG] SHG is a homogenous group of rural poor. • In case of (a). Non-Governmental Organisations (NGOs) or at the initiative of Banks. which is convenient to all the members and agreed upon by all to form a common fund/ corpus of the group to be lent to the members for meeting their productive and emergent credit needs. It is not necessary that the Savings Bank Accounts should have been opened 6 months prior to credit linkage While grading. SHGs scoring 60-89 points have to be selected with caution. Grading of SHGs / Linking of SHGs Besides looking into the characteristics of SHGs there is a need for a system to grade the SHGs for the purpose of establishing credit linkage with the bank. Quantum of Loan : sanction of limits to SHGs under Direct linkage only by way of Cash Credit facility. The group should have an active existence of atleast 6 months and must have successfully undertaken savings and credit operations for credit linkage.Career Guide for IOBians 261 _____________________________________ _____________________________________ _____________________________________ The group should function in a democratic manner allowing free exchange of views and participation by members. The groups should maintain simple records. Our Bank Lending Norms a. 4.000/- _____________________________________ _____________________________________ _____________________________________ .00. The SHGs scoring more than 90 points can be selected without any reservation. rate of interest to be paid/charged on savings/credit to members. SHGs scoring less than 60 points are not suitable for linkage. the SHG should score more than 60 points. periodicity and the amount to be saved by every member. other than those exempted.7.00. The banker should be convinced of the genuineness of the group formation and its objectives.25. viz. Membership Register. Minutes Book. Credit dispensation Financing can be done directly to the SHG or through the sponsoring NGO/VA. b.000/- 3 4 10 times of savings/ corpus subject to a maximum of Rs.000/- 5 10 times of savings/ corpus subject to a maximum of Rs.2. viz.5. Savings registers and Credit Registers. as per the following eligibility norms:Type of loan 1 Cash credit facility I year II year III year IV year 2 4 times of savings/ corpus subject to a maximum of Rs. The group should devise a code of conduct for themselves. purpose for which loan can be given. 5. Separate category: Loan granted to SHGs are reported under the head ‘Advances to SHGs’ 6. etc.000/- 10 times of savings/ corpus subject to a maximum of Rs.50.4. Career Guide for IOBians 262 _____________________________________ _____________________________________ _____________________________________ • Cash Credit limit shall be sanctioned in the ratio of 1:10 subject to a maximum of Rs.7.50 lacs after savings of 5 years and drawals will be allowed as per column (2) to (4). • The members inter-se will get a term loan from the group c. Margin: There is no margin for loans granted to SHGs d. Security: The SHGs may not be in a position to offer any collateral security. However, the assets created out of our finance should be hypothecated. Term loans: Term loans can be sanctioned only for the following purposes’ a. In those Govt schemes which have back ended subsidy and release of subsidy is contingent on repayment of term loans, the SHGs can be granted term loans. b. Term loans can also be given to SHGs in cases where the SHGs undertake group activity and the Bank loans are taken to undertake that activity. 7. Discretionary powers: i. Loans to SHGs for economic activity can be sanctioned at branch level subject to scheme norms and activity wise delegations under Agriculture & Priority Sector ii. Direct lending to SHGs (not linked to economic activities) subject to compliance of loan to savings ratio, as given below. Type of group DGM AGM SM IV MM III MM II JM I where the number of members in the SHG is [a] upto 15 3 3 3 3 3 3 [b] More than 15 5 5 5 5 5 5 Loans to NGOs for on-lending to SHGs 25 25 10 Nil Nil Nil 6. JBY – Janashree Bima Yojana is a low cost insurance available both for beneficiaries and their spouse which shall take care of repayment in case of unforeseen eventualities to the beneficiaries. 7. All women SHG members financed by our Bank shall be necessarily covered under Janashree Bima Yojana (JBY). 8. IOB-SHG Family Insurance" - Life Insurance Cover to Members of Self Help Groups (SHG) and Spouse _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 263 _____________________________________ _____________________________________ _____________________________________ This is a socially relevant scheme, which will enhance goodwill for the Bank a. Type of cover: Group Term Insurance Cover b. Eligibility: Persons in the age group of 18 to 59 years are covered who are engaged in specified occupation like milk produces, construction workers, farm labourers etc. They should be members of a Self Help Group and the SHG should have account relationship with us. The SHG may or may not have availed loan facility from us. A member can take only one cover under the policy. Multiple covers through different SHG is not allowed. c. Documents required: The insured i.e., the SHG member has to sign a simple proposal form which contains a self declaration of good health. No other document is required from the insured. d. Premium payable: Annual premium is Rs.200/- of which Rs.100 will be paid by the individual member and the remaining Rs.100 will be subsidised from the Social Security Fund of Government of India. The husband of SHG member can also be covered for death benefit of Rs.10,000/- for additional premium of Rs.40/e. Period of Cover: For a period of 1 year from the date of receipt of premium by the branch. f. Issue of Policy: Individual policies will not be issued but a Master Policy in the name of the Bank will be issued. g. Benefits to the Insured: The insured under the scheme will get the following benefits: Natural death of insured, the nominee will get Rs.30,000 Death due to accident, the nominee will get Rs.75,000 Total Permanent disability due to accident, the amount payable is Rs.75,000 Partial permanent disability due to accident, the amount payable is Rs.37,500 Members' children studying between 9th and 12th standard are eligible for scholarship of Rs.300/- per quarter, provided the student passes the final examination. This facility of Shiksha Sahayog Yojana is available for a maximum of two children per family. On death of husband of the member an amount of Rs.10,000/- is payable for an additional premium of Rs.40/-. h. Scholarship Claims: Apart from life cover the scheme also provides for scholarship for children of the insured SHG member studying between class 9th and 12th provided the student passes the annual examination. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 264 _____________________________________ _____________________________________ _____________________________________ The number of scholarships is restricted to 15 % of the total number of members and will be given to the poorest of the poor as certified by the Branch Manager of the Bank. 9. Debt swap scheme for SHGs As a measure of inclusive growth, banks have been advised by RBI/NABARD to implement Debt Swap Scheme to provide Institutional Credit to the indebted farmers and SHG members to repay loans taken from private money lenders. Lending to SHG members (who are not engaged in agricultural activities) to prepay loan to non institutional lenders against appropriate collateral or group security will be classified as Micro Credit under Priority Sector. The Debt Swap scheme should be implemented in service area villages only. a. Objective: The objective of the scheme is to facilitate the members of SHGs to liquidate their outstanding debts with non-institutional lenders (money lenders) through bank linkage and replacement of high cost loans with bank finance. Eligibility All the eligible SHGs may be financed & this scheme may be taken up in one service area village of each branch. Existing members of Self Help Groups (SHGs), who are linked to banks, accessed bank loans and promptly repaying & also those SHGs, who are linked to Banks and yet to take loans from banks. New SHGs, which have completed atleast 6 months of the existence with regular savings and internal lending. In case the SHG member is having dealings with other Bank, loans under Debt Swap scheme should not be extended to such borrowers who have multiple bank borrowings b. Assessment of outside debt & loan amount i. Existing SHGs Regular loan limit: Eligibility as per the corpus and (or) Micro Credit PlanMCP (Note: Micro Credit Plan includes the following components.) 1. Investment credit needs for economic activities. 2. Social needs like Health, Education, marriage, house repair etc., which is subject to maximum of 10%of investment credit needs as calculated above. Debt swap scheme: 50% of the eligible loan amount as calculated above (or) to the extent of debt which ever is lower, as additional term loan. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 265 _____________________________________ _____________________________________ _____________________________________ Total limits of both the regular loan and additional loan as detailed above are subject to maximum of Rs.5 lakh per SHG. ii. New SHGS Debt swap:50% of the eligible loan amount or to whichever is lower, as additional term loan. the extent of debt Total limits of both the regular loan and additional term loan as detailed above are subject to maximum of Rs.2.5 lakh per SHG. The loan is given to SHGs only (Not to the individual members directly ). c. Mode of payment/disbursement SHGs should prepare a micro credit plan and submit the same along with application & statement of debts obtained by individual members. Based on the MCP, and debt statement Branch Manager may take decision regarding the quantum of loan. Resolution from the Group declaring outside debts. The sanctioned amount towards the debt should be directly paid to the money lender. Every member should be informed of the sanction particulars. Branch Manager has to satisfy about the existence of outside debt. After availing the loan, the group has to ensure that the repayment of outside debts taken by its members is liquidated and further a declaration to that effect to be furnished to the Branch. Wherever possible, the documentary evidence for payment of outside debt to be handed over to the Branch and payment will be made to the creditors. e. Margin: No margin. f. Security: Hypothecation of Book debts/assets created out of loan. No collateral security upto Rs.5.00 lakhs per group. However if the SHG member(s) have already given collateral security to the moneylender, such underlying security will be taken while taking over of such debts under the scheme. Above Rs.5.00 lakhs as per usual norms. Repayment: Repayable in three to five years in monthly instalments with gestation period of 6 months (Depending on the activity of the SHGs). Longer repayment period for SHGs is proposed after considering the income generation of SHGs. h. Insurance coverage: Individual Self Help Group members may be covered with Janashree Bima Policies, which covers their life OR Individual Self Help Group members may be covered with Swasthya Bima Policies, which covers their health. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 266 _____________________________________ _____________________________________ _____________________________________ i. Other terms KYC norms must be strictly adhered to. SHGS to be evaluated periodically. Applicable processing charge to be collected 10. Other loan schemes for SHGs a. Loans under SGSY Scheme Loans to SHGs are considered under SGSY scheme, provided the members of the group are eligible SGSY scheme beneficiaries b. Loan under SJSRY Scheme c. Loan under PMEGP ********************************* srn/11.05.2013 Back to index _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 267 _____________________________________ _____________________________________ _____________________________________ SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY) 1. General • The SGSY Scheme is operative from 1st April, 1999 in rural areas of the country. • The scheme will be funded by the Centre and the States in the ratio of 75:25. • Implemented by Commercial Banks, Regional Rural Banks and Co-operative Banks. • The objective of SGSY is to bring the assisted poor families (Swarozgaris) above the poverty line by ensuring appreciable sustained income over a period of time. • Swarozgaris can be either individuals or groups and would be selected from BPL families by a 3 member team consisting of Block Development Officer (BDO), Banker and Sarpanch. • The list of Below Poverty Line (BPL) households identified through BPL census duly approved by Gram Sabha will form the basis for identification of families for assistance under SGSY. • SC/ST will account for at least 50 %, Women 40 %, and the disabled 3 % of those assisted. • Once the person or group of persons has been identified for assistance, their training need also is to be ascertained with reference to Minimum Skill Requirement (MSR). • Farm activities to be assisted would include minor irrigation such as open dug well/bore/tube well/lift irrigation/check dam etc. Non-farm activities will include those activities that result in the production of goods/services that have ready market. • The unit cost as fixed by the Regional Committees of NABARD should be taken into consideration as indicative cost while fixing the unit cost for the farm sector. • In regard to loans falling under Industry, Service and Business (ISB) Sector, the responsibility of fixing the unit cost and other techno-economic parameters rests with the District SGSY Committee. • ‘BPL Family’ under the guidelines would be treated as a unit for the purpose of giving income generating assets. • A household having two kitchens and two ration cards should not be treated as a family and the existence of two kitchens or two ration cards in the same house is an indication of two families. 2. Revolving Fund • Self Help Groups go through various stages of evolution viz. Group formation, Group Stabilization, Micro Credit stage and Micro Enterprise Development stage. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 268 _____________________________________ _____________________________________ _____________________________________ • SHGs that are in existence for about six months and have demonstrated the potential of a viable group, enters the third stage, receives the Revolving Fund from DRDA and banks as cash credit facility. • The DRDAs may release subsidy, which is equal to the group corpus with a minimum of Rs. 5000/- and a maximum of Rs. 10000/- linked with bank credit. • The group corpus would be defined as the total amount available with the group inclusive of cash with the group, amount in Savings Bank account of the group, loans outstanding against members of the group and interest earned on the loans as well as deposits. • Subsequently, if it is found that the group has not been able to reach the micro enterprise stage and requires further financial support to continue in the micro finance stage for some more time, performance of such groups may be got evaluated. • In the evaluation if it is observed that the group has been successfully utilising the revolving fund, they could be considered for sanction of further doses of subsidy fund up to a maximum of Rs. 20000/- inclusive of previous doses linked with bank credit. • The subsidy of Rs. 20000/- released by DRDA will be adjusted against the loan at the end of the cash credit period on the request of the group. 3. Lending Norms • The size of loan under the scheme would depend on the nature of project. • The loans under the scheme would be composite loan comprising of Term Loan and working capital. • The loan component and the admissible subsidy together would be equal to total project cost. • Swarozgaris will be given the full amount of loan and subsidy and they will have the freedom to procure the assets themselves. • Disbursements up to Rs.10,000/- under Industry, Service and Business (ISB) sector may be made in cash where a number of items are to be bought. But bills/vouchers are to be collected subsequently. 4. Group loans • The group is entitled to subsidy of 50% of the project cost subject to per capita subsidy of Rs. 10000/- or Rs. 1.25 lakh, whichever is less. 5. Time limit for disposal of applications • All loans granted under the scheme are to be treated as advances under priority sector. • Loan applications under the scheme should be disposed of within the prescribed time limit of 15 days and at any rate not later one month. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 269 _____________________________________ _____________________________________ _____________________________________ 6. Insurance Cover • Insurance cover is available for assets/live stock bought out of the loan. • Swarozgaris are covered under the Group Insurance Scheme as per SGSY guidelines. • The General Insurance Corporation has agreed to provide this cover on the terms and conditions as reflected in the specimen Master Policy and Long Term Master Policy Agreement signed between the GIC and the State Government. • The expenditure on the premium is to be shared among the Government, bank and the beneficiary. • Sum Insured: The cost of the asset shall be treated as the sum insured for the settlement of claims. • For permanent total disablement (PTD) claims 75% of the sum insured shall be payable. 7. Group Life Insurance Scheme • For availing the group insurance coverage by the SGSY Swarozgaris, the maximum age of Swarozgaris at the time of sanction has to be kept at 60 years of age. • The insurance coverage, however, would be for five years or till the loan is repaid, whichever is earlier, irrespective of the age of Swarozgaris at the time of sanction of loan. • This Scheme is operative from the date on which the asset is disbursed to the Swarozgari. • Under the insurance, An amount of Rs.6000 will be given by LIC to the nominee of the swarozgari, in case of natural death. • In the event of death due to accident a sum of Rs.12,000/- shall become payable by LIC. 8. Security norms • • For individual loans upto Rs. One lakh and group loans upto Rs. 10 lakhs, the assets created out of bank loan would be hypothecated to the bank as primary security. • In case where movable assets are not created, as in land-based activities such as dug well, minor irrigation etc., mortgage of land may be obtained. • Where mortgage of land is not possible, third party guarantee may be obtained at the discretion of the bank. For all individual loans exceeding Rs. 1,00,000/- and group loans exceeding Rs. 10 lakhs, in addition to primary security such as hypothecation/mortgage of land or other assets, suitable margin money/ other collateral security in the form of insurance policy; marketable security/ deeds of other property etc. may _____________________________________ _____________________________________ _____________________________________ 9. 7. 1. Subsidy • Subsidy under SGSY will be uniform at 30 % of the project cost. 4 and 5 years respectively. • While deciding the limit for collateral security. SGSY Committee. • There will be no monetary limit on subsidy for irrigation projects. the Swarozgaris will be entitled only to pro-rata subsidy. Banks should apply no interest on the Subsidy Reserve Fund Account. c) Subsidy under SGSY will be back ended. • Repayment of instalments should not be more than 50 % of the incremental net income expected from the project. subject to a maximum of Rs. subsidy may be kept in the Reserve Fund Account as stated above without any interest being offered. • Swarozgaris will not be entitled for any benefit of subsidy if the loan is fully repaid before the prescribed lock-in period. • There will be a moratorium on repayment of loans during the gestation period. 7 and 9 years depending on the project. d) The balance lying to the credit of Subsidy Reserve Fund Account will not form part of DTL for the purpose of SLR/CRR. • The group is entitled to subsidy of 50% of the project cost subject to per capita subsidy of Rs. b) In the case of Working Capital advances also. Repayment of Loan • All SGSY loans are to be treated as medium term loans with minimum repayment period of five years.000/-.25 lakhs. a) The subsidy admissible to the Swarozgaris under SGSY should be kept in the Subsidy Reserve Fund Account Swarozgari-wise. • The repayment period for various activities under SGSY can broadly be categorized into 5. • Instalments for repayment of loan will be fixed as per the unit cost approved by the NABARD/Dist. the amount standing to the credit of the account should be withdrawn and credited to a Cash Credit Account of the SGSY Swarozgaris after a period of 5 years. 10. 10.500/-. 10000/. However.Career Guide for IOBians 270 _____________________________________ _____________________________________ _____________________________________ be obtained at the discretion of the bank. • The corresponding lock-in period would be 3. whichever is less. _____________________________________ _____________________________________ _____________________________________ . If the loan is fully repaid before the currency period. the total project cost (bank loan plus Government subsidy) should be taken into consideration by banks.or Rs. • In respect of SC/STs it will be 50 % of the project cost subject to a maximum of Rs. will entitle him/her to waiver of the 0. • A processing-cum-monitoring fee of 0.Career Guide for IOBians 271 _____________________________________ _____________________________________ _____________________________________ • The banks may engage the services of NGOs or individuals (other than government servants) as monitor-cum-recovery facilitators. • Banks are eligible for refinance from NABARD for the loans disbursed under SGSY as per their guidelines.5 % of the loan amount may be charged to the Swarozgaris to meet this expenditure. on a commission basis. • Prompt repayment at the Swarozgari’s level.5 % processing-cum-monitoring fee. srn/04.04.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . • Major components of SJSRY are. A special provision of 3% reservation in the total number of beneficiaries should be made for the differently-abled . Skill Training for Employment Promotion amongst Urban Poor (STEP-UP) d. with support for their ustainability. Urban Wage Employment Programme (UWEP) e. • Urban Self Employment Programme (Loan & Subsidy): This programme will be applicable to all cities and towns on a whole town basis. Not less than 30% for women beneficiaries are to be assisted under the scheme. • Funding under SJSRY will be shared between the Central Government and the State Governments in the ratio of 75:25. _____________________________________ _____________________________________ _____________________________________ . • The target population under SJSRY is the urban poor . will be carved out of USEP and STEP-UP. Urban Community Development Network (UCDN) • To accord special focus on the issues of urban poverty amongst Scheduled Castes (SCs) and Scheduled Tribes (STs).Career Guide for IOBians 272 _____________________________________ _____________________________________ _____________________________________ Swarna Jayanti Shahari Rozgar Yojana (SJSRY) • The main objective of the scheme is addressing urban poverty alleviation through gainful employment to the urban unemployed or underemployed poor by encouraging them to set up self employment ventures (individual or group).those living below the poverty line. the same will be provided to the beneficiaries before extending financial support. • Where the identified activity for microenterprise development requires skill training of an appropriate level. or undertake wage employment. called the Urban Programme for Poverty reduction amongst SCs & STs (UPPS). Urban Self Employment Programme (USEP) • Assistance to individual urban poor beneficiaries for setting up gainful self employment ventures [Loan & Subsidy] is a sub-component of USEP. 15% of the physical and financial targets under USEP at the national level shall be earmarked for the minority communities. as defined by the Planning Commission from time to time. Urban Self Employment Programme (USEP) b. Urban Women Self-help Programme (UWSP) c. a. • No minimum or maximum educational qualification is prescribed for selection of beneficiaries under USEP. a special component programme of SJSRY. SCs and STs must be benefited at least to the extent of the proportion of their strength in the city / town population below poverty line (BPL). In case more than one beneficiary join together and set a project under partnership. Loan amount (including subsidy) : 95% of the project cost would be made available by Banks Interest rate: as applicable to such priority sector lending fixed by the Reserve Bank of India. Maximum allowable subsidy . Residing in the town for at least three years Should not be a defaulter institution/cooperative bank. Margin: 5% of the project cost as margin money in cash. subsidy would be calculated for each partner separately. the project with higher costs would also be considered provided share of each person in the project cost is Rs. clusters should be taken for support under SJSRY and efforts should be to ensure that all adults in the cluster are provided with benefits of skill development. • Eligibility: Membership of the Group : Minimum number of women in a group is 5. _____________________________________ _____________________________________ _____________________________________ .000/-.No Collateral required Repayment : Repayment schedule ranges from 3 to 7 years after initial moratorium of 6 to 18 months as decided by Bank.25% of the Project Cost subject to a maximum of Rs. If two or more eligible persons join together in a partnership. Self-Employment (Group) Through Setting Up Of Micro-Enterprises Under UWSP. Should be of minimum 18 years at the time of applying for Bank Loan. Beneficiary contribution . The interest will be charged only on the loan amount.300. to any nationalized bank/financial Project Cost : No maximum limit Subsidy: Rs.200. in any city/town.000/.Career Guide for IOBians 273 _____________________________________ _____________________________________ _____________________________________ • Identifiably. self-employment or wage employment so that no urban poor household is left with an adult without means of earning income.50.5% of the project cost as margin money Collateral .or 35% of the cost of project or Rs.200. • to any nationalized bank/financial Financing pattern under USEP are: Maximum allowable unit project cost .000 or less.per Member of the Group. • Eligibility: Urban poor living below the poverty line.60. Should not be a defaulter institution/cooperative bank. from time to time.Rs.000/-.000/. whichever is less. 2013 Back to index _____________________________________ _____________________________________ _____________________________________ . Collateral . The interest will be charged only on the loan amount.No Collateral required Repayment : Repayment schedule ranges from 3 to 7 years after initial moratorium of 6 to 18 months as decided by Bank ***************** srn/10.Career Guide for IOBians 274 _____________________________________ _____________________________________ _____________________________________ Interest rate: as applicable to such priority sector lending fixed by the Reserve Bank of India.03. from time to time. • The scheme is implemented in Rural as well as urban areas. • Cost Project a. The maximum cost of the project / unit admissible under business / service sector is Rs. 25 lakh b. 10 lakh • Subsidy The quantum of subsidy from the Government of India is based on the categories of beneficiaries and the area of location of the project viz. the beneficiaries should possess at least VIII standard pass educational qualification. It ranges from 15% to 35% accordingly. _____________________________________ _____________________________________ _____________________________________ .10 lakh in the manufacturing sector and above Rs.2008 namely Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP). • PMEGP will be a central sector scheme administered by the Ministry of Micro. Hill and Border areas etc. • For setting up of project costing above Rs.Career Guide for IOBians 275 _____________________________________ _____________________________________ _____________________________________ PRIME MINISTER’S EMPLOYMENT GENERATION PROGRAMME (PMEGP) • This scheme is developed by merging the two schemes that were in operation till 31. 5 lakh in the business / service sector. Exservicemen. Categories of beneficiaries under PMEGP Area (location unit/project) of Beneficiary’s contribution (of project cost) the General Categories Special (including SC / ST / OBC / Minorities / Women.03. Subsidy amount (of project cost) urban Rural 10% 15% 25% 5% 25% 35% Eligibility Conditions of Beneficiaries • There will be no income ceiling for assistance for setting up projects under PMEGP. Physically handicapped. NER. Small and Medium Enterprises. rural or urban. The maximum cost of the project / unit admissible under manufacturing sector is Rs. • Retail outlets backed by manufacturing (Including Processing)/ Service facilities may also be permitted to avail loan under the scheme. proportionate amount of the Margin Money (subsidy) is to be recovered by the Bank / Financial Institution and refunded to the KVIC at the end of the third year. Implementing Agencies • Khadi and Village Industries Commission (KVIC).Career Guide for IOBians 276 _____________________________________ _____________________________________ _____________________________________ The retail outlets backed by bonafide manufacturing /service facilities may be certified to be so by the district level task force committee which recommends the case.25. For service projects with sales out lets the maximum project cost should not exceed Rs. • In urban areas.10 lakhs. • If it does not touch aforesaid limit. The maximum cost of the project for business/ trading activities may be Rs.1860 • Production Co-operative Societies • Charitable Trusts • Units that have already availed Government subsidy under any scheme of Govt. 10 lakh ( at par with the maximum project cost for service sector). Maximum 10 % of the Margin Money allocation in a year in a state may be used for business /trading activities as above For manufacturing with retail outlet the project cost should not exceed Rs. • Institutions registered under Societies Registration Act. which will be the single nodal agency at the national level. • At the State level. of India or State Government are not eligible. State Khadi and Village Industries Boards (KVIBs) and District Industries Centres in rural areas. the Scheme will be implemented by DICs. • The Task force would be headed by the Commissioner / Collector concerned. Mumbai. ISEC or any other scheme is not eligible. _____________________________________ _____________________________________ _____________________________________ . the scheme will be implemented through State Directorates of KVIC. Identification of beneficiaries • Will be done at the district level by a Task Force consisting of representatives from KVIC / State KVIB and State DICs and Banks. District Magistrate /Deputy Working capital • Working Capital component should be utilized in such a way that at one point of stage it touches 100% limit of Cash Credit within three years of lock in period of Margin Money and not less than 75% utilization of the sanctioned limit. • Registered and Khadi Institutions who have availed government grant under MDA.00 Lacs. • Self Help Groups (including those belonging to BPL provided that they have not availed benefits under any other Scheme) are also eligible for assistance under PMEGP. Any surplus will be remitted to KVIC. if the bank authorities feel that EDP is necessary before disbursement in some specific project.2 lacs for service activities is only 3 days. should not be made till EDP training is completed. • However. • The designated nodal branch has to clear and remit the amount of subsidy to the financing branch within 15 days of receipt of the claim. it should be kept in a Term Deposit of 3 years at branch level in the name of the beneficiary / Institution. the same can be insisted upon. • The training should be invariably completed within 12 months of release of first installment. • Margin Money (subsidy) will be ‘one time assistance’. • Final adjustment of subsidy kept in Term deposit after physical verification of the project should not be made till EDP is completed. from Government. _____________________________________ _____________________________________ _____________________________________ . For any enhancement of credit limit or for expansion / modernization of the project. Margin Money (Subsidy) • The financing branch must forward the Margin Money (subsidy) claims in the prescribed format to the nodal branch within 15 days from the date of first disbursement of loan. • In case any recovery is effected subsequently by the Bank from any source whatsoever. • The period of training for the projects upto Rs.Career Guide for IOBians 277 _____________________________________ _____________________________________ _____________________________________ EDP training • Sanctioning authority need not wait for the completion of EDP training for disbursement of the loan to the beneficiaries under PMEGP scheme. • In case the Bank’s advance goes “bad” before the three year period due to reasons beyond the control of the beneficiary. • No interest will be paid on the TD and no interest will be charged on loan to the corresponding amount of TD. kept in term deposit. • Since “Margin Money” (subsidy) is to be provided in the form of subsidy (Grant). the Margin Money (subsidy) will be adjusted by the Bank to liquidate the loan liability of the borrower either in part or full. • Branches should make it mandatory to complete the EDP training before releasing the second stage of loan. such recovery will be utilized by the Bank for liquidating their outstanding dues first. • Once the Margin Money (subsidy) is released in favour of the loanee. claiming as well as settlement of subsidy by the Nodal branches. • But final adjustment of subsidy. margin money (subsidy) assistance is not available. it will be credited to the Borrower’s loan account after 3 years from the date of first disbursement to the borrower / institution. 03.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 278 _____________________________________ _____________________________________ _____________________________________ • Margin Money (subsidy) assistance is available only for new projects sanctioned specifically under the PMEGP. • The average working capital availment should be calculated on the basis of daily average of the actually availed cash credit limit. Existing units are not eligible under the Scheme Computation of admissible margin capital/sanctioned cash credit limit money subsidy on working • If the working capital availment touches 100% of the sanctioned cash credit limit at least once. srn/17. • If the first instalment is less than the margin money subsidy/TDR amount. whatever is earlier. • The rate of interest should be the same at which the loans have been sanctioned to the beneficiaries. Bank has to obtain an undertaking from the beneficiary before the release of bank finance that. that is. in the event of objection (recorded and communicated in writing) by KVIC / KVIB / State DIC. Interest on margin money subsidy • Banks can charge interest only on that part of loan which exceeds the margin money subsidy/TDR amount. should be undertaken at the end of the three year period from the date of first disbursal of the loan or date of ending of lock-in period. the beneficiary will refund the Margin Money (subsidy) kept in the TDR or released to him after three years period. The first instalment released by bankers should be at least equal to or more than the margin money subsidy/ TDR amount. • The refund of the margin money subsidy (on working capital) on the difference between subsidy on the sanctioned cash credit limit and the subsidy on the admissible limit. and the average working capital availment is at least 75%. whichever is earlier • Adjustment of margin money subsidy on term loan. refund of the margin money subsidy on the difference between the sanctioned term loan and the actually availed term loan (where the latter is less than the former) should be undertaken immediately after the disbursement of the last instalment of the loan. term loan) or date of ending of lock-in period. Banks have to pay interest to KVIC on the difference (till such time the loan amount becomes equal to or exceeds the margin money subsidy/TDR amount). then the margin money subsidy would be calculated on 100% of the sanctioned cash credit limit. • If the working capital availment does not touch 100% of the sanctioned cash credit limit atleast once. proportionate amount of margin money subsidy should be recovered by the Bank and refunded to KVIC at the end of three years from the date of disbursement of the loan (that is. • The margin money subsidy has to be computed as the admissible percentage of the average daily working capital availment. or if the average working capital availment is below 75%. The training expenditure will be met by DRDAs from out of the SGSY Fund _____________________________________ SJSRY Urban local bodies. In respect of SC/STs it will be 50 percent of the project cost subject to a maximum of Rs. 1.or Rs.000/. DIC & KVIB at state level Objective of the scheme For employment generation through establishment of micro enterprises Target Group Purpose Quantum Amount of subsidy Rate of Interest Security Margin Repayment Holiday period Individuals.200000 • 25% of the Project Cost subject to a maximum of Rs. the assets created out of bank loan would be hypothecated to the bank as primary collateral.10 lacs Category Urban General 15% Special (including SC / ST / OBC / Minorities/ Women. whichever is less As applicable to small loans No Collateral required 5% of the project cost as margin money As per the decision of the financial institution As decision of the financial institution Priority Sector Branch discretion subject to scheme norms & activity wise discretion under Agri & Pri. Prime security for both General category : 10% & special : 5% may range between 3 to 7 years after an initial moratorium As decide by the bank Priority status Discretion Priority sector As per SME finance Remarks it is mandatory to complete the EDP training before releasing the second stage of loan _____________________________________ SGSY District Rural Development Agencies (DRDAs).60. Collateral security nil to be treated as medium term loans with minimum repayment period of five years Moratorium on repayment of loans during the gestation period – as decide by bank Priority Sector Branch discretion subject to scheme norms & activity wise discretion under Agri & Pri. 10000/. Charitable Trusts etc. Production Co-operative Societies.000/-.50.per Member of the Group. Individuals & SHGs. Ex-servicemen 25% Physically andicapped. Bankers and line departments will act as resource persons for imparting the training.000/• For setting up group enterprises. NER. subject to a maximum of Rs. Institutions registered under Societies Registration Act. Technical Institutions in the district to bring the assisted poor families (Swarozgaris) above the poverty line by ensuring appreciable sustained income over period of time Individual & SHGs (The list of (BPL) households identified through BPL census duly approved by Gram Sabha will form the basis for identification of families for assistance under SGSY.1 lakh and group loans up to Rs. Funding is shared between the Centre and the States in the ratio of 75:25.) On farm activities to be assisted would include minor irrigation such as open dug well/bore/tube well/lift irrigation/check dam. Non-farm activities will include those activities that result in the production of goods/services that have ready market The size of loan under the Scheme would depend on the nature of project.10 lacs collateral security or CGTMSE cover.those living below the poverty line. 10. SHG. As applicable to SME Rural 25% 35% No collateral security upto Rs. Loan exceeding the above addl. 7.25 lakhs.1860.25 lacs and for service Rs.credit Urban Self Employment Program (USEP) & Urban Women Self-help Program (UWSP) are components of SJSRY _____________________________________ .000/.10 lacs. Hill and Border areas etc. The urban poor .Career Guide for IOBians _____________________________________ _____________________________________ 279 _____________________________________ Government Sponsored Schemes Name PMEGP Implementing Agency KVIC as single agency at central level & KVIC.300. Non-Government Organisations (NGOs).credit • BDOs. whichever is less As applicable to small loans For individual loans upto Rs. There is no investment ceiling other than the unit cost • 30 percent of the project cost.500/-. Above rs.or 35% of the cost of project or Rs. For setting up of Micro Enterprises Project cost for manufacturing : Rs. the UWSP group shall be entitled to a subsidy of Rs. etc. servicing and petty business for which there is a lot of potential in urban areas Maximum allowable unit project cost : Rs. 10 lakh. No minimum or maximum educational qualification beneficiaries under USEP To set up small enterprises relating to manufacturing. To provide gainful employment to the urban unemployed or underemployed through the setting up of self-employment ventures or provision of wage employment. • The group is entitled to subsidy of 50% of the project cost subject to per capita subsidy of Rs. 1. Ref. companies.27 / 2011 dt.2011 address banks Subsidy is 5% p.25% Term Loan : BR + 1.2013.25% w. The capital subsidy will be back ended with minimum lock-in period of 3 years. banks may not insist on margin as per RBI guidelines. For setting up layer units.30.a on interest charged for EWS and LIG.9 years. For loans above Rs 1. cooperatives.60. NGOs.33 % for SC and ST entrepreneurs and North Eastern areas including Sikkim) Cash credit : BR + 1.06.2.f 18.00.50% Prime security : Hypothecation of assets created out of loan amount Collateral : as decided by the bank/RBI guidelines. 1 lakh 280 _____________________________________ Capital subsidy .e.1. Present Base rate of our Bank is 10. Circular No. broiler units etc.1. 10% For loans upto Rs one lakh.00. Additional loans.05.02.1. Varies depending on the species. 124 / ICD .00. admissible for a maximum loan amount of Rs. if needed would be at ubsubsidized rates. Joint Liability Groups (JLGs) etc. ….25% of outlay (33. purpose etc.one lakh over the full period of the loan 9% fixed for five years.000 to Rs.00. Interest rates are subject to change in Base Rate srn/23. Farmers.00 lakh : 10% (minimum) Minimum period :15 years Maximum period : 20years (Construction to be completed in one year) Repayment Period will depend on the nature of activity and cash flow and will vary between 5. individual entrepreneurs. The scheme will close in March 2013 may range from 6 months to 1 year Yes As per other agri finances (Per borrower limit) • • NABARD would provide refinance assistance to commercial banks.2013 _____________________________________ Back to index _____________________________________ _____________________________________ .000 LIG: Household income per annum : Rs.NABARD circular No. Yes Branch Managers irrespective of their grade can sanction loans under this scheme EWS: Household income per annum: Rs.00 lac.Career Guide for IOBians _____________________________________ Name Implementing Agency Objective of the scheme Target Group _____________________________________ Interest Subsidy Scheme for Housing poor NHB & HUDCO Affordable House to all People belonging to Economically weaker section (EWS) and Low Income Group (LIG) Purpose To provide affordable housing loans with Central Government subsidy to EWS/LIG persons for (a) acquisition of house & (b)construction of house Quantum EWS : Rs.000 Amount of subsidy Rate of Interest Security Margin Repayment Holiday period Priority status Discretion Remarks Poultry Venture Capital Fund ( Subsidy) NABARD to encourage poultry farming activity especially in non-traditional States and provide employment opportunities in backward areas. as applicable to Subhagraha Prime: Mortgage of the dwelling units Collateral: No collateral security/third party guarantee for loans upto and inclusive of Rs.000 LIG: 1. After 5 years till the date of liquidation of the loan the rate of interest would be normal rate prevailing at that time.000 Subsidy will be available for loan amount upto Rs. groups of Un-organised and organized sector which include Self Help Groups (SHGs). 1. _____________________________________ _____________________________________ _____________________________________ . • Beneficiaries who own land in urban area but do not have any pucca house in own name or in the name of spouse or any dependent child will also be covered. is prescribed. as applicable to Subha Gruha scheme ii.1. the family income limit of Rs.5000/Maximum Loan Amount Rs. EWS: Households having an average monthly income upto Rs.20.1.mts Loan repayment: Minimum Period: 15 years Maximum Period: 20 years (Construction to be completed in one year) Margin: 10% Rate of Interest: i.5001 to 10000/Maximum Loan Amount Rs. 9% fixed for first 5 years.00. Reset clause: 5 years iii. After 5 years till the date of liquidation of the loan the rate of interest would be normal rate prevailing at that time.000 per annum.mts LIG: Low Income Group Households having an average monthly income :Rs.Career Guide for IOBians 281 _____________________________________ _____________________________________ _____________________________________ Interest Subsidy Scheme for Housing the Urban Poor Purpose a) Acquisition of house b) Construction of house Eligibility • The scheme is meant only for people belonging to Economically weaker section (EWS) and Low Income Group (LIG) • For the purpose of identifying the economically weaker sections and low income groups.60. • Beneficiaries having no house in his/her name or in the name of his/her spouse or any dependent child will be eligible.000/Construction Area (Minimum House area) 25 Sq.000/Construction Area (Minimum House area) 40 Sq. Penal Interest for Delayed payment of instalment: 2% Processing Charges : Nil Prepayment charges: Nil Insurance Cover: Free insurance cover to borrowers. irrespective of the location. Career Guide for IOBians 282 _____________________________________ _____________________________________ _____________________________________ Security: Prime Security: Mortgage of the dwelling units Collateral Security: No collateral security /third party guarantee for loans up to and inclusive of Rs.1 lakh. • Subsidy will be 5% p.a. on interest charged for EWS and LIG, admissible for a maximum loan amount of Rupees one lakh over the full period of the loan. The subsidy will be passed on as follows: • The Net Present Value (NPV) of this subsidy will be arrived at on the basis of notional discount rate of 9% p.a., (equivalent to Government Security rate) for the period of the loan and on the interest chargeable at the time when the loan is contracted • Nodal Agency for implementing the scheme in our Bank and for releasing the interest subsidy amount is HUDCO • Beneficiaries have to be identified and certified by the State Level Nodal Agency. • Interest subsidy at 5% for a maximum loan amount of Rs. 1.00 lac is calculated over the full period of the loan at NPV. • Subsidy is passed on by Nodal Agency on upfront basis every quarter for loans granted during the previous quarter. • Immediately on receipt of the subsidy at branch level; branch will credit the same to the borrower’s loan account. • Interest on the loan amount will be calculated on the reduced outstanding after credit of subsidy. • Bank will submit utilisation certificate to HUDCO every half year. • The generation of application under the scheme is unsatisfactory. Hence it was decided that MFIs/ NGOs/ SHGs /CBOs can be associated as business correspondent /facilitator and a fee of Rs.100/ per approved application would be provided to such person under the Scheme. srn/12.04.2013 Back to index _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 283 _____________________________________ _____________________________________ _____________________________________ Subhagraha – Housing Loan scheme Purpose: • Term loan for acquisition / construction of new flat or a house and for purchase of old house/ flat. • Loans under the scheme may also be sanctioned for additional rooms/ first floor/ Second floor on the already owned houses. • Second/ additional loans may also be sanctioned to the existing borrowers under the scheme for construction of additional rooms/ floors on the already built houses. • Second loan for purchase / construction of second house also can be given under the Scheme. • Loans shall be considered for purchase of plot also subject to the loan quantum for such purpose does not go beyond 30% of the total loan amount sanctioned and the house to be constructed within 2 years from the date of purchase of plot. Eligibility: • Individuals/group of Individuals and individual members of Cooperative society. Individuals who have regular and independent Source of Income from Agriculture/ Profession/ Trade business etc. and through employment. • In case of applicants belonging to salaried class he should be in the line of employment at least for 2 years and in case of persons in business it may be reduced/ waived depending on the income of the individual. • The maximum age of the applicant at the time of availing loan may be considered up to 60 years. • In case of applicants having crossed the age of 55 years, his/ her spouse or other legal heir should be included as co-obligant. However the entire loan should be liquidated before the first applicant attains the age of 70 years. • Borrower, who wants to let out the house he purchases, on rental basis on account of his posting outside the headquarters or because he has been provided accommodation by his employer, is also eligible to avail the loan under the Scheme. Quantum of finance:• • Loans can be sanctioned up to 80% of the cost of house/flat whether new or already built. • However where the loan amount falls under Priority Sector Credit, loans can be sanctioned up to 90% of the cost of the house / flat. • There is no upper ceiling. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 284 _____________________________________ _____________________________________ _____________________________________ • 50% norms is followed for arriving the eligible amount. Regional Managers are empowered to sanction housing loan under 40% norms. • In case of Husband and wife, if both are employed, 40% norms should be seen only in case of the Prime borrower and net income of the spouse shall be added to arrive at the repayment capacity and to fix quantum of loan. However this norm cannot be applied for any other relations. • Stamp duty, registration and other documentation charges should not be included in the cost of the house property. Repayment:• Loan should be repaid within a maximum period of 30 years including the maximum holiday period. • Repayment period shall be permitted up to the age of 70 Years. However incase of employed persons it may be ensured that adequate documentary evidence is produced in support of additional income/ pension /income from other sources to meet the Instalment commitments. • Loan is repayable in equated Monthly installments and interest Charged during holiday period at monthly rest has to be serviced. • However in order to facilitate the borrowers who are close to their retirement years and are currently earning good income, the branches may fix a higher EMI till their retirement period and shall refix the EMI at the time of their retirement in such a way that the 40% norms shall be maintained in the post retirement income also. • Similarly, in case of any lump sum payment made by the borrowers towards part payment of the loan, the EMI shall be refixed on the outstanding of that date at the request of the borrower. Form 378 to be obtained afresh at such times. Holiday period: • A maximum of 18 months from the date of disbursement of first instalment of loan or completion of construction whichever is earlier. • For purchase of old house/old flat, holiday period of 3 months may be allowed. Margin :• Uniform margin of 20% to be maintained for purchase of new and old house (margin as a % of estimated cost inclusive of cost of land). • In case of loans falling under Priority Sector Credit , it is enough if the margin is maintained at 10%. • The stamp duty, registration and other documentations charges are to be borne by the borrower and cannot be included under Margin. • In case of loans for construction of house on already owned plot, cost of such plot shall be reckoned as margin .The value of such plot to be reckoned as given in _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 285 _____________________________________ _____________________________________ _____________________________________ the Sale Deed of the land purchased or the ruling guideline value whichever is less. • However value of properties/plots obtained through Gift Deed / Partition Deed / Settlement Deed or by any such means shall not be considered as Margin. Rate of Interest: Repayment period Over 1 year to 5 years Over 5 yrs – upto 10 yrs More than 10 years Amount upto 30 lacs Base Rate (BR) Base Rate (BR) Base Rate (BR) Amount above 30 lacs – 75 lacs BR + 0.25% BR + 0.25% BR + 0.25% Amount above Rs.75 lacs BR + 0.50% BR + 0.75% BR + 1.00% • 50 bps concession in interest rate is allowed for loans above Rs.75 lacs where the margin offered is 25% and more. • The above concession is also made available for loans above Rs.30 lacs upto Rs.75 lacs w.e.f 19.04.2013. effective from today (the date of this circular). Penal interest • 2% over the prescribed rate should invariably be charged for the amount of default / delay in payment of installments for the overdue period. Processing Charges:• A flat rate of 0.58% of the loan amount with a maximum of Rs 10190/-. Security: • Immovable property to be financed must be mortgaged only with our Bank. The land should be in the name of the applicant or jointly with his/ her spouse / close relatives (Co-obligant). • Loans can also be considered even if the land is in the name of any close relatives. However the loans should be granted jointly, where the earning member will be the Prime borrower and the land owner will be the co borrower. • The mortgage details should be registered under CERSAI also as per the extant guidelines. Valuation of property:• In case of new house/flat allotted by DDA/ Housing Boards and other central/ State Government Agencies (original purchase/ first buyer), separate third party valuation need not be insisted upon. • In other cases like Second hand house or flat / flats purchased from Private builders/ construction on owners plot etc., estimate report at the time of sanction _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 286 _____________________________________ _____________________________________ _____________________________________ of loan and valuation report at the time completion / possession, from our approved valuer should be obtained at borrowers cost. • Age of the house / flat should not generally exceed 25 years. Regional Managers are given discretion in cases where the age of the building exceeds 25 years provided our approved valuer has certified about the quality and soundness of construction. The certificate should also indicate the probable left over life span of the building, sufficiently covering the proposed repayment period. Insurance:• The Property should be insured for the full value of its superstructure for the risk of fire and other hazards including earthquake with bank clause during the currency of loan and the original policy should be held with the bank. Prepayment Charges: • No Prepayment charges to be collected on any loans closed prematurely. However for the loans granted under fixed rate option prior to 1.7.2011, 1% Pre payment charges should be collected on the amount outstanding as of date if they are closed prematurely. Takeover of loans:• Branches are permitted to take over housing loans accounts from other banks as well as reputed housing Finance institutions such as HUDCO, LIC housing Finance Ltd and other reputed intermediaries in the housing finance market in the public/ private sector, provided it satisfies the following The accounts to be taken over are regular and are in the standard category and performing assets The repayment period to be fixed by us should not exceed the original repayment period stipulated by the institution, which has sanctioned the original loan. The proposal for takeover of housing loan accounts should be sanctioned from the level of Regional Managers and above within the discretionary powers available to various layers of authority. Proposals involving taking over of housing loan accounts from cooperative housing societies will have to be referred to General Managers for prior Housing Loans eligible for Priority Credit: • Housing Loans upto a limit of Rs. 20 lacs sanctioned prior to 01.04.2011 will continue to be classified under priority sector till maturity / renewal of such loans. • Housing Loans sanctioned up to a limit of Rs. 25 lacs between 1.4.2011 and 1.7.2012 will be classified as Priority Sector irrespective of the Area of Classification. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 287 _____________________________________ _____________________________________ _____________________________________ • The revised guidelines for Housing Loans Limits to be eligible under Priority Sector Advances with effect from 02.07.2012 are as given below: Loans to individuals up to Rs. 25 lakh in metropolitan centres with population above 10 lacs and Rs. 15 lakh in other centres for purchase/construction of a dwelling unit per family excluding loans sanctioned to bank’s own employees. Loans for repairs to the damaged dwelling units of families (Home Improvement Scheme) up to Rs. 2 lakh in rural and semi- urban areas and up to Rs. 5 lakh in urban and metropolitan areas. Bank loans to any governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum dwellers subject to a ceiling of Rs. 5 lakh per dwelling unit. The loans sanctioned by banks for housing projects exclusively for the purpose of construction of houses only to economically weaker sections and low income groups, the total cost of which do not exceed Rs. 5 lakh per dwelling unit. For the purpose of identifying the economically weaker sections and low income groups, the family income limit of Rs. 1,20,000 per annum, irrespective of the location, is prescribed. Other conditions • Loans must be granted either by the branch nearer to the permanent residence of the borrower or nearer to the location of the property proposed to be financed. • In case the borrower fails to construct a house within the stipulated time on the plot purchased using the bank loan, the loan amount disbursed up to date must be recovered at commercial rate of interest from the date/s of disbursements. An Undertaking letter from the borrower accepting to repay the loan with commercial rate of interest in case of failure to construct the house to be obtained before disbursement of loan • The borrowers must be advised to bring in proportionate margin before release of each stage of loan. The proceeds are to be paid to the Contractor/builder/ supplier of materials by way of Demand Draft or in any other electronic mode of payment as far as possible against their acknowledgement/ receipts/ bills. • In cases where the applicant owns a plot/land and approaches the bank for a credit facility to construct a house, a copy of the sanctioned Plan approved by the competent authority in the name of the person applying for such credit facility must be obtained by the bank. • An affidavit – cum undertaking letter must be obtained from the person applying for such credit facility that; He shall not violate the sanctioned plan and construction shall be done strictly as per the sanctioned plan. It will be the sole responsibility of the executants to obtain completion certificate within 3 months of completion of construction failing which the bank _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 288 _____________________________________ _____________________________________ _____________________________________ shall have the power and the authority to recall the entire loan with interest costs and other usual charges. • An architect appointed by the bank must also certify at various stages of construction of building that; the construction of building is strictly as per the sanctioned plan and Also certify at a particular point of time that the completion certificate of the building issued by the competent authority has been obtained. • When loan is granted for purchase of built up house/ flat it is mandatory for the borrower/s to declare by way of an affidavit cum undertaking that the built up property has been constructed as per the sanctioned plan and or building bye laws and as far as possible has a completion certificate also. • An architect appointed by the bank must also certify before disbursement of loan that the built up property is strictly as per the sanctioned plan and/ or building bye laws. • No loan should be granted in respect of those properties which fall in the category of unauthorized colonies unless and until they have been regularized and development charges are paid. • Further no loan should be sanctioned in respect of properties meant for residential use but which the applicant intends to use for commercial purposes and declare so while applying for loan. • In case of loans availed jointly by resident and non-resident Indians, it has to be treated as loan under Subhagruha Scheme only. • If loan is granted in the names of more than one borrower, the asset creation must be in the names of all the borrowers. Loan to Staff members • All the terms and conditions mentioned in the Scheme will be applicable to Staff members also who avail the loan under the Subhagruha Scheme, provided their Pension and other fixed income (like rent, income/pension of spouse, etc.,)are sufficient to make good the loan instalment for which documentary evidences are to be produced by them. • The loans granted to the staff members should be recovered in proportionate EMI from their monthly salary. However the monthly installment under this loan need not be reckoned for arriving member’s 40% net income for availing other staff loans by them from the Bank. • Besides authorization letter for deduction of proportionate loan installments from their monthly salary, the applicants should also submit a letter of undertaking for recovery of the entire outstanding in the loan account from their terminal benefits in the event of death/ pre-mature retirement / termination etc during the currency of the loan. _____________________________________ _____________________________________ _____________________________________ Career Guide for IOBians 289 _____________________________________ _____________________________________ _____________________________________ • Loans under Subha Gruha scheme to the staff members, whether as prime borrower or as co borrower, are to be sanctioned by RLCC only, even if the loan amount falls within the discretionary powers of the branch. • However applications need not be routed through the Rapid Retail Centres and can be sent to the ROs directly for sanction. • Loans under the Scheme are to be availed at the Salary Drawn branch only. • Branches/Regional Offices need not insist for prior clearance from Industrial Relations department, Central Office for loan availment by staff members under Subha gruha Housing loan scheme. • However the sanctioning authorities shall mark a copy of their sanction endorsement of the loan granted to our staff members under the above scheme, marking to Industrial Relations Department, central office and Personnel Administration Department clerical/ Supervisory section, as the case may be for placing the same in the respective members’ personal files. *************************** srn/19.05.2013 Back to index _____________________________________ _____________________________________ _____________________________________ ugc. Wherever common entrance test (CET) is absent for securing admission to post graduate courses/research programmes. if everybody who appeared for examination is advised as selected then it is not a merit based selection (single window).Career Guide for IOBians 290 _____________________________________ _____________________________________ _____________________________________ VIDYA JYOTHI EDUCATIONAL LOAN SCHEME A. Eligibility of Student: Should be an Indian National Should have secured admission to higher education course in recognized institutions in India through Entrance Test/ Merit Based Selection process after completion of HSC (10 plus2 or equivalent). Eligible courses of Study: I. employment and reputation of institution concerned should be the criteria.aicte. NIFT. IITs. cannot be considered as merit based selection.org. Hence single window concept. Courses conducted by IIMs. pilot training. Eligibility of such PG courses may be ascertained from the “Webomatrics” Website by the Branches.in. www.ac. B. The students who have secured more than 60% (in case of SC/ST students 55%) marks and joining colleges other than college allotted to him/her by counseling to be considered as management quota.in.education. shipping. documentary evidence with regard to conduct of any Common Entrance Test and selection through Merit based Process must be obtained by the Branches. Branches may also visit For courses in India: :www. CFA etc.nic. / AICTE/AIBMS/ICMR etc. www. which give indicative list of reputed universities and loans may be granted accordingly. IISc. degree/diploma in nursing or any other discipline approved by Director _____________________________________ _____________________________________ _____________________________________ . CA. Regular Degree/Diploma courses like Aeronautical.in In case of admission to any Deemed university. NID etc. In a selection process. In the states where there is no common entrance test (CET) the applicant must secure 60% (in case of SC/ST students 55%) marks in the qualifying examination as Cutoff marks. Courses like ICWA. It would be in order for banks to consider a meritorious student (who qualifies for a seat under merit quota) eligible for loan under this scheme even if the student chooses to pursue a course under Management Quota. Studies in India: (Indicative list) Approved courses leading to graduate/post graduate degrees and PG diplomas conducted by recognized colleges/ universities recognized by UGC/ Govt. like in Tamil Nadu. XLRI. the funding is restricted to fee structure as approved by the State Government or regulatory body). if applicable vi. if the course is pursued in India Approved courses offered in India by reputed foreign universities.G diplomas offered by recognized institutions. considered under the scheme. For courses under Management quota seats. Degree/Post graduate diploma courses like aeronautical. Caution deposit. iii. Nursing courses pursued under Management Quota. pilot training. Examination/ Library/ Laboratory fee iv. Fee payable to college/ school/ hostel ii. Travel expenses/ passage money for studies abroad v. MS. Expenses considered for loan i. C. Studies abroad: Graduation: For job oriented professional/ technical courses from reputed universities. PG diploma from reputed universities also eligible. Post graduation: MCA. (However. _____________________________________ _____________________________________ _____________________________________ . Building fund/refundable deposit supported by Institution bills / receipts (subject to a max. subject to viability of repayment.Career Guide for IOBians 291 _____________________________________ _____________________________________ _____________________________________ General of Civil Aviation/Shipping/Indian Nursing Council or any other regulatory body as the case may be. etc. Courses conducted by CIMA. shipping etc provided these are recognized by competent regulatory bodies in India/abroad for the purpose of employment in India/abroad. off-campus courses and onsite/partnership programmes are not eligible for loan under the IBA scheme. Other job oriented courses leading to technical/ professional degrees. of 10% of entire tuition fee). • Vocational/skill development study courses. post graduate degrees/P. Courses offered by reputed universities. CPA in USA etc. MBA. Insurance premium for student borrower. fees as approved by the State Government/Government approved regulatory body for payment seats will be taken. II. • Sanction of loans to applicants who got admission under “Management Quota” is to be considered outside the purview of IBA educational loan scheme.London. of 20% of tuition fee) viii. Security: Category Upto Rs 4 lacs Above Rs. the unencumbered portion can be taken as security on second charge basis provided it covers the required loan amount. • Security offered for loans above ` 7. IIMs.5% Studies Abroad . etc. • Loans in excess of Rs.4 lacs and upto Rs7. No security Co-obligation of parents / Guardian together with collateral security in the form of suitable third party guarantee.00 Lakhs Non-Priority Sector Rs. Co-obligation of parents together with tangible collateral security of suitable value. (subject to a max.like study tours.00 Lakhs • However higher quantum of loan can be considered on case-to-case basis (eg.. Margin may be brought-in on year-to-year basis as and when disbursements are made on a pro-rata basis. along with the assignment of future income of the student for payment of installments • Wherever the land/ building is already mortgaged. Purchase of books/ equipments/ instruments/ uniforms (subject to a max. of 20% of tuition fee) ix.00 Lakhs Rs. project work.00 lacs : Nil : Studies in India . F.20. thesis.Career Guide for IOBians 292 _____________________________________ _____________________________________ _____________________________________ vii.50 lakhs Above Rs. if required for completion of the course (subject to a max.10.00 lacs Above Rs.7.00 Lakhs Rs.5 lakhs need not necessarily be belonging to the joint borrower (co-obligator). Category Studies in India Studies abroad Priority sector Rs. E. Margin: Upto Rs 4. _____________________________________ _____________________________________ _____________________________________ . 4. Quantum of finance: Need based finance is to be worked out as per expenses eligible above with applicable margin and within the following ceilings.40. etc. of 20% of tuition fee) D.50 lakhs Security Co-obligation of parents or Guardian. Any other expense required to complete the course . ISB.15% Scholarship/ assistantship to be included in margin. Purchase of computer at reasonable cost.30.10 lakhs qualify for interest subsidy under Central Sector Interest Subsidy Scheme for amount up to 10 lakhs only.) at CO level by appropriate authority. 75% Simple interest to be charged during the Repayment holiday/Moratorium period.00% Base Rate + 3. The acknowledgement will contain contact details of the Branch Manager / designated official who. • The Interest concession of 0. 4 lacs to Rs. lacs Above Rs. loan application will be accepted by the branch nearest to the residence of parents. Penal interest @ 2% to be charged for above Rs.5 % given to the Girl students at the time of disbursement of loan to continue. APPRAISAL/ SANCTION/ DISBURSEMENT: • Applications shall be received either directly at our branches or through on-line mode. • H. • Servicing of interest during study period and the moratorium period i.4 lacs for the overdue amount and overdue period.Career Guide for IOBians 293 _____________________________________ _____________________________________ _____________________________________ • In case the loan is given for purchase of computer. • 1% concession if interest is serviced during the study period and subsequent moratorium period prior to commencement of repayment will continue.5 lacs For wards of staff members irrespective of the amount • • Rate of Interest Base Rate + 2. could be contacted in case of delay in disposal of application.e. the computer has to be hypothecated to the Bank. • Concession 0. Rate of Interest: Category Upto Rs4 lacs Rs.00% Base Rate + 1. For the parents with transferable jobs. _____________________________________ _____________________________________ _____________________________________ .50% to Children of War widows and Handicapped Soldiers Subject to rate not falling below Base Rate and pension accounts are routed through us. Accrued interest to be added to the principal amount borrowed while fixing EMI for repayment. till commencement of repayment is optional for students. 7. standard acknowledgement giving a reference number is to be issued. the branches nearer to the permanent address shall consider the loan. • No Loan applications to be rejected without being referred to the next higher Authority / Controlling Office. G. • Normally. sanction/rejection will be communicated within 15 days of receipt duly completed application with supporting documents. • Upon receipt of application.5. 7.25% Base Rate + 3. • Normally. sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course. appropriate repayment schedule will be worked out by the bank in consultation with the student/parent • The accrued interest during the repayment holiday period to be added to the principal and repayment in Equated Monthly Instalments (EMI) fixed. 7. INSURANCE • Branches are advised to cover the lives of the students and the parents up to 50 years of age while granting Educational Loan by covering the loan under our Vidya Jyothi Educational Scheme with Suraksha with their consent • The loan to be disbursed could include the insurance premium amount and the insurance policy should be assigned in favour of the bank. while appraising the loan the future income prospects of the student will be looked into. However. • In case the student takes up higher studies immediately upon completion of the course. whichever is earlier. the means of parent / guardian could also be taken into account to evaluate re-payment capability. Repayment Holiday/ Moratorium period Repayment of the loan Course period + 1year or 6 months after getting job. • If the student is not able to complete the course for reasons beyond his control. • In the normal course. I. loans to be considered by obtaining a Declaration letter from the Borrower parent to intimate the Bank about change of address. This would be so irrespective of whether the student had taken fresh/top up loan for higher studies or not. J.upto 15 years • If the student is not able to complete the course within the scheduled time.upto 10 years For loans above Rs. • In case the student discontinues the course midway. if any without fail. where required. in equated monthly instalments for periods as under: For loans upto Rs.5 lakhs . _____________________________________ _____________________________________ _____________________________________ . 7.5 lakhs .Career Guide for IOBians 294 _____________________________________ _____________________________________ _____________________________________ • In the absence of any permanent address. the commencement of repayment would get shifted to 6 months from employment or one year from completion of the course (higher studies) whichever is earlier without treating the change as restructuring. extension of time for completion of course may be permitted for a maximum period of 2 years. • Repayment of the education loan is based on the future earning potential of the student. limit of Rs 4. as provided under the scheme. Top up loans • Banks may consider top up loans to students pursuing further studies within the overall eligibility limit. The UID number issued by UIDIA is to be captured in Bank’s system as and when available.57 % processing charges may be collected while considering the loan. • In respect of studies abroad. O. _____________________________________ _____________________________________ _____________________________________ . Minimum Age • There is no specific restriction with regard to the age of the student to be eligible for education loan. P. FOLLOW UP/TRACKING • Branches are advised to contact college / university authorities to send the progress report to the bank at regular intervals in respect of students who have availed loans. L. • For Study abroad 0. There is no restriction on giving a second or third collateral free loan to other siblings when one of the siblings has already taken a collateral free loan.0 lakh (Rupees Four Lakhs) collateral free loan is student specific and not family specific. Q. • For issuing the certificate. CAPABILITY CERTIFICATE • Branches are advised to issue the capability certificate for students going abroad for higher studies. if such further studies are commenced during the moratorium period of the first loan. OTHER TERMS: • Going by the spirit of the scheme. the branches are advised to insist on the student borrower to provide the Unique Identification Number (UIN)/ Identity card and note the same in the office records to enable the bank to track the students studying abroad. N. No Due Certificate • Branches may obtain a declaration/ an affidavit confirming that no loans are availed from other banks. PROCESSING CHARGES • No processing / upfront charges can be collected on Educational Loan for studies in India. financial and other supporting documents may be obtained from the applicant. The fee would however. M. be refunded upon the student taking up the course. • The repayment of the loan will commence after the completion of the second course and further moratorium period.Career Guide for IOBians 295 _____________________________________ _____________________________________ _____________________________________ K. • The student loan will not be affected by any change in asset classification of any separate bank borrowing of the joint borrower. • It is not uncommon for students to take up part-time jobs as permitted by the institutions where they are studying to part fund their education. Interest Subsidy Central Scheme to provide Interest Subsidy Scheme on Education Loan for Economically Weaker Section. in case of adverse credit history of the parent/guardian of the student.50 lacs per year (from all sources).Career Guide for IOBians 296 _____________________________________ _____________________________________ _____________________________________ R. • However. So they will not be taking loan for meeting entire cost of studies.Ed. S. Co. as a prudent measure insist on a joint borrower acceptable to the bank. • The revised Model Educational Loan Scheme (2011) covers only merit channel seats for these courses. • No application for educational loan received should be rejected without the concurrence of next higher authority. Disposal of loan application • Loan applications have to be disposed of in the normal course within a period of 15 days to 1 month. Additional Points to note: • Teacher Training/Nursing/B. T. The benefits of the Scheme would be applicable to those students belonging to Economically Weaker Sections (EWS). but not exceeding the time norms stipulated for disposing of loan applications under priority sector lending. _____________________________________ _____________________________________ _____________________________________ . with an annual gross parental/family income with an upper limit of Rs. U.Obligator • The Co-obligator should be Parent(s)/ guardian of the student borrower. Branch / RO may sanction loan for meeting part cost as requested by students in such cases. courses will be eligible for education loan provided the training institutions are approved either by the Central Government or by State Government and such courses should lead to Degree or Diploma course and not to Certification course. • Requests received from NRIs can be considered if student is Indian passport holder and they meet other eligibility requirements. However. • In case of Married person. the co-obligor can be Spouse or the Parent /Parents in law. if the joint borrower has a loan account with the bank and the loan is treated as non-performing asset the bank may. it would be necessary to accept as security any collateral which is enforceable in India. 4. The interest subsidy is admissible upto a loan amount of Rs 10 lakhs. for calculation of interest subsidy. Course Period plus one year or six months after getting job.00 lakhs. whichever is earlier. Only member banks of IBA are eligible for Interest Subsidy for Education Loan.Career Guide for IOBians 297 _____________________________________ _____________________________________ _____________________________________ To cater-to the needs of students belonging to economically weaker sections with prescribed upper parental gross income limit of the family from all sources. Interest subsidy is available during the period of moratorium i. For pursuing any of the approved courses of studies in technical and professional streams. The interest subsidy under the Scheme shall be available to the eligible students only once.e.. Interest Subsidy shall. however. from recognized institutions in India. ******************************** srn/15. The subsidy is admissible even in respect of courses where the fee structure is more than Rs 10. which is based on economic index and not on social background. the same should be calculated for loans upto Rs 10 lakhs.05.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . However. either for the first undergraduate degree course or the post graduate degrees/diplomas in India. be admissible for integrated courses (graduate + post graduate). _____________________________________ Adv/002/2011-12 dt 05. II-2 lac . Central/State Govt and reputed PVt. additionally NSC. Loans will be classified under MSE Loans. experience 5 yrs.II-50000.age not to exceed 55 yrs.5. NSC/KVP/Units : 25% Life policies : 10%. Properties 50% Max: 60 EMI Nil NO JMI-1 lac . 10 times of average commission receipt per month with a maximum of Rs 10.Career Guide for IOBians _____________________________________ _____________________________________ 298 _____________________________________ Retail Credit Schemes Name Target Group Purpose Quantum Rate of Interest Clean loans Employees of Govt.AGM – 10 lac.III-1.00 lakhs for those not over 65 years of age and Rs. SM IV & above : Full On selective basis.UTI. BR+ 5. 15. if extended for professional purpose.0% BR + 4. PSUs.1 lakh for those who are over 65 years of age. Loan to LIC agents. More than 65 yrs EMI 30 months Holiday period Nil Nil Priority status No No Maximum eligible amount as per Scheme Discretion Scale I-20000. self employed and businessmen with 3 years standing in the field and IT assessee.00 lac.2011 _____________________________________ Sahayika Confirmed salaried persons with 40% take home pay (including other income). To meet any social and financial commitments Max : Rs.00% 1% interest concession for ex-staff of our Bank Personal Guarantee of two guarantors acceptable to the sanctioning authority. Property valuation should be doubly ensured _____________________________________ . Pensioners’ Loan Scheme All pensioners excluding Malaysian Government pensioners receiving pension through our bank branch The loan can be granted for meeting any personal expenses and the end use need not be verified.Corp.75% 0. 10. professional.10 yrsLIC agent 3 yrs average yearly commission Rs.00 lacs Others. DGM : 10 lac Security Margin Remarks Obtention of undertaking letter from employer to recover the dues from the terminal benefits in case of retirement/death/termination preferably for the loans repayable within two years.00 lacs .mini. BR + 3.sector undertakings which are highly rated and are in existence for mini.IT assessee To meet out financial needs Clean Loan to LIC Agents be extended for professional purpose.Rs.IV-3 lac. III .2.00 lac whichever is lower subject to undertaking from the employer to deduct the instalment or to route the salary through the branch till the loan adjusted. The loan amount is restricted to 10 months pension with a ceiling of Rs. Undertaking letter from legal heir/third party.(repayment upto 60 months).00 lakhs. For Ex-IOB ian no such letter Repayment Nil Loans on 10 month salary -60 monthly instalments & for others – 36 months Nil Not more than 65 yrs-60 EMI. For LIC agents.04.IVP etc . LIC-AGM Br-5ac/SRM-5 lacs/CRM-5.5% reduction for prompt payment EM on Immovable property. upto 10 times of salary or Rs.84000/.00 lacs. regn exp. Already owned land. • Processing charge @0. irrespective of enjoying credit limits or not are eligible for the loan under IOB GOLD..3 months for purchase of old house/flat. Upto Rs. Maxi.000/- Rate of Interest Base rate + 4%. Acquisition/construction of a new flat or a house.75 lac with margin more than 25% First mortgage of property to be financed/land in the name of applicant(s). Scale IV Rs. Maxi.10190/- _____________________________________ .25. 1 lac to Rs.00% 10yrs < .AGM Br/SRM/CRM/RGM full Margin Remarks Appraisal charges. Rs.25% 10.Scale (II) Rs.75% Endowment policy with profit/money back policy of LIC/PLI/ policies of Pvt insurers approved by IRDA Repayment 20% . Additional floor/rooms construction also. Upto 5 yrs .50% norms (RMS can follow 40% norms). 25 lacs ..-Scale(III) Rs.2011 _____________________________________ 10% of surrender value Maxi.25 lacs in metropolitan & 15 lacs in other areas (w.2011. For purchase of plot – 30% of loan amount.II-2 lacs. Advance against LIC policies 90% of the surrender value Base rate + 3. Upto Rs.10.Career Guide for IOBians _____________________________________ Name Target Group _____________________________________ IOB Gold All existing business customers.e.100 lacs . Maxi 30 years including holiday period.30 lacs..000/Maximum Amount Rs. 2. 5 lacs . Age not to exceed 60 years. 500/-.07. • Loans to staff members under subhagrahadiscretion only with RLCC.Rate is fixed on daily basis linked to previous day’s rate of ornamental gold – available in IOB online.5.2012) Scale-1 5.25% 10. Quantum Minimum Amount Rs.10 lac. subject to following: 1. V-200 . Purchase of old house/flat age not exceeding 25 years (deviation can be allowed by RM).00.VI-300 lac No pre-payment penalty if paid from own sources & 1% if availed under fixed rate option prior to 01. No. the CA should be at least one year old with satisfactory operations Purpose To meet any urgent business/personal requirements.30 l< Rs. sold by Banks IOB-Akshay Personal borrowers in their individual capacity Corporates/business concerns not eligible. Security Pledge of gold ornaments of 20 to 22 carat fineness and gold coins of 24 carat fineness.75L< Repay per.No ceiling.58% of the loan amount.Stamp duty. 30 lsc Rs.25% 10. Upto 90% of the cost of construction/purchase value of the house for loans fall under priority sector sector & 80% for others. 1000/Processing charges : 0.07. Cir. A period of 12 months either in monthly instalments or through one bullet repayment. Etc not to be included. Must have a CA or CC account with the branch. ADV/ 35 / 2011-12 Dt : 07. 5 lacs to Rs. A/c should be closed before the applicant attains 70 years of age.00.48 EMI ADV/113/dt 21.IV-4 lacs. 10% for loans under priority sector & 20% for others inclusive of cost of land.58% of the loan with a maximum of Rs. Rs.. Rs.10.07.50% 10. 1.f 02..2002 _____________________________________ 299 _____________________________________ Subhagruha Individuals/group of individuals/members of coop society having regular and independent income-employed persons 2 years in the line of employment.50% 11.75% 5yrs<upto 10 yrs ..50% 11.18 months or completion of construction whichever is earlier for construction. A declaration from the borrower in this regard is sufficient. cost of land can be margin.Rs. Holiday period Nil Nil Priority status No No Discretion Per Borrower Limit or Maximum specified in the scheme whichever is lower Scale I-I lac.III-3 lacs.25% subject to change in base rate): 50bps concession is allowed for loans > Rs.10. In case of non borrowers. business people. with a maximum of 80% of cost for construction /purchase. III.00 lacs whichever is less of collateral equal to the loan amount is offered BR + 2. MMII 10 lac.confirmed service. purchase ( including cost of land) or repair to be brought in by way of foreign inward remittance or by debit to NRE/NRO/FCNR accounts Construction/purchase-180 EMI-Repair /renovation 60 EMI. Branches should ensure that the payment made by the relative is through his/her bank account and credited directly to the borrower’s loan account.lac/in R/SU upto Rs. Washing machine computer not allowed 5 times gross monthly income or Rs. PIOs with fresh account relationship with minimum monthly salary equal to Rs.00 lacs which ever is less if 3rd party guarantee is offered 10 times the gross monthly income or Rs.. three years standing for P.DGM300lac Co obligant(resident) may also be POA of NRI.75 % 1) Loan upto 2.Rs. 10000/For purchase or construction of residential flat/house and for repair/renovation of existing house or flat.SE – if house in close relative’s name –joint borrowers-age not more than 55 years To furnish the house-TV.subject to max.15 lacs 50% of value of security or estimated cost of repairs whichever is less. As per Subhagraha scheme (subject to change in Base rate) EM of the house/flat which is under repair/renovation and the land or any other immovable property in the name of borrower and unencumbered with a market value twice that of the loan amount Home Décor scheme Individuals who own a house/flat in their name or in the name of their spouse . MM III-30 lac . age of 60 yrs –for salaried persons entire loan should be recovered before retirement-36 post dated cheques should be obtained towards EMI 72 EMI. 6months-acquisition-12months for construction from the date of first disbursal 3 months for repair & renovationAs applicable to Subhagraha For construction/purchase/acquisition/ repair/réno: JMI 5 lac.10190/20% of the cost of construction. another Bank/Institution no lien letter from the bank/Insti to the items hypothecated to our BK/ renovations undertaken Immovable property 50% of market value 25% on cost kept as term deposit till the loan is closed.3 yrs standing For repair & renovation/up gradation of existing houses/flats Mini.. _____________________________________ .balance of service equal to or more than the repayment period.25000 Maxi. SMIV 10 lac . take home pay more than 50%.00 lac.II-1. age of 60 yrs & not to exceed 60% of gross pay including EMI for any housing loan-36 post dated cheques must be obtained towards EMI Holiday period Three months holiday period Nil Priority status Loan Upto Rs.2. professionals) owning a flat/house in his /her name-confirmed service. Maxi.5 lacs in other areas No Discretion JMI 2 lacs. AGM-200 lac .144 EMI subject to max.2.10. As per Subhagruha loan Equitable mortgage of property purchased or proposed to be acquired-Guarantee waivedProcessing charge @0. proof for other source of income.000.3 lac.IV-5 lac AGM&DGM _ 10 lac 36 post dated cheques should be obtained Full cost of furnishing as loan _____________________________________ 300 _____________________________________ Home Loan to NRI Existing NRI/Persons of Indian Origin holding Indian Passport or pass port of any other country except Pakistan and Bangladesh.58% of the loan with a maximum of Rs. AGM & DGM 15 lac Repayment Remarks 36 posted dated cheques should be obtained _____________________________________ Scale I-50. 100 lac .VCR. Scale IV Rs.P&SE -IT assessee.00 lac 1) >2 lacs upto 10 lacs Hypo of items purchased . Should not accept cash towards repayment of Home Loan account of NRI. MMII 3 lacs MMIII –5 lacs .Career Guide for IOBians _____________________________________ Name Target Group Purpose Quantum Rate of Interest Security Margin _____________________________________ Home Improvement Scheme Individuals(Salaried.mini. 2) Suitable TPG (salaried person) 2) Mortgage of houseuse/flat 3) If house/flat is mortgaged to 3) .Rs.fresh inward remittance or to the debit NRE/FCNR/NRO account or by close relatives of the NRI Borrower in India. Lien on terminal benefits if the loan terms extends after retirement 3.000/B R + 3. self vehicle of higher cost employed professionals. Motor cycle : 72 months . 84 emi for new car & old car maxi. dealers/engineers/ survivors of GIC.50 lac. 1. Civil Services examinations and various Career & Skill development courses Purpose Quantum Rate of Interest Security Margin Repayment Pushpaka for financing Coaching/Tuition fee of reputed Institutions in India to prepare for Professional Courses entrance exam. 84 emi for new car & old car maxi. Third party guarantee is not required. Deposits. II-10 lac. New 2 wheelers. 2 lac Remarks • Under Career & Skill development courses. Motor cycle : 72 months New car : 10% : Old car : 25% Two wheeler : 10% Max. . • Immovable property also accepted as security • 5% of the tuition fee as per the fee structure • 25 % for immovable property.Career Guide for IOBians _____________________________________ _____________________________________ Name IOB CAREER DREAM Target Group Students preparing for Professional Courses entrance examinations . KVP etc. Old : 75% 2 wheelers : 90% of the cost Base Rate + 0. no security is required. • 10 % for Movable Within 3 years Holiday period Nil Priority status No Discretion JM I : Rs.50% Hypothecation of vehicles For NRIs.and Maximum Of Rs. this should not be 2. • While giving to firms.500 _____________________________________ 301 _____________________________________ Pushpaka to staff members 1. No processing charge linked with other borrowings. No clearance from IRD required. • In case salary/pension is not routed through the Bank. business. New car : 90% of the cost.50% To purchase new/old car (not older than 5 years. a suitable guarantee from Resident Indian. New 2 wheelers. Reputed automobile spouse may also be reckoned. Total term does not go beyond 65 yrs Nil Nil Advances granted to medical practitioners for an amount up to Rs. New car : 90% of the cost. the loan is to be fully secured by collateral in the form of NSC. LIC. rental • 2 valuation and road worthiness certifi for income. 84 months – age of car should not go beyond 8 yrs at the time of closure (last instalment). Others : No Car : JM I – 7. Old : 75% 2 wheelers : 90% of the cost Base Rate + 0. and various Career & Skill development courses Minimum of Rs. Recovery from salary – monthly instalments New car : 10% : Old car : 25% Two wheeler : 10% Max.00. _____________________________________ _____________________________________ . Hypothecation of vehicles 2. • 0. LIC Policies. Firms.2. agri income of applicant/ used card.10 No lacs.full Net salary income of spouse. II -1 lac MMIII & above . In confirmed service with net take & NRIs are also eligible home pay not less that 40% of Gross salary To purchase new/old car (not older than 5 years.75 % under Floating Rate (Loan secured by NSC. KVP etc) and for others B R + 4.000/.50% of loan amount sanctioned subject to the minimum of Rs. Branch should get the approval from Regional Head for financing institutes other than NIIT & APTECH. acceptable to the Bank 1. 25.But TPG is mandatory.00 % under Floating Rate (Loan without security /against immovable property) • If salary is routed through our Bank. 1 lac and other Rs.75 lac. Members who are not eligible for loan under SVL scheme or who want to buy Individuals – in employment. 84 months – age of car should not go beyond 8 yrs at the time of closure (last instalment). Civil Services exam. III – 15 lac. SMIV & above : full Sanctioned only by RLCC 2 wheeler : JMI -0. Companies 2. 5 % with min of Rs.. MM II-3lac.5 lakhs – up to 10 years For loans above 7. • Any other course pursued by students which are having employability on completion. whichever is earlier. concession for girl students _____________________________________ 302 _____________________________________ _____________________________________ Vocational Education And Training • • for pursuing higher education in India & Abroad.4 lacs to Rs. • Students who want to pursue Vocational Training and skill development courses that are kept outside the Model Scheme (VJEL).4 lacs : No security Above Rs. Studies in India . whichever is earlier Studies in India .000 Upto Rs.50% Above Rs.000 For courses of duration 6 m to 1 yr Rs.4.upto 10 years For loans above Rs.25% Above Rs. parent as joint borrower NIL Courses upto 1 year : in 2 to 5 years Courses above 1 year : in 3 to 7 years • For courses of duration up to 1 year : 6 m from the date of Completion of the course • For courses of duration above 1 year : 12 m from the date of Completion of the course Yes JM I – 1 lac.000 For courses of duration 3 to 6 mths Rs.50 lacs: guarantee Above Rs.1. 40 lacs Rate of Interest Security Margin Repayment Holiday period Priority status Discretion Remarks Up to Rs. AGM & DGM –Inland 20lac & abroad 30 lac • Central Scheme to provide Interest Subsidynot applicable. SM-IV – (India) 10/(abroad)20 lacs. concession for holiday int.000/• 1% int. 4 lacs to Rs. to support the national initiatives for skill development BR + 2% • • No collateral or third party guarantee will be taken. AGM & DGM (India) 15/(abroad)25 lac • CSIS eligible. service _____________________________________ Students those who have the minimum educational qualification.00 lacs : NIL Above Rs.4 lacs : BR + 2. concession for holiday int.00% Rs. • 1% int concession for holiday int service • Processing Charges – NIL • top up loans to students pursuing further studies within the overall eligibility limit • Central Scheme to provide Interest Subsidynot applicable.5 lakhs . etc. MM III – 4 lacs. 4. upto Rs. MM II-3lac. 30 lacs Loans for studies abroad Up to Rs. 4. uniform Margin of 25% for all the loans under the Scheme irrespective of the loan amount For loans upto 7.25% Ward of Staff : BR + 1. Loans in excess of Rs. • No processing charges for studies in India & 0. 5. 20.00 lacs : BR + 3. Bus fare. 4 lacs : studies in India : 5% Studies abroad : 15% For loans upto Rs. 7.30 lac Studies abroad : Rs.5% int. upto Rs.000 For courses of duration above 1 yr Rs. upto Rs. Purpose Expenses towards persecution of higher studies Expenses towards persecution of higher studies + living expenses (like Hostel fees.50.20 lacs – priority sector JM I – 1 lac.50 lacs : tangible security Upto Rs.7.7. MM III – 4 lacs. • Processing fee of 0.75 % Loans to be secured fully in the form of collateral security acceptable to the bank with suitable margin. 50.10 lacs & studies abroad . to support the national initiatives for skill development Need based finance to meet expenses will be considered subject to the following ceilings : For courses duration upto 3 mths Rs.7.upto 15 yrs Course period + 1year or 6 months after getting job. has been developed as an extension of the existing Model Educational Loan Scheme for pursuing higher education in India & Abroad.40 lac Loan for Inland studies up to Rs. • In the states where there is no common entrance test (CET) the applicant must secure 60% in the qualifying examination as Cutoff marks • Merit channel seat holders in admission IOB -Scholar • Students who got admission in approved colleges and secured minimum of 65% marks in the Plus 2 or equivalent exam.58% for studies abroad • Suraksha insurance for students & parents upto 50 yrs with their consent • 1% int.75% Up to Rs.10 lacs & studies abroad .00% For wards of staff :BR + 1. 7.5 lakhs .00 lacs : BR + 2.5 lakhs – up to 15 years Repayment holiday/Moratorium Course period + 6 months or after getting job.) Quantum Studies in India : Rs. SM-IV – (India) 10/(abroad)20 lacs.5 lacs : BR + 3. 75.5 lacs :BR + 3.Career Guide for IOBians _____________________________________ Name Target Group Vidyajothi with suraksha • Students who have secured admission to higher education course in recognized institutions in India through merit channel Selection process after completion of HSC . upto Rs. MM II-& above full • No specific restriction with regard to the age to be eligible for the loan. _____________________________________ .10 lakhs qualify for interest subsidy under CSIS Scheme for amount up to 10 lakhs only. 500/and max of Rs.20 lacs – priority sector JM I – 1 lac. service • 0. 7. net weight of the jewels or Rs.00 lakhs. 3 lakhs.Career Guide for IOBians _____________________________________ _____________________________________ Name IOB . 10. SM-IV – 10 lacs & AGM/DGM : Rs. Engineers.per Lakh subject to a maximum of Rs. Scale IV – rs.30lacs. <50000 Fixed Rate of Interest at Base Rate +1. • 10% less than market value • 75% for calculation of loan amount • Of this. 15. 20% of the projected turn over whichever is lower _____________________________________ . repair.and maxi Rs. Security No security / Guarantee required Margin NIL Repayment From 12 to 84 months Holiday period Priority status No holiday period Discretion • Remarks • • • NO AGM : Rs. Ref: ADV/ 187 /2012-13 dt : 06. MM-II – 3 lacs MM-III – Rs. AGM & DGM 100 lacl • obtain Life Certificate during November every year as is done in the case of pensioners • The borrower will have the option for foreclosure • Bank s have the option for forced closure • Lump sum payment is restricted only for medical expenses. free from any encumbrance. Higher Judiciary Officials. 15 years • The loan will become due for recovery and payable six months after the death of the last surviving spouse NA No Scale I & II : NIL.00 lakhs DGM : Rs.0.Royal Target Group High net worth individuals / Self employed Professionals like Doctors. (Quantum to be assessed according to the 50% norms) Rate of Interest repay up to 4 years Repay 4 years< : BR + 4. self occupied residential property (house or flat) located in India with clear and transferable title. 15.50% of the loan amt subject to a maximum of Rs 10000/-. renovation or extension of the house property Medical expenses or maintenance of family. To meet the business needs for running a commercial activity against the prime security of jewels. _____________________________________ 303 _____________________________________ Comm. Mini.3 lakhs whichever is lower.5 lacs.00 lakhs In the form of Cash Credit with monthly reducing DP balance and to be reviewed once in a year or as Demand Loan with EMI obtaining Post dated cheques Processing Charges of Rs.000/.per lac or Part thereof with a max. • depend on market value of the property. only 45% is released • Loan period : Max. 1000/-.25% : BR + 5. 204/. Min salary/disclosed income : Rs. Cash Credit against Jewellery Individuals who own jewels. Commercial property will not be accepted as security.06. • Process. age of the borrower and the rate of interest prevailing • MinRs. Professors of Colleges / Universities. engaged in business activities like small business/trade/professional and selfemployed etc. • Joint loans with spouse is possible provided the first named applicant is a Senior Citizen and the age of the spouse is not below 55 years • Applicant must be the owner of a selfacquired.3 lakhs. 10 lacs. For limits exceeding Rs.00% subject to reset every 5 years. Rs.2012 _____________________________________ Reverse Mortgage Loan • Applicant should be a Senior Citizen having completed 60 years of age. whether it is for a dream holiday or any marriage expenses or any of their social / financial commitments. • Registered Memorandum of deposit of title deeds of the house (residential) property against which the loan is granted. etc. Scale – III – Rs.50 lacs . Architects and salaried employees of select Public and Private limited Companies. Quantum Maximum Loan Limit of Rs. High end IT employees. CAs. Charges Rs. 200/. of Rs.50. • For upgradation.10 lacs • Process.75000/month Purpose Fulfilling all financial aspirations. fully secured by pledge of gold jewellery (prime security) NIL Similar to cash credit limits NA No JM-2lacs.5lac&Max: No ceiling (mly inst.00%. • Supplementing pension or any other income.2040 • For limits up to Rs. • Meeting any other need. 2013 Back to index _____________________________________ _____________________________________ _____________________________________ .67% and rent advance taken if any OR discounted value of @12. No holiday period Priority status Yes – under “others” Discretion Only with RLCC Remarks Upto 2 lacs-Nil > 2 lacs EM of the same property whose rent is charged to us or other property valued 150% of loan amount.30.120 months’ rent including renewal period Rate of Interest Base rate Plus 1.f 01.00 lacs Maxi.00% • • Security • • Hypothecation of Solar Energy Equipments (financed by Bank).LIC equal to loan amount or more 30% Maxi.02.50 lacs.10.70% of rentals (net of service tax) for the unexpired lease period less TDS @22.25% w. Min.: Rs. Rs. • No prior clearance from IR dept is required • No processing charge (Only floating rate is applicable for all fresh advances under retail credit schemes w.IVP. Extension of mortgage of house property for which the member has availed loan under SHL/subhagraha.Career Guide for IOBians _____________________________________ _____________________________________ 304 _____________________________________ Name IOB Surya (Scheme A) loan to staff Liquirent Target Group Members must be confirmed service with net take home pay not less than 40% of gross salary including proposed instalment.e.f 18.120 EMI Nil No NON-CRE -For landlords/others-Scale I -5 lacs II-10 lacs-III-20 lacs. Lien on terminal benefits where the member has no housing loan with us. accessories.07. NSC.75% whichever is less subject to maxi. Owners who let out their properties to reputed companies / PSUs / MNCs / Banks /Institutions / Commercial Organisations / individuals / Landlords of our Bank premises / officers / executive’s quarters Purpose To purchase off grid renewable solar energy equipments in India as under: • Solar Cookers • Solar Heaters • Home/Indoor Lighting Systems Advance against rent receivables Quantum 85% on the project cost which includes cost of the system. Instalments – salary recovery Margin 15% of the project cost Repayment Holiday period Maximum up to 5 years subject to the total loan terms does not go beyond his age of 65 years.50% BR+5.2011) Present Base rate of our Bank is 10.IV.e. transportation & installation. or Bank deposit.000 Max.KVP. AGM Br-300 lacs/ DGM-600 lacsl • Loans under the scheme are to be availed at the salary drawn branch. Career Guide for IOBians 305 _____________________________________ _____________________________________ _____________________________________ Liquirent • Liquirent scheme was introduced during the year 2000 with a view to provide loans against future rent receivables • Sanctioning of loan is based on current lease agreement.on rentals net of deduction of repairs etc 3. assuming the interest rate as BPLR + 3%. Net rentals {1 minus (2+3) 5. Less: TDS @ 22. • The repayment period will be fixed corresponding to the number of months rent (including the renewal period) taken in to account for arriving at the loan amount.75% fixed at present] 7. as per the agreement. as per the option of the borrower. the sanctioning authorities should calculate the EMI.67% (Effective tax rate. Less: Rental advance received as per agreement 4. Less: margin @30% on net rentals (4) 6. Interior Decoration. Loan amount: Minimum of amount under 5 or 6 (For fixed interest option) 8. The rentals (net of service tax) for unexpired lease period up to a maximum of 120 months rent. the renewal period of the lease should not be automatically taken in to account for arriving at the loan amount. subject to a maximum of 120 months. • The unexpired period of the current lease. should not be less than 36 months • It is to be noted that merely because the lease agreement provides for extension of lease beyond the current lease period. Branch/Regional Office should make an assessment of the investment made by the lessee in the leased premises viz. air-conditioning and electrical installations before sanctioning and or sending the recommendation for such proposals • The quantum of loan will be arrived at after reducing the advance rent and TDS if any. • Calculation of loan amount 1. When Liquirent loans are sanctioned. Maximum loan amount based on the discounted value of net rentals (Rent after deduction of TDS) and un expired period of lease with applicable rate of interest (12. (this interest rate is for arriving at the eligible loan amount and fixing the EMI only and not for charging the borrower) _____________________________________ _____________________________________ _____________________________________ . 2. srn/10.Career Guide for IOBians 306 _____________________________________ _____________________________________ _____________________________________ • The loan is secured fully by tangible assets.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . The lease rental agreement between the lessor and lessee has a lock in period. which is not shorter than the tenor of the loan. lessee and the bank and • There should not be any deviation in the norms for liquirent CRE exposure. Lease deed does not contain any clause. the exposures need not be classified under CRE. • As per the revised guidelines of RBI on the classification of advances. which allows a downward revision in the rentals during the period. • Liquirent loan should be subject to execution of tripartite agreement (between lessor. subject to fulfilment of the following conditions. • Advances under Liquirent Scheme should not be considered if the land lord and the tenant are associates/subsidiaries/relatives.02. Liquirent Exposure has to be classified under Commercial Real Estate and Non Commercial Real Estate depending upon the fulfillment of certain conditions • In the case of advances under Liquirent Scheme. Amount of loan: The minimum finance under the scheme will be Rs. Purpose: To meet the working capital needs and also term loan needs viz. IVP . showcase.150 lac Rs.000/-. 3. • However.Career Guide for IOBians 307 _____________________________________ _____________________________________ _____________________________________ Easy Trade Finance Target group: Individuals/proprietary/partnership/ Private Limited Company concerns engaged in Retail Trade. Margin on Security a. Liquid securities i. residential property in growing sub urban areas adjoining to Metro and Urban centres.100. KVP . 50 lac Rs. Life policies .20% of the advance value iv.20% of the face value iii. For immovable property Classification of centre Metro and Urban centres Semi-Urban centres Rural centres Margin in % terms of Forced Sale Vale of the properties 30 40 50 _____________________________________ _____________________________________ _____________________________________ . 300 lakh Rs.150 lac Rs. 300 lakh Rs. Security • The advance should be fully secured by Immovable property and / or liquid assets such as Life policies of LIC of India and Private insurance companies approved by IRDA. 30 lakh Non Fund Based Rs. • Rural properties in general should not be accepted as Collateral security.00 Crore& NFB 1. Maximum loan under working capital and term loans put together should not exceed as given below: Location Metro branches Urban branches Semi-Urban branches Rural Branches • Fund Based Rs. found to be rural but highly marketable can be taken up with Central Office on a case to case basis 4. 1.10% of advance value b. and equipment and in general for setting up/running a shop or office or any other contingent requirements relating to the business of retail trade. buying a shop.10 lac RLCC can sanction Fund based limit upto Rs 3.10% of Surrender value ii. 150 lakh Rs. NSC/IVP/KVP/Term Deposits etc.50 Cr under the above scheme irrespective of the category of branches on merits of the case. Term deposit. 2. Other features/conditions: If a client has more than one unit and he applies for the facility under this scheme. Advantages to customers: Customers can avail finance for both working capital and term loan requirement under one scheme. b.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .05. 6. Assessment of finance • a. For TL – 75% of invoice amount . For WC. Low interest rates They are relieved of botheration of having to submit periodical stock statement. ***************** srn/08. the total liability need not be taken into account for determining area specific limit provided different securities / properties are offered as collateral for each unit.25% of turnover a and b put together should not exceed the area specific limit subject to Forced sale value of immovable property less margin and value less margin in the case of liquid securities.Career Guide for IOBians 308 _____________________________________ _____________________________________ _____________________________________ 5. financial statements and the insurance of stock is also not insisted. 000/. c. Eligibility criteria DRI Scheme a.for working capital / term loan depending on the nature and need of the activity and • The limit of the Housing Loan is Rs. b. 15. Back to index srn/30. 24000 per family in urban and semi-urban areas and Rs.Career Guide for IOBians 309 _____________________________________ _____________________________________ _____________________________________ a. He/she should not own any land or the size of the land holding should not exceed 1 acre in the case of irrigated land and 2.000/-. Members of SC/STs are eligible for the loan irrespective of their land holdings provided they satisfy the other criteria • The maximum loan amount per beneficiary under the scheme should not exceed Rs.07.5 acres in the case of un-irrigated land.20.2012 _____________________________________ _____________________________________ _____________________________________ . 18000 in rural areas. The annual income ceiling for eligibility to borrow under DRI scheme is Rs. Post harvest expenses c. All Farmers – Individuals / Joint borrowers who are owner cultivators b. Objectives/Purpose • Kisan Credit Card Scheme aims at providing adequate and timely credit support from the banking system under a single window to the farmers for their cultivation& other needs as indicated below: I. Oral Lessees & Share Croppers c. Long Term Credit limit portion Investment credit requirement for agriculture and allied activities like pump sets. share d. To meet the short term credit requirements for cultivation of crops b. Tenant Farmers.Career Guide for IOBians 310 _____________________________________ _____________________________________ _____________________________________ KISAN CREDIT CARD (KCC) SCHEME • The Kisan Credit Card has emerged as an innovative credit delivery mechanism to meet the production credit requirements of the farmers in a timely and hassle-free manner • The scheme is under implementation in the entire country by the vast institutional credit framework involving Commercial Banks. Short Term credit limit portion a. sprayers. II. Produce Marketing loan d. RRBs and Cooperatives • All KCCs are Smart Card cum Debit Cards. Point of Sale(PoS) Terminals at Merchant Establishments and Micro ATMs with Business Correspondents. Consumption requirements of farmer household e. croppers etc _____________________________________ _____________________________________ _____________________________________ . • The scheme is implemented in association with National Payment Corporation of India Ltd • These cards should be enabled for use at ATMs. dairy animals etc. inland fishery etc. • ATM enabled Rupay Kisan Card are issued to all the new KCC accounts A. SHGs or Joint Liability Groups of Farmers including tenant farmers. Eligibility a. Working capital for maintenance of farm assets and activities allied to agriculture like dairy animals. B. 4th and 5th year) and estimated Term loan component for the tenure of Kisan Credit Card. 4th and 5th year).e. five years. Farmers other than Marginal farmers: For farmers raising single crop in a year a. Further. Fixation of credit limit/Loan amount Limits are fixed separately for Farmers Other than marginal farmers & Marginal farmers and depends on crop pattern.. purchase of farm equipments and allied agricultural activities. Fixation of Sub-limits for other than Marginal Farmers: • Short term loans and term loans are governed by different interest rates. Limit for second & subsequent year : First year limit for crop cultivation purpose arrived at as above plus 10% of the limit towards cost escalation /increase in scale of finance for every successive year ( 2nd . at present. The short term limit to be arrived for the first year: Scale of finance for the crop (as decided by District Level Technical Committee) x Extent of area cultivated + 10% of limit towards post-harvest / household / consumption requirements + 20% of limit towards repairs and maintenance expenses of farm assets + crop insurance. In case the cropping pattern adopted by the farmer is changed in the subsequent year. _____________________________________ _____________________________________ _____________________________________ . short term crop loans are covered under Interest Subvention Scheme/Prompt Repayment Incentive scheme. • Term loans for investments towards land development. 3rd. including existing loan obligations • The long term loan limit is based on the proposed investments during the five year period and the bank’s perception on the repaying capacity of the farmer D. PAIS & asset insurance. 3rd.Career Guide for IOBians 311 _____________________________________ _____________________________________ _____________________________________ C. the bank’s judgment on repayment capacity vis-a-vis total loan burden devolving on the farmer. 1) For farmers raising more than one crop • Short term credit: The limit is to be fixed as above depending upon the crops cultivated as per proposed cropping pattern for the first year and an additional 10% of the limit towards cost escalation / increase in scale of finance for every successive year (2nd.. based on the unit cost of the asset/s proposed to be acquired by the farmer. minor irrigation. the limit may be reworked. It is assumed that the farmer adopts the same cropping pattern for the remaining four years also. Maximum Permissible Limit: The short term loan limit arrived for the 5th year plus the estimated long term loan requirement will be the Maximum Permissible Limit (MPL) and treated as the Kisan Credit Card Limit. the allied activities already being undertaken on the farm. Besides. etc. b. I. i. The banks may fix the quantum of credit for term and working capital limit for agricultural and allied activities. 000 be provided (as Flexi KCC) based on the land holding and crops grown including post harvest warehouse storage related credit needs and other farm expenses. • For term loans. Disbursement Short term credit • The short term component of the KCC limit is in the nature of revolving cash credit facility. a. the card limit is to be bifurcated into separate sub limits for short term cash credit limit cum savings account and term loans. establishing mini dairy/backyard poultry as per assessment of Branch Manager without relating it to the value of land..Career Guide for IOBians 312 _____________________________________ _____________________________________ _____________________________________ repayment schedule and norms are different for short term and term loans. repairs and maintenance of farm assets and consumption may be allowed to be drawn as per the convenience of the farmer. • Drawing limit for short term cash credit should be fixed based on the cropping pattern and the amounts for crop production. E. the branches may take suitable collateral as per our bank norms II. Wherever higher limit is required due to change in cropping pattern and/or scale of finance. consumption needs. Operations using Cheque facility c. For Marginal Farmers: A flexible limit of Rs. installments may be allowed to be withdrawn based on the nature of investment and repayment schedule drawn as per the economic life of the proposed investments.000 to Rs.50. in order to have operational and accounting convenience. • It is to be ensured that at any point of time the total liability should be within the drawing limit of the concerned year. There should be no restriction in number of debits and credits. The composite KCC limit is to be fixed for a period of 5 years on this basis. etc. plus small term loan investments like purchase of farm equipments. • In case the revision of scale of finance for any year by the district level committee exceeds the notional hike of 10% contemplated while fixing the five year limit. Hence. • Wherever the card limit/liability so arrived warrants additional security.10. • In case such revisions require the card limit itself to be enhanced (4th or 5th year). the same may be done and the farmer be so advised. a revised drawable limit may be fixed and the farmer be advised about the same. the limit may be arrived at as explained for other farmers. Operations through branch b. Withdrawal through ATM / Debit cards _____________________________________ _____________________________________ _____________________________________ . • The drawing limit for the current season/year could be allowed to be drawn using any of the following delivery channels. Career Guide for IOBians 313 _____________________________________ _____________________________________ _____________________________________ d. Validity / Renewal • The Kisan Credit Card should be valid for 5 years subject to an annual review. the aggregate of debits for which extension is granted is to be transferred to a separate term loan account with stipulation for repayment in installments. if Government supported interest subvention is provided for any component of the limit. the rate of interest may be fixed accordingly. • The review may result in continuation of the facility. depending upon increase in cropping area / pattern and performance of the borrower. The maximum limit can be upscaled on the basis of approximate future need but not above 125% of the present need. Repayment Period: • The repayment period may be fixed by banks as per the anticipated harvesting and marketing period for the crops for which a loan has been granted. • The DPN and related documents should be taken for such higher amount but actual disbursement will be as per current need • Rate of Interest (ROI): ROI will be linked to Base Rate However. Therefore documentation will be done only for maximum limit so that there is no need for fresh documentation during the validity of account. • When the bank has granted extension and/or re-schedulement of the period of repayment on account of natural calamities affecting the farmer. • The scheme provides fixation of scale of finance for the first year and subsequent increase for every successive year.etc. • When the proposed extension is beyond one crop season. especially for tie-up advances b. G. Operation through PoS available in Sugar Mills/ Contract farming companies. Operations through PoS available with input dealers c. _____________________________________ _____________________________________ _____________________________________ . the period for reckoning the status of operations as satisfactory or otherwise would get extended together with the extended amount of limit. Operations through Business Correspondents and ultra thin branches e. Mobile based transfer transactions at agricultural input dealers and mandies.. enhancement of the limit or cancellation of the limit / withdrawal of the facility. Long term credit • The long term loan for investment purposes may be drawn as per installment fixed. F. • Within the sanctioned limits the withdrawal limit may be fixed each year as per the scale of finance. 1. • In States where branches have the facility of on-line creation of charge on the land records. Personal Accident Insurance Scheme (PAIS). Security: Security will be applicable as under: • Hypothecation of crops up to card limit of Rs. • The extant prudential norms for income recognition. Necessary premium will have to be paid on the basis of agreed ratio between bank and farmer to the insurance companies from KCC accounts.3. and Health Insurance (wherever product is available and have premium paid through his KCC account). the same shall be ensured. • One time documentation at the time of first availment and thereafter simple declaration (about crops raised / proposed) by farmer from the second year onwards. Other features: • Interest Subvention/Incentive for prompt repayment as advised by Government of India and / or State Governments.00 lakh in case of Sugar mill tie-up advances.00 lakh in case of non tie-up and above Rs. • With tie-up for recovery: Branches may consider sanctioning loans on hypothecation of crops upto card limit of Rs.00 lakh. H.3. Margin: For crop loans.3. • Collateral security may be obtained for loan limits above Rs. • Farmers to be provided with KCC Short Term sub-limit cum SB account so as to allow credit balance in KCC-cum-SB accounts to fetch interest at savings bank rate. no separate margin need be insisted as the Margin is in-built while fixing the Scales of Finance. J. For term loan component. asset classification and provisioning will continue to apply for loans granted under revised KCC Scheme. • Crop insurance is mandatory. Branches will make the farmers aware of this facility.00 lakh without insisting on collateral security for the Sugar mill tie up loans.Career Guide for IOBians 314 _____________________________________ _____________________________________ _____________________________________ • The term loan component will be normally repayable within a period of 5 years depending on the type of activity / investment as per the existing guidelines applicable for investment credit.00 lakh as per the extant RBI guidelines. No Processing fee should be charged up to a card limit of Rs. 1. • The KCC holder should have the option to take benefit of Assets Insurance. I. _____________________________________ _____________________________________ _____________________________________ . our existing margin norms will be followed. 07. • The premium burden will be shared between the KCC issuing branch and the KCC holder in the ratio of 2:1.50000 Rs.03. ********************* srn/10.Career Guide for IOBians 315 _____________________________________ _____________________________________ _____________________________________ Personal Accident Insurance Scheme (Pais) For Kcc Holders • MOU with M/s Universal Sompo General Insurance Company Limited (USGIC Co.50000 Rs. • This scheme will cover all the KCC holders against death due to accident or permanent disability from accidents caused by external. Our bank market this product among the Kisan Credit Card borrowers of our Bank.2015 • The premium payable for a one-year policy is Rs. • This policy will cover the KCC holders up to the age of 70 years • Risk coverage: a. c. b. Death due to accident (within 12 months of accident) caused by outward violent and visible means Permanent total disability Loss of two limbs or two eyes or one limb and one eye Loss of one limb or one eye Rs.Ltd) for a Master Policy to cover all KCC holders under Personal Accident Insurance Scheme (PAIS). Universal Sompo General Insurance Company Limited has launched a Micro Insurance Policy titled Saral Suraksha Bima. violent and visible means and occurring within the geographical jurisdiction of India.25000 Saral Suraksha Bima M/S. The Master policy is valid up to 31. 12/-.50000 Rs.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . d. 000 0.25% +2. animal husbandry.25% +1.Different Credit Schemes Name IOB ROSHINI Target Group Women-18-55 yrs from rural households from well functioning SHGs. 000 As applicable to general agri advances As applicable to general agri advances As applicable to general agri advances As applicable to general agri advances Nil AGRI-CLINIC Agricultural graduates/graduates in subjects related to agriculture like horticulture. if the tenant is a woman for all activities under Agriculture Not fixed Maxi.5 lac BR + 1.25% less than applicable rate for limits above Rs.Career Guide for IOBians _____________________________________ _____________________________________ 316 _____________________________________ Agriculture/Non-Agri .75% +3. Maxi.Indirect Agricultural Advances Per Borrower limit or maximum specified in the scheme whichever is lower Letter to be sent to LPG dealer with a copy to Regional Office of the Oil Company –no transfer without our NOC Processing Charges. poultry. proper assessment of cash flow while fixing the limit to avoid problems in recovery later Yes – Non Agri _____________________________________ _____________________________________ _____________________________________ .5 lacs-Nil > 5 lacs. AgriBusiness centres for input supply and services to needy farmers. 5 lacs –Nil > 5 lacs 15-25% 5-10 years depending upon the activity Nil Branch Manager Yes Direct Agri advances Per Borrower limit or maximum specified in the scheme whichever is lower Yes . graduates to set up Agri-clinics.25% +2.25% +3.10 lacs for individuals and Rs.25000/.50% Upto Rs. Cash credit Term loan <=5yrs 5yrs< Upto Rs.5% less than applicable rate for limits up to Rs. Rs.50% 5lac–25lacs BR + 3. Quantum Rate of Interest Security Margin Repaymen t Holiday period Priority status Discretion Remarks BHOOMI SHAKTI Women Farmers. Upfront Fee and Mortgage Charges are waived for all loans granted under this Scheme GL-CODE 4156 to be introduced.75% +1.upto Rs.5000/- Base rate + 1.25 % Hypothecation of assets purchased out of loan Nil Maxi 60 EMI 4% if granted under DRI All other cases – 0.50% 25lac-100lacs BR+3. pisciculture and other allied activities To provide gainful employment to agrl.50.SF/MF/Share croppers and landless laborers/SC/ST Purpose To pay deposit for LPG connection and purchase of gas stove with accessories.Collateral/guarantee Upto Rs. 50 lacs for Group of 5 entrepreneurs. fisheries . comprising of the following: (a) Women having farm land in their own names (b) tenant farmers. NGOs. Project cost Rs.50.25% +2.100 < RAM rating +3. veterinary.dairy.00% Rs. (including purchase of jeeps/trucks/tractors and for construction of farm houses) Rs.25% +2.25.00. 2.1 lac and maximum of Rs. carrying material needed for farming.33.).000/.URBAN HORTICULTURE YOJANA Salaried persons. For Employees: Undertaking letter from employer or routing of salary through the branch backed by standing instructions For Other Individuals: Third party guarantee of an individual with worth not less than that of the borrower. 50% of the value of farm land subject to other conditions Seven years in monthly. having steady income & institutions.Rs.5. For Institutions: Collateral Security of at least 50 % of loan amount plus personal guarantee of partners/trustees/ promoters. Loan amt. going to field. flower garden small orchards or roof gardens in open space inside the compound and on the terrace For individuals : Min. This facility is treated as an Agricultural Term Loan.2.50% Up to 1 lakh no collateral security.50% 1.25% No holiday period Priority sector IOB. Up to 5 yrs : BR + 1. retd IOBians drawing pension from us . half yearly or annual installments depending upon the cropping pattern Repayment coincides with harvest Repayment coincides with the harvest Priority sector Per Borrower limit or maximum specified in the scheme whichever is lower GL code -4114 -23 IOB AGRI-TRANSPORT YOJANA The farmer owning economically viable land holding or carrying out any other agricultural or allied activities Repay period.25 lac Loan upto Rs. three-wheelers and four wheelers to be used for agricultural purpose only (ie.possess independent house having at least 500 s. depending on crop harvest time. 2. to meet both short term and long term credit needs of the farming community.or 85% of the cost whichever is less Hypothecation of crop & and hypothecation of vehicle Loan amount will be 50% of the value of farm-land mortgaged to the Bank subject to a minimum of Rs.Rs.Career Guide for IOBians _____________________________________ Target Group Purpose Quantum Rate of Interest Security Margin Repayment Holiday period Priority status Discretion Remarks IOB . half yearly or annual instalments. Up to 5 yrs : BR+1. Mortgage of agricultural land having value of at least twice the loan amount.00 lacs.5 lacs : BR + 1.000/.& 15% for others Maximum 10 years in monthly. Rs.1. Hypothecation of crop and hypothecation of any asset created out of loan amount No margin is required for loans up to Rs. 5 lacs : BR + 2. movement for sale of produce etc.GREEN CREDIT Yojana Any farmer owning cultivable land in his own name will be eligible for the facility.25% Above yrs : BR + 1.50 lakh & For institutions max.25% Above 5 yrs : BR+1.00.50% +2. upto Rs.5 lac > 5 lac Repay per. professionals and business men.ft of open space for gardening For raising kitchen-garden.25% Loan above Rs. Prime Security in each case will be hypothecation of produce. • No margin up to 1 lakh • Loan above 1 lakh – 15% 12 to 24 EMIs for individuals 12 to 36 instalments for institutions _____________________________________ 317 _____________________________________ _____________________________________ Per Borrower limit or maximum specified in the scheme whichever is lower GL code -4114 -21 _____________________________________ Priority Per Borrower limit or maximum specified in the scheme whichever is lower Mortgage of small patches of scattered land should not be allowed GL code – 4114-22 _____________________________________ .000 and max. Purchase of two-wheelers. 50.50 acres irrigated land to provide land to the Small and Marginal Farmers / Share croppers / Tenant farmers to possess and cultivate land.in corporation areas Up to Rs. Insurance under PAIS & NAIS to be considered.25% The land purchased out of the bank finance and mortgaged in favour of the bank will form the security for the loan from borrowers.10 lacs Rs. Resident of urban area for atleast 3 years. All are of similar economic status engaged in agricultural activity for min period of 1 year Model A – Financing Individuals in the group Model B – Financing the Group for requirement of all the members. subvention) Cash credit : BR+1. Maximum of Rs.Career Guide for IOBians _____________________________________ Name Target Group Purpose Quantum Rate of Interest Security Margin Repayment Holiday period _____________________________________ BHUMILAKSHMI Small and marginal farmers/Share croppers / Tenant farmers/ Total land owned by the borrowers including the land to be purchased under the scheme should not be more than 5 acres of un irrigated land or 2. int.50% BR + 1. 500000/. Short term or Term loans depending on the purpose. SF/MF/Share croppers and landless laborers/SC/ST.25% Group guarantee of SHG/JLG members Hypothecation of assets purchased out of loan Nil Nil 60 EMI Maxi 60 EMI Nil Nil Priority status Yes : Direct Agriculture Yes Discretion Per Borrower limit or maximum specified in the scheme whichever is lower As applicable to Priority sector advancessmall loans Remarks SHG with satisfactory record and who fits into norms of the schemes may be encouraged to avail the loans for purchase of land so as to enable them to diversify their activities and to build up community assets. Payment directly to Non-Institutional lender by way of pay order after getting due authorisation from the borrower – identification by Branch Manager with SHG/ Women Development Corporation _____________________________________ 318 _____________________________________ _____________________________________ Yes – to be covered under Direct Agricultural Advances As Applicable to Agricultural Loans to individuals for different purposes.in Municipal areas/Rs. Short term loan : BR+0. marketing and other productive purposes.000/. Branches may temporarily take separate collateral security if mortgage of the purchased land in favour of the Bank is delayed Up to loan amount of Rs.000/per member under both Models A & B.75% Term loan : BR+1.5000/. To enable the distressed urban poor to prepay their debt to non-Institutional lender and to bring them into formal financial system Maximum Rs. JLG members may open no-frills a/c and save but not compulsory.75 % (incl.: B R + 2. or JLG JOINT LIABILITY GROUPS OF TENANT FARMERS Informal Group of 4 to 10 (Max of 20) tenant & Small farmers cultivating land but not possessing proper titles to the lands.1 Lac : minimum 10% Loan may be repaid within 12 years in half yearly / yearly instalments including moratorium period maximum moratorium period of 24 months. 500000/. Loans may be CC. Flexible Credit Product for requirements of crop production.1 Lac : .: B R + 1. consumption.NIL Loan amount exceeding Rs. member of well functioning SHG financed by us already for productive purpose. _____________________________________ . SCHEME FOR DISTRESSED URBAN POOR BPL.50% Over Rs.10. : Rs. RLCC – 10 lacs • Wherever Subsidy is available. etc.10.25% • Security IOB –Surya (Scheme –B) To purchase off grid renewable solar energy equipments in India as under: • Solar Cookers • Solar Heaters • Home/Indoor Lighting Systems 85% on the project cost which includes cost of the system.50000/. 100% Collateral security to be obtained in any form as under. etc subject to norms.00 lacs. SM-IV & above 8.25000 : Nil: Above `. Processing charge : as fund based loans Ref: ADV/ 253 /2012-2013 dt : 15.2012 The Present Base rate of our Bank is 10.00 lacs.Career Guide for IOBians _____________________________________ Name IOB –Surya (Scheme –A) Target Group All Individuals satisfying 50% take home pay norms Purpose Quantum • Institutions like Educational Institutions. Hotels/Restaurants. 1 lakh Margin 15% of the project cost 20% of the project cost Repayment Maximum up to 5 years Maximum up to 5 years No holiday period No holiday period . Iob-Kisan Tatkal Scheme a. Direct Agriculture JM.50% to our Housing Loan borrowers whose accounts are regular and prompt.3. Min. For Loan up to Rs 1 lac.5.25% w.10. Sound track record of atleast 2 yrs is a pre requisite • Single transaction Term Loan in addition to KCC limit. Security in the form of LIC policy/ NSC/ Term Deposits.00 lacs. Holiday period Priority status Discretion Remarks • • • • Wherever Subsidy is available. MM II.f 18. accessories. Hypothecation of Solar Energy Equipments (financed by Bank) along with third Party Guarantee to be insisted.e. Either individual or groups (not exceeding 4 farmers) b. Back to index _____________________________________ . The Kisan Tatkal loan is to be cleared in full while enhancing KCC limit subsequently. MM III. 50000/.50 lacs.00 lacs Rate of Interest 319 _____________________________________ _____________________________________ For Loan up to Rs 1 lac. MM II. 100% Collateral security to be obtained in any form as under. etc.75% (presently 11.000 Max.1.50 lacs.00 lacs.credit the same to the respective loan account of the borrower.upto `.2013 Interest rates are subject to change in Base Rate _____________________________________ _____________________________________ • • • • Within 3 yr in half yearly/annual instalments. Hospitals. 56/Application: :Agri 1. • An Undertaking letter from the borrower must be obtained for the same. transportation & installation.02. Only existing KCC holders are eligible c. An Undertaking letter from the borrower must be obtained for the same. Rs. • Interest concession of 0. Yes – under “others” No – Non Agri Yes. RLCC – 10 lacs As applicable for KCC. • For Loan above Rs 1 Lac. Hypothecation of Solar Energy Equipments (financed by Bank) along with third Party Guarantee to be insisted. No additional securities need be obtained even when the combined exposure (KCC plus proposed Kisan Tatkal Scheme) exceeds Rs.1. Processing and other charges : Upto `.00 lacs.whichever is less Base Rate plus 0. Security in the form of LIC policy/ NSC/ Term Deposits.00 lakhs Base rate Plus 1.credit the same to the respective loan account of the borrower. accessories. To purchase off grid renewable solar energy equipments in India as under: • Solar Cookers • Solar Heaters • Home/Indoor Lighting Systems 80% on the project cost which includes cost of the system.5.30. MM III.. Agri 15 and Agri 2 to Agri 12 depending upon the purpose. Mortgage of land /House/flat.25%) as applicable for KCC (without interest subvention) • • • Existing security(ies) obtained for KCC should continue. 1 lakh Max. Min.10.3. For Loan above Rs 1 Lac. : Rs. SM-IV & above 8.50% Base rate Plus 2.00 lacs. • Providing instant credit to existing KCC holders for meeting emergency requirement for agricultural purposes Minimum : Rs. : Rs. transportation & installation.1000Maximum : 50% of KCC limit or 25% of Annual Income or Rs.25000/. JM. Mortgage of land /House/flat. should be studied and commented upon in the appraisal note. the remaining repayment period shall not be extended. • All other cases are not treated as takeover.Guidelines Whenever Bank takes over borrowal accounts from other Banks / Financial Institutions / Agencies / NBFCs and the following guidelines will be adhered to: 1. 3. 2. increasing our share as well as taking over of the share of other Bank or induction of our bank by taking over of the share of other bank shall not be reckoned as take over of the advances from other Banks. No waiver. Take over accounts falling under the purview of CRISIL RAM rating should have a minimum rating equivalent to IOB 5. Account should have recorded cash generation / profit for the preceding 2 years out of 3 years unless the account is not in operation for three years and business conditions should indicate improvement in profitability 7. No borrowal accounts should be taken over from any Bank where any of our ED or CMD have worked earlier. • Before taking over. 8. 6. Such statement of accounts.Career Guide for IOBians 320 _____________________________________ _____________________________________ _____________________________________ Take over of advances . credit report from transferor bank should be obtained. Treatment as takeover • If the borrowal account with the existing bankers is liquidated out of advances extended by us. it is to be treated as takeover. 5. A certified copy of the statement of accounts duly signed by the officials of the erstwhile Bank should be taken without relying on the mere photocopies of the statement of the account produced by the applicant. The project should not be in the implementation phase at the time of take over of the loan. • While take over accounts. Only borrowal accounts which are standard and performing for the past one year will be taken over. • In the case of working capital finance through consortium or multiple Banking. at least for the last 6 months. No waiver shall be permitted at any level for this. • Branches do not have delegated authority to finance additional facilities. _____________________________________ _____________________________________ _____________________________________ . 4. Rating i. the next immediate higher authority can consider any further concession including interest / charges on case-to-case basis and on merits 11.05. 10. However. • ii.Career Guide for IOBians 321 _____________________________________ _____________________________________ _____________________________________ 9.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . generally no further concession can be considered till completion of one year from the date of sanction. The takeover norms are applicable for takeover of accounts from Banks. • Internal Rating: Accounts shall be with the rating equivalent IOB 1 to IOB 5. In the case of taken-over accounts where sanctioning authorities have already considered concession in pricing /charges etc at the time of take over. External Rating: Wherever external rating is available. Financial Institutions / Agencies and NBFCs. ************* srn/12. the rating shall be not less than investment grade (BBB and above). Discretionary Powers for Branch Managers (Including DGM branches) FOR CASH CREDIT ACCOUNT including MCC account) headed • Excess can be allowed for 10 times subject to the total period of excess not exceeding 50 days per year and subject to each excess not exceeding a maximum period of 5 days • 10% of the limit (i. • Where adequate DP is not available.Career Guide for IOBians 322 _____________________________________ _____________________________________ _____________________________________ Granting of excess & adhoc A. the specific facility) sanctioned to a borrower by any layer of authority or 10% of the discretionary powers of the Branch Head under per borrower limit whichever is lower subject to availability of adequate drawing power (DP).e the specific facility) sanctioned to a borrower by any layer of authority or 5% of the discretionary powers of the Branch Head under per borrower limit whichever is lower subject to the outstanding not exceeding the sanctioned limit and subject to reporting to the appropriate authorities as per existing guidelines. • With regard to excess drawals in working capital limits other than cash credit account. • Any excess given has to be reported by branches to the next layer of authority. • Excess or adhoc can be allowed only in rated accounts equivalent to IOB-1to IOB-4 and SME 1 to SME 3. Branch Managers can grant 5% of the limit (i. the excess allowed on any one occasion should be adjusted within a maximum period of 30 days (as against 5 days allowed for CC _____________________________________ _____________________________________ _____________________________________ . • Forced excess. ie due to LG/LCs invoked or devolved and monthly interest charged to the cash credit account will not be construed as excess if it is regularized within 15 days. if the uncleared cheque is returned and results in excess such excess should be treated as excess and the account should not be allowed to remain in excess for more than 5 days. • If the above forced excess is not regularized within 15 days. • Excess allowed against uncleared effects will not be treated as excess. • However.e. but the outstanding is within the sanctioned limit. B. in deserving cases. This excess will be taken into account for calculation of total period of 50 days that can be allowed for an account per year. • Limits should be in force either renewed or reviewed. No excess /adhoc can be allowed in lapsed sanctions /short reviewed accounts. General • Normally Excess should not be granted during first 3 months from the date of sanction. such excess will be treated as excess and the number of days the excess remained in the account will be taken into account for calculation of aggregate period of 50 days that can be allowed per year for that account. of days permissible for allowing excess to a borrower in a financial year should not exceed 90 days. if Regional Heads permit excess beyond their powers to grant excess in borrowal accounts. it should be ensured that prior permission of Regional Head is obtained (if RM is on leave. • Regional Heads and above can allow excess for a maximum period of 30 days (as against 5 days for Branch Heads). • Similar type of reporting system on a monthly basis to the next layer of authority may be followed at Central office in respect of excess allowed by CO Executives within their delegated powers. Reporting • Any excess given under the Branch Manager’s delegated powers has to be reported to the Regional Office in CAF-1 statement on a monthly basis. permission may be given by the person officiating / holding additional charge). beyond his discretionary powers. including the 50 days permitted for Branch Heads. • Branch Managers/Regional Managers and other connected officials will be made accountable for not reporting the excess/late reporting beyond the stipulated period and such excess will be treated as unauthorized. These guidelines are applicable for Cash Credit as well as other than Cash Credit accounts • Regional Heads and above are empowered to allow excess irrespective of the ratings of the borrowal accounts as also for unrated accounts. beyond his discretionary powers. but within the powers of Regional Head should be reported on the SAME day to Regional Head in CAF-XS format for confirmation • Excess allowed by Regional Head. with prior approval of Regional Manager.O. on the SAME day. • Excess allowed by branch Manager.Career Guide for IOBians 323 _____________________________________ _____________________________________ _____________________________________ account) and the maximum number of days for which excess can be allowed in a year will be 50 as applicable to cash credit accounts. However. GMs to ED and CMD as the case may be.O. Mid Corporate and MSME as the case may be. Executives. the total no. but within the powers of C. i. Executives should be reported in the CAF-XS format by Branches to R. should submit the same to Central Office with their comments and recommendations immediately on receipt of excess report from Branch.O. on merits of the case within the delegated powers vested with them for granting excess C. with prior approval of C. Regional Office. D. in turn. _____________________________________ _____________________________________ _____________________________________ .e. Excess beyond the delegated powers of Branch Head / Regional Head: • Whenever excess is to be granted by the branch managers beyond their powers (to grant excess). • Likewise Regional Heads should obtain prior permission of General Manager heading Large Corporate. if the same is not confirmed by the approving authorities. Otherwise. / C./C.e specific facility) sanctioned to a borrower by any layer of authority or 25% of the discretionary powers of the Branch Head under per borrower limit whichever is less. • Documentation / extension of mortgage will be compulsory for adhoc limits. efforts should be taken by Branch/R. Monitoring of unauthorized excess: • In case such excess drawings are declined by R. the authorised official may allow another 15 days for taking a final view in this regard. it should be ensured that a decision either way is taken within a period of one month of receipt of the original report.O. the transaction in question shall be deemed to have been ratified by the appropriate authority. G. However.. H. • Adhoc can be granted subject to acceptance in writing by the borrower that the outstanding under adhoc facility will be reduced gradually atleast 15 days prior to the due date so that the adhoc will get adjusted fully on the due date. subject to each adhoc not exceeding 90 days on any one occasion. to ratify or reject such excess) should be taken by the appropriate authority within 15 days of the receipt of the report. extension of mortgage need not be made if adhoc limits are _____________________________________ _____________________________________ _____________________________________ . Disposal of Excess Report: • All excess drawings allowed are to be confirmed or otherwise disposed of by the appropriate/competent layer of authority.O. • Excess and adhoc cannot be granted simultaneously in the same facility..e. F.Career Guide for IOBians 324 _____________________________________ _____________________________________ _____________________________________ E. • Adhoc limits can be granted only 2 times in a year for an account. • In such cases a weekly report should be submitted (until regularization) to the next higher authority advising the steps taken and progress in regularizing the account. to ensure that the account is regularized immediately. such excess drawal is to be treated as unauthorised excess.O. • In any event. • In case queries / clarifications are necessary before taking a decision. Adhoc limits (for working capital) : • 25% of the limit (i.O. • If the sanctioning / confirming authority views the excess drawal as not justifiable and declines the same. • The decision on the excess report (i. Unauthorised excess: • Excess drawals duly reported and confirmed are not to be treated as unauthorised excess. • Extension of adhoc facility can be permitted by RLCC (GM) / HLCC (GM) for the adhoc facilities sanctioned upto their level for 30 days. CAC can permit extension of adhoc facility sanctioned by CAC/ MCB. • In these cases. srn/18. • In the case of restructured accounts which are Standard & performing (restructured by higher authorities).2013 Back to index _____________________________________ _____________________________________ _____________________________________ . further extension by another 60 days can be permitted by HLCC (ED). • The adhoc limits granted should be reported to authorities who have sanctioned the regular limits • RLCCs and above are empowered to sanction adhoc limits irrespective of the internal ratings of the borrowal accounts as also for unrated accounts. on merits of the case. Branch Managers can exercise the powers to grant adhoc limits only after 6 months from the date of restructure. within the delegated powers vested with them for adhoc limits.Career Guide for IOBians 325 _____________________________________ _____________________________________ _____________________________________ granted for bills purchasing / discounting limits which are of self liquidating nature. on merits. • Extension upto 90 days can be permitted by HLCC (ED) for the adhoc facilities sanctioned upto and including the level of HLCC (ED). This restriction to sanction of adhoc limit is not applicable to the authority who has restructured the limits.05. the portfolios of each Supervisory Staff in the branch and get their acknowledgement thereon. In case. on receipt of the sanction endorsement from RO/ CO. All the business proposals shall be prepared by an officer attached to advances department and signed by him along with the Second Line Manager in charge of advances department and the First Line Manager. that fact should be recorded in the proposal itself. For branch sanctioned facilities. In a branch where no separate advances officer is functioning and the portfolio is looked after by the Second Line Manager . Second Line Manager in charge of advances and the officer who had prepared the proposal will be jointly responsible for the appraisal content of the proposal. For this purpose the First Line Manager should clearly mention in the periodical office order. All parties including the guarantors to a borrowal account should be subjected to KYC procedure and due diligence. the branch feels that certain conditions could not be fulfilled. For AGM/DGM headed branches. will attract joint responsibility of First Line Manager. _____________________________________ _____________________________________ _____________________________________ . giving proper reasons and supported by documents to that effect. the certificate of compliance will be kept with the loan documents for verification by the inspectors. • Compliance with Endorsement the Terms and Conditions of the Sanction The certificate of compliance with the Terms and Conditions should be submitted by the branch within 30 days from date of sanction for all advances sanctioned by Regional Office / Central Office to Credit Department at Regional Office keeping a copy for branch records along with the documents. branch should take up with Regional Office for amending / waiver of such conditions.Career Guide for IOBians 326 _____________________________________ _____________________________________ _____________________________________ JOINT RESPONSIBILITY FOR LOANS AND ADVANCES • It is primarily the responsibility of the Branch Managers to ensure the safety of all the advances of their branches. the proposals beyond the discretionary powers of Scale IV officer are to be routed through approval grid. The office order book should be in the custody of the First Line Manager of the branch. Failure to do so will attract sole responsibility of the Branch Manager. • Appraisal of proposals First Line Manager of the branch. Failure to do so. Second Line Manager in charge of Advances Department and the officer who had prepared the proposal. given in the pre-release clearance / observations by the next level of sanctioning authority should be addressed to as though forming part of the sanction. • Documentation No loans or advances shall be released without obtaining proper documents. all the three officials noted above shall be jointly responsible. This certificate should be obtained by First Line Branch Manager in respect of each loan/ advances from the Second Line Manager of the branch in charge of the advances department or in his absence from the advances department officer who is authorised to release the facility. duly filled in and completed and signed by the Executants in the capacity intended. Conditions if any. In case any deficiency is noted at a future date in complying with the Terms and conditions. If the branch is manned by only one Manager. then the First Line Manager will be solely responsible for deficiencies in documentation. First Line Branch Manager should not disburse the loan /credit facility without obtaining this certificate. Regional office keeping the copy with the documents. The certificate of compliance with the Terms and conditions shall be signed by the First Line Manager of the branch. In case of any non co-operation by the Second Line Manager or the advances department officer as the case may be. If such a certificate is not submitted by the Second Line Manager and the First Line Manager authorises release of loan/ facility. Second Line Manager in charge of advances department and the officer who has prepared the proposal / the officer who is disbursing the facilities. No advance / loan can be released by the branch (other than branch discretion) without the submission of the certificate of compliance to Regional Office. the First Line Manager should file a report with Regional Office that because of non co-operation _____________________________________ _____________________________________ _____________________________________ . the loan / facility should not be released. The certificate should be without any qualifying clauses. The Second Line Manager of the branch in charge of the advances department should give a certificate to the Branch Manager before disbursement of loans/ advances that all the relevant documents for releasing the facility have been obtained. complete in all respects.Career Guide for IOBians 327 _____________________________________ _____________________________________ _____________________________________ Pending a decision on such representation. the Manager should himself send the certificate to Credit Department. Regional office along with CAF–1 control return. sanction endorsement to Credit Monitoring Department. the First Line Manager of the Branch. based on which Regional Office will permit release of limits. The perforated sheet should be sent along with the appraisal note. _____________________________________ _____________________________________ _____________________________________ . Only on receipt of confirmation from Regional Office the limits can be released. he had authorised the release of the loan / credit facility. • Reporting Documentation Execution Register with perforated sheet should be maintained by branch as per instructions in force.50 Crores the documents have to be vetted by Lawyers in Bank’s approved panel and certified by Second line officers at Branches. • In case any branch releases the limit without vetting of documents as above. then the Second Line Manager will also be jointly responsible for deficiency in documentation. • Vetting of documents For limits over Rs. For limits above Rs.50 Crore. the Second Line Manager in-charge of advances department and the Officer who had released the limits will be jointly held responsible in case of any deficiency in documentation. A copy of such reporting should be held with the documents and be made available to visiting officials from Regional Office / Inspectors. Only on receipt of such confirmation from Central Office the limits can be released. the documents have to be vetted by Lawyers in Bank’s approved panel and certified by Second line officers of the branch and the same is to be sent to concerned Credit Departments at Central Office who will permit release of the limits.Career Guide for IOBians 328 _____________________________________ _____________________________________ _____________________________________ by the Second Line Manager / Advances Department Officer in obtaining this certificate. Second Line Manager in charge of Advances Department and the officer who had prepared the proposal / officer who had disbursed the loan / facility. Disbursement of loans Disbursal of the loan proceeds should always be in favour of the supplier with authority so obtained from the borrower.10 Crores and upto Rs. A certificate to this effect should be kept with the documents. For limits above Rs. will attract joint responsibility of the First Line Manager. unless specifically authorised in the sanction. The certificate regarding vetting has to be sent to Regional Office.1 Crore and upto Rs. Failure to do so. If such a report had been filed.10 Crores the documents have to be vetted by Lawyers in Bank’s approved panel and certified by Second line officers at branches before release of limits. In case of any lacunae in the property taken as security. Any withdrawals of more than Rs. Registration of charge with the Registrar of Companies. suitable evidence should be verified and branch should be satisfied about such remittance. • Monitoring of Accounts Monitoring should be done through verification of debits made in the account. The Pre-inspection report and F 337 should be signed by the Branch Manager and the official who had accompanied the Branch Manager. In case any non co-operation is experienced by the First Line Manager from the Second Line Manager or officers in charge of the departments on the verification of end use of funds . the First Line Manager should report such issues to Regional Office and make available a copy of such reporting to visiting officials / inspectors. perusing the periodical stock statements. the First Line Manager. Subsequently if it is found that no assets had been created or funds had been diverted for purposes other than the purpose for which the loan / facility had been sanctioned. In case such a reporting is not done by the First Line Manager. the Second Line Manager in charge of advances department and the officer who had permitted such withdrawals will be held jointly responsible.5 lakhs from Cash Credit accounts or Current Accounts where Packing Credit loan proceeds are credited (if specifically permitted) should be countersigned by the First Line Manager of the branch and the Second Line Manager in charge of the advances dept along with the cash credit / current account department officer ensuring that such withdrawals are made only for creation of working capital assets as envisaged in the business proposal. adequate and live insurance policies. the end use verification should be done to ensure that payments have been made to the suppliers only. _____________________________________ _____________________________________ _____________________________________ . all the three officials as mentioned above would be held jointly responsible. periodical inspection of stocks as per laid down procedure. In such a case. In case of Cash Credit accounts and Packing Credit Loans also. • Inspection of security assets The inspection of the property should be jointly carried out by the Branch Manager and Second Line Manager in charge of advances department or the officer who had made the proposal. All loan vouchers should be countersigned by the First Line Branch Manager and the Second Line Manager in charge of advances department along with the officer releasing the loan. prompt renewal of the account. continuous surveillance statements. both of them would be jointly held responsible.Career Guide for IOBians 329 _____________________________________ _____________________________________ _____________________________________ In case any advance is remitted by the borrower to the supplier. he would be solely responsible for end use verification. ************ srn/04. At a future date if any deficiency is noted in the monitoring of the account.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . Branch Manager will be solely responsible in the operational areas detailed as above. • Single man branches In the case of single man branches. the First Line Manager. periodical review of the account for the changing market conditions etc. The Second Line Manager in charge of advances department and the officer who is assigned to handle the particular account(s) will be held jointly responsible. For any indiscriminate or unauthorized excesses and delayed submission of excess reports.Career Guide for IOBians 330 _____________________________________ _____________________________________ _____________________________________ adherence to the terms and conditions given in the sanction endorsement.04. the First Line Manager. the Second Line Manager in charge of advances department and the officer who is assigned to handle this particular account will be held jointly responsible. 4. In tune with the ‘Guidance Notes on Risk Management’ issued to all commercial banks by Reserve Bank of India. and • Credit Audit. The purpose of Loan Review Mechanism is to review the status of compliance of terms and conditions of sanction and post sanction process. 3. • Loan Review Mechanism. 6 Accounts with exposure of Rs 1 crore and above but below Rs 20 crore sanctioned by branches/Regional Offices are reviewed by Loan Review Committees at respective Inspectorates. an off-site Audit process. c.05. ********* srn/15. Coverage of borrowal accounts under Loan Review Mechanism: • All borrowal accounts with FUND-BASED CREDIT LIMIT of Rs.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . an on-site Audit process 2.Career Guide for IOBians 331 _____________________________________ _____________________________________ _____________________________________ Loan Review Mechanism 1. The following types of advances are exempted from purview of Loan Review Mechanism: a. Accounts sanctioned within the discretionary powers of overseas branches d. Standalone term loans where simple review has been done and where outstanding has been allowed to run off 4 Branches shall submit LRM-1 form only to the respective Regional Office 5 LRM-1 should reach Regional Office within 90 days from the date of sanction or renewal. Our Bank introduced. One Crore and above sanctioned or renewed. Advances against liquid securities. 7 All accounts with exposure of Rs 1 crore and above sanctioned by Central Office and all accounts with exposure of Rs 20 crore and above sanctioned by Regional Offices are reviewed by Loan Review Committee at Central Office. b. Advances against Bank’s own Term Deposits or Government Securities. 8 LRM-1 need NOT be submitted in the case of Short-Reviews and sanction of Adhoc Limits for short periods upto 6 months. • The customer indulging in frauds and malfeasance are not eligible. DD) upon restructuring.Career Guide for IOBians 332 _____________________________________ _____________________________________ _____________________________________ Restructuring of advances General Guidelines & Instructions of RBI • Restructuring would normally involve modification of terms of advances/securities. repayment period etc. would be eligible for upgradation to the “Standard” category after observation of “satisfactory performance” during the “specified period” • Specified period means a period of one year from the date when the first payment of interest or instalment of principal falls due. • All restructured advances. • Upon restructuring. SS. • Customer should agree for the changes/alterations in the terms and conditions on restructuring • The borrower account should be financially viable.TL accounts: No payment of instalment should remain overdue for a period of more than 90 days AND there should not be any overdue at the end of the “specified period” Agri Accounts: period” • Account should be regular at the end of the “specified All business activities are covered under SPECIAL REGULATORY TREATMENT (SRT). This provision will be in addition to the normal provision applicable for the classification of the restructured advance. alteration of repayment period/repayable amount/amount of instalments/rate of interest etc. “Sub-standard” and “Doubtful” categories can also be restructured. • Bank cannot reschedule/restructure/renegotiate retrospective effect. diminution in fair value of the advance due to change in the terms of original agreement. • Satisfactory performance means borrowal accounts with . For restructuring purpose State /Central Government guarantees and Bank guarantees will be treated as tangible security. • Amounts may be fully-secured / partly-secured / unsecured.CC accounts: The account should not be out of order anytime during the “specified period” for a duration of more than 90 days AND there should not be any overdue at the end of the “specified period” . among others. which would generally include. as per restructuring package. which have been classified as “Non-performing” (i. excepting the following 3 categories: _____________________________________ _____________________________________ _____________________________________ . such as interest. will be computed and provided for. • Those accounts classified under “Standard”.e. The other guidelines and instructions under Special Regulatory Treatment • Restructuring package should be implemented within 90 days from the date of receipt of application in cases other than under CDR mechanism • Under CDR mechanism. other than under SPECIAL REGULATORY TREATMENT are to be downgraded to NPA on restructuring. implementation is to be done within 90 days. to be obtained to this effect) • BIFR cases are not eligible for restructuring without their express approval. Educational Institutions etc. Dues of Micro Finance Institutions (MFIs) restructured up to March 31. SSI borrowers. • Corporate Debt Restructuring (CDR) Mechanism 10 years for _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 333 _____________________________________ _____________________________________ _____________________________________ Consumer and personal advances Advances classified as Capital market exposures Advances classified as commercial real estate exposure. 2011 • The unit becomes viable in 10 years. Retention of the asset classification of the restructured account in the prerestructuring asset classification category • All accounts of activities. i. if they were in standard category at the time of restructuring. (Advances to Hospitals. • Repayment period : 15 years for infrastructure advances & others (except for home loans). if it is engaged in infrastructure activities and in 7 years in the case of other units. where the outstanding is up to Rs. such as CA certificate. are not covered under exposure to commercial real estate. Infrastructure projects with adequate cash flow for repayment and appropriate mechanism to escrow cash flows with clear and legal first claim on cash flows iii.. (Proof . • The following categories are considered ‘fully secured’ even if security to cover the outstanding is not available.) • The special regulatory treatment has the following two components : Incentive for quick implementation of the restructuring package.25. Hotels. • Promoters’ sacrifice and additional funds brought by them should be atleast 15% of Banks’ sacrifice.00 lacs ii. The CDR Empowered Group would be mandated to look into each case of debt restructuring.Career Guide for IOBians 334 _____________________________________ _____________________________________ _____________________________________ This mechanism will be available to all borrowers engaged in any type of activity subject to the following conditions: a. The total outstanding (fund-based and non-fund based) exposure is Rs. The borrowers enjoy credit facilities from more than one bank/FI under multiple banking / syndication / consortium system of lending (in a co-ordinated manner). CDR Standing Forum and its Core Group 2.04.2012 Back to index _____________________________________ _____________________________________ _____________________________________ . examine the viability and rehabilitation potential of the Company and approve the restructuring package within a specified time frame of 90 days. The decisions of the CDR Empowered Group shall be final ****************** srn/04. CDR Empowered Group 3. b.10 crore or above. or at best within 180 days of reference to the Empowered Group. CDR Cell The CDR Standing Forum shall meet at least once every six months and would review and monitor the progress of corporate debt restructuring system. CDR system in the country will have a three tier structure : 1. 7. Normally for all advances unit inspection will be conducted on monthly basis. along with audited balance sheets. Secured term loans /Demand loans granted for approved purposes. Loan Review Mechanism is an ‘off-site’ audit procedure with the main objective of ensuring compliance of terms and conditions of sanction and post sanction processes laid down by the Bank from time to time. 3. during the course of dealing with the borrower in respect of finance made to them. Term loan accounts should be reviewed periodically at least once in a year. 5. Short Review & Renewal Proposal (SRRP) Whenever there is delay in submitting renewal proposal due to genuine reasons short review can be done for a maximum period of 6 months.Career Guide for IOBians 335 _____________________________________ _____________________________________ _____________________________________ Credit Monitoring 1. shall and be physically inspected encumbrance certificate before to be 9. QIS forms: Submission of QIS forms I. they are not subject to renewal but only review. CMA data: In all cases where working capital limits are Rs 2 crore and above CMA data will be called for. NSC/LIC policies/Resurgent India Bonds/IMDs etc are allowed to run off and once sanctioned by the authority. such auditor’s certificates should be obtained from the Auditor who has originally audited and certified the books of accounts of the concern/firm/ company. Such short reviews will be resorted to only once between two regular sanctions. 6. 4. Credit Audit is an ‘on-site’ audit function – Credit Risk mitigation tool to be used by the Sanctioning Authorities to evaluate the quality of Loan asset and to take appropriate decisions in the best interests of the Bank. _____________________________________ _____________________________________ _____________________________________ . All mortgaged property review/renewal of limits obtained once in 3 years. Review/Renewal of borrowal account: All the credit limits are renewed / reviewed at least once in a year Review/Renewal of borrowal accounts sanctioned will be ensured within 3 months from due date. Standard Assets showing overdue for more than one month are classified as “Watch Category” accounts 2. The inspection of godown should be carried out meticulously as per terms of sanction. 8. against various securities such as gold ornaments. II & III is discontinued. Auditor’s Certificate: Whenever the borrower is advised to produce auditor’s certificate by the Bank. Guidelines for Operations in NPA Account Showing Signs of Revival: In those NPAs (due to factors beyond the control of borrower) where borrowers are willing to revive the business activities.50 lac is waived. While allowing holding on operations in NPA accounts.Career Guide for IOBians 336 _____________________________________ _____________________________________ _____________________________________ If the Branch submits a complete renewal proposal before expiry of the existing limits or before the expiry of the extended period of the limits. 11. they require revalidation by sanctioning authority. 12. Within a period of 3 months of allowing operations. Compulsory Audit Of Borrowal Accounts • All borrowers with credit limits of above Rs. branch will be in order in continuing the existing facilities till a decision is taken by the sanctioning authority. a view is to be taken in its entirety about future course of action and the manner in which further recoveries have to be effected. • Submission of financial Statements by individual agricultural borrower for availing agricultural advances for less than Rs. _____________________________________ _____________________________________ _____________________________________ .25 lakhs from the banking system should get themselves audited compulsorily by Chartered Accountants. Unit should be a going concern. not only to help them to revive their business but also to reduce their dues in NPA accounts. The guidelines to be followed are as follows: The holding on operations will be a temporary affair Branch Managers are permitted to allow operations in NPA accounts (irrespective sanctioning authorities of these loan accounts) under report to Regional Office and Sanctioning Authority. Bank can allow operations in the NPA account. Unless availed within this period. the exposure in such accounts will not be allowed to go above the level of outstanding as on the date of allowing such holding on operations. • Sanctions by MCB can be considered for revalidation by CAC and for others by the respective authority who has sanctioned the loan. Such decision to allow operation should be reported to Regional Office and Sanctioning Authority. Revalidation of Sanction • Credit Sanctions (including term loans) are valid for 6 months from the date of sanction. 10. by way of rehabilitation/ restructuring or by filing suit / action under SARFAESI Act 2002. misrepresentation. falsification of accounts and fraudulent transactions have been identified by Other Banks/FIs will be debarred from financial assistance from us for a period of 5 years from the date the name of Willful Defaulter is disseminated in the list of Willful Defaulters by RBI.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . • Willful defaulters Entrepreneurs/promoters of Companies where diversion of funds.05. 14. siphoning of funds. ******************** srn/14. Quick mortality The Bank will classify accounts that become NPA within a year of its sanction as quick mortality. Annual review of such accounts will be done.Career Guide for IOBians 337 _____________________________________ _____________________________________ _____________________________________ 13. mortgagee or absolute owner. Bank shall not grant any loan/advances for subscription to Indian Depository Receipts (IDRs). Loans and advances against shares. 2. deposits.Career Guide for IOBians 338 _____________________________________ _____________________________________ _____________________________________ Restrictions for financing A. Bridge Loans To NBFCs: Bridge loans will not be granted pending raising of long-term funds from the market by way of capital. 1949. debentures and bonds: • No loans to be granted against partly paid shares. to any category of NBFC and also Residuary Non. Bank also shall not grant any advance against security (either as prime or collateral) of IDRs issued in India. • No loans to be granted to partnership/proprietorship concerns against the primary security of shares and debentures. etc. 7. 3. whichever is less. Bank will not grant any advance to partnership firms in which NBFC is a partner. Holding Shares In Companies: In terms of BR Act. 6. Bank shall not extend advances to employees / Employees' Trusts set up by them for the purpose of purchasing Bank’s shares under ESOPs / IPOs or from the secondary market. Credit to Companies for Buy-Back of their Shares/Securities: Bank will not provide loans to companies for buy-back of shares/securities except buy back of FCCB as per extant RBI guidelines B. Regulatory Restrictions 1. Bank shall not grant any loans and advances on the security of its own shares 2. Statutory restrictions 1. of an amount exceeding 30 % of the paid-up share capital of that company or 30 % of its own paid-up share capital and reserves. srn/14. banks should not hold shares in any company except as provided in sub-section (1) whether as pledgee. or other term deposits of other Banks will not be granted 3. Loans against Certificate Of Deposits (CDS): Bank will not grant loans against Certificate of Deposits 4. Advances against fixed deposit receipts issued by other banks: Advances against FDRs.Banking Company.05. 4. 1949.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . Advances against Bank's Own Shares: In terms of BR Act. Advances against bullion / primary gold: Bank will not grant any advance against bullion/primary gold except gold coins purchased from banks 5. if any with the prior approval of the delegated authority(see “D” below). (Action under SARFAESI Act 2002 will not extend limitation period of documents). Loan account must have been classified as NPA 2. The secured asset must be detailed in the notice. 4. ensure lenders having 3/4th of dues outstanding are agreeable for initiating action under SARFAESI Act 2002. _____________________________________ _____________________________________ _____________________________________ . In case of corporate bodies the notice can be served on the registered office or on any of the Branches (Rule 3(2)). 1. Speed Post c. 6. B. Documents should be enforceable and unexpired period of a minimum of 6 months must be available (not specified in the Act). Clause can be incorporated in the demand notice to the effect that Bank reserves its right to publish their photos. A.One lakh. Notice should be issued by ‘Authorised Officer’ of the Bank who is not below the rank of Scale IV officer. Outstanding dues should be above 20% of the principal and interest.Career Guide for IOBians 339 _____________________________________ _____________________________________ _____________________________________ Guidelines on Enforcement of Securities under SARFAESI Act 2002 • “SARFAESI Act” stands for The Securitisation And Reconstruction of Financial Assets and Enforcement of Security Interest Act. The notice can be issued by any one of the following ways. Outstanding in the account including the interest accrued/applied should be more than Rs.Courier e. E-mail. 60 days time is to be allowed for payment/discharge of the dues. Requirements for initiating action under SARFAESI Act 2002 . Secured asset should not be an agricultural land. 1. Different steps involved in initiating action under SARFAESI Act 2002. 5. without intervention of Court. 2002. Agricultural land used for Non-Agricultural activities can be enforced under this Act. In case of multiple lenders/consortium advances. • SARFAESI Act 2002 is one of the tools available with Bankers for recovery of NPAs. Notice must be addressed to the borrower/guarantor at the place where he/she resides or carries on business or works for gain (Rule 3(1)). 3. Demand Notice under section 13(2) is to be serviced to the borrower and to guarantors. if the account is not regularised / settled within time). a. Registered post A/D d Fax Message b. The amount claimed in the notice should be the total dues as on the date of the notice including upto date undebited interest. newspaper publication of notice and any undelivered covers without being opened etc.Career Guide for IOBians 340 _____________________________________ _____________________________________ _____________________________________ If the service of notice cannot be made as aforesaid for the reason that the borrower is avoiding the service or otherwise. Possession Notice shall also be published. 8. Approved valuer means a person registered as valuer under section 34AB of the Wealth-Tax Act. Insurance cover. 3. the insurer should be informed. the Authorised Officer should fix the ‘Reserve price’. If the property taken into possession is subject to natural decay or the expenses of keeping such property in custody is likely to exceed its value. Authorised Officer should issue 30 days notice for sale under section 13(4). Taking possession should be in the presence of two witnesses (preferably independent witnesses) If secured assets are movable. which should not be less than the estimated value. Simultaneously inventory should be prepared by the Authorised Officer in the specified format and one copy should be delivered to the borrower or the guarantor as the case may be. then insurance should be taken immediately (Rule 4(3)). one in vernacular having sufficient circulation in that locality by the authorised officer. 5. assignment or sale. as soon as possible but in any case not later than seven days from the date of taking possession. If the borrower does not pay the demanded amount in 60 days the Authorised Officer can take possession on the secured asset (as detailed in Sec 13 (4) of the Act. One office copy of the notice together with proof of despatch and acknowledgement. Authorised Officer shall communicate his reply within 15 days of receipt of such objection u/s 13 (3A). Branches can consider publishing the photos in the SARFAESI possession notices. if not available. 1957. If insurance cover is available. Thereafter. Authorised officer should obtain a valuation report from one of our approved valuers. If the borrower makes any objection or representation after the receipt of the demand notice. The movable assets taken possession should be immediately transferred to a nearby godown for storage and protection. 7. including the right to transfer by way of lease. must be kept by the branch/Authorised officer as proof which may require on a later date. in 2 leading newspapers. the authorized officer may sell it. 6. in consultation with Regional Office/SARFAESI committee. then • The service can be effected by the Authorised Office by affixing a copy of the demand notice on the outer door or some other conspicuous part of the house of building in which the borrower resides/carries on business or personally works for gain and also • By publishing the contents of the demand notice in two leading newspapers (one in vernacular language) having sufficient circulation in the locality. _____________________________________ _____________________________________ _____________________________________ . 2. 4. As obtention of consent of the owner is difficult. The Ministry of Finance has issued a direction to all PSBS/ FIs to upload all SARFAESI auction notices in the official website of the Government “tender. Proposed date & time of sale 10. The banks have to confirm that no auction takes place henceforth without auction notice being put on the website for at least 30 days. Mode of sale is e-auction c.No 1. 4th Street. On payment of the sale price the Authorised officer shall issue a certificate of sale. 13.Matex Net P Ltd. Sl. Karpagam Avenue. 2nd Floor.3500 + service charge per auction 11. • For the purpose of e_auction.AbcProcure B-704/705. Chennai 600 028 Tel.. 124. over and above the dues and expenses to us shall be paid to the owner of the secured asset.Career Guide for IOBians 341 _____________________________________ _____________________________________ _____________________________________ • Sale notice should contain. 044 43437474/42107062 E_mail:
[email protected]. Any amount received as sale price. RA Puram. a.com 2. For any shortfall civil suit/DRT can be approached. Name and address of service providers M/s. +917640016843 Fee : Rs. 12. proper marketing should be done to receive more than one bid so that the offer / bid is more than the reserve price. Ellisbridge Ahamedabad – 3800006 Tel. as per the directives of Ministry of Finance. 14. Reserve price fixed b. The authorised officer may sell the secured assets taken on possession through e_auction. The Act empowers the banks to accept the immovable property in full or partial satisfaction of the bank’s claim against the defaulting borrower in times when the bank cannot find a buyer for the securities. the Authorised Officer can confirm the sale only with the consent of the owner of the property and also the Bank.in” to give wider publicity with a view to get better response. the services of any one of the following service providers is to be used. Wall Street – II Nr. Sale confirmation: Sale should be confirmed by the Authorised Officer only if the bid is higher than the reserve price.Gujarat college. If the highest bid is equal to the reserve price. _____________________________________ _____________________________________ _____________________________________ . M/s. Once permission is granted as above for CO follow up accounts for initiation of SARFAESI action and issuance of demand notice. • The DRAT has the discretion to reduce the deposit to 25% of the above amount. • The appeal will be entertained only if the borrower has remitted 50% of the debt demanded by the Bank or determined by DRT whichever is less.O accounts–Respective GMs handling credit For Doubtful and loss accounts – GM (Law).2013 Back to index _____________________________________ _____________________________________ _____________________________________ . • Accounts fall under Central Office follow up For Substandard department at C. confirmation of sale shall be taken by RO SARFAESI Committee. • Cause of Action arises to the borrower/guarantor only on taking possession of the property. • Aggrieved party can prefer an appeal before DRAT within 30 days from the date of receipt of DRT’s order. fixing reserve price. including taking possession. the same shall be referred to CO SARFAESI Committee through CO. • Borrower/Guarantor can file an application before DRT within a 45 days questioning the action taken by the Bank • DRT is expected to dispose of the borrower’s application within 60 days. fixing reserve price and confirmation of sale.05. D. Right vested in borrower/guarantor to challenge action taken by Bank under sec 13(4). subsequent decisions to take all further actions under Sec 13(4) of SARFAESI Act. which can be extended upto 4 months. Law Department along with proper justification for such recommendation srn / 10. If Reserve Price to be fixed is lower than FSV . Regional Office SARFAESI Committee shall take all further actions under Section 13(4) of SARFAESI Act.Career Guide for IOBians 342 _____________________________________ _____________________________________ _____________________________________ C. including taking possession. Delegated powers for SARFAESI Action • Accounts fall under RO follow up: The Regional Head shall permit issuance of demand notice in respect of all RO follow up accounts. Income recognition Income recognition has to be objective and based on the record of recovery. A. prudential norms for income recognition. Submission of stock statements older than 3 months. The outstanding balance remains limit/DP. a. including leased assets. Based on Income recognition assets are classified into. asset classification and provisioning for the advances portfolio of the banks so as to move towards greater consistency and transparency in the published accounts.) • A bill remains overdue for a period of more than 90 days from the date of purchase or in the case of bills purchased and 90 days from due date in the case of bills discounted. • In which interest and/instalment of principal remain overdue for a period of more than 90 days in respect of a term loan. NPA is an asset/loan account.Career Guide for IOBians 343 _____________________________________ _____________________________________ _____________________________________ Prudential accounting norms – Classification of Assets (Some points) In line with the international practices and as per the recommendations made by the Committee on the Financial System (Chairman Shri M. the Reserve Bank of India has introduced. Narasimham). (Overdue is any amount due to the bank under any credit facility. continuously in excess of the sanctioned Account where the regular/ad hoc credit limits have not been reviewed/renewed within 180 days from the due date/date of adhoc sanction. • Asset classification of accounts under consortium should be based on the record of recovery of the individual member banks and other aspects having a bearing on the recoverability of the advances • Agricultural advances : _____________________________________ _____________________________________ _____________________________________ . if it is not paid on the due date fixed by the Bank) • Which remains out of order for more than 90 days in respect of an OD/CC account? (An account is treated as out of order if. Non Performing Assets [N P A] Performing Assets: Assets which generate income for the Bank Non Performing Assets [NPA]: Assets. Performing Assets & b. becomes NonPerforming when it ceases to generate income for the Bank. in a phased manner. No credit in the account for a period of 90 days Credit in the account not adequate for servicing interest. The crop season for each crop. provided adequate margin is available in the accounts • Government guaranteed advances Guarantee of Central Govt. which means the period up to harvesting of the crops rose. This exemption from classification of Government guaranteed advances as NPA is not for the purpose of recognition of income. Performing Asset: Standard asset: An asset which is not an NPA. Doubtful Assets d. should be reversed if the same is not realized. “long duration” crops would be crops with crop season longer than one year and crops. including bills purchased and discounted. etc : Advances against term deposits. Sub – standard assets c. Guarantee of State Govt. would be as determined by the State Level Bankers’ Committee in each State. IVPs. B. if the instalment of principal or interest thereon remains overdue for one crop season. which are not “long duration” crops would be treated as “short duration” crops. This will apply to Government guaranteed accounts also. Standard assets b. Income Recognition policy • The policy of income recognition has to be objective and based on the record of recovery • Advances against Term Deposits. For the purpose of these guidelines. becomes NPA.: The credit facilities backed by guarantee of the Central Government though overdue may be treated as NPA only when the Government repudiates its guarantee when invoked. Loss assets i.Career Guide for IOBians 344 _____________________________________ _____________________________________ _____________________________________ A loan granted for short duration crops will be treated as NPA. Nonperforming Assets: Sub-standard Asset: exceeding 12 months An asset which has remained NPA for a period of not _____________________________________ _____________________________________ _____________________________________ . Reversal of Income If any advance. Asset Classification: categories Banks are required to classify assets in to the following 4 a. if the instalment of principal or interest thereon remains overdue for two crop seasons. the entire interest accrued and credited to income account in the past periods. NSCs. A loan granted for long duration crops will be treated as NPA. NSCs eligible for surrender.: State Government guaranteed advances and investments in State Government guaranteed securities attract asset classification and provisioning norms if interest and/or principal or any other amount due to the bank remains overdue for more than 90 days. ii. KVP/IVP. KVPs and life policies need not be treated as NPAs. Plus • For secured portion. Accounts where there is erosion in the value of security/frauds committed by borrowers • If the erosion in the value of security is more than 50%. the existence of security should be ignored and the asset should be straightaway classified as loss asset • In cases of serious credit impairment the asset (due to fraud or so). whether in respect of principal instalment or interest amount. such accounts should be straightaway classified as doubtful or loss asset as appropriate: C. falls due. Doubtful assets: 100 % of the extent to which the advance is not covered by realizable value of the security. all the facilities granted by a bank to a borrower will have to be treated as NPA.Career Guide for IOBians 345 _____________________________________ _____________________________________ _____________________________________ Doubtful asset: An asset which has remained NPA for a period of exceeding 12months Loss Asset: An Asset where loss has been identified by the Bank or internal or external auditors or RBI Inspectors • Borrower wise: Assets are classified on borrower wise and not on facility wise. provision may be made depending upon the period for which the asset has remained doubtful. whichever is earlier. subject to satisfactory performance during the period.. by whatever modality. as assessed by the bank/ approved valuers/ RBI is less than 10 per cent of the outstanding in the borrowal accounts. investment or other assets is that of the Bank Management and statutory auditors. even if one of the facilities becomes NPA and not the particular facility. Loss Assets: 100 % of the outstanding should be provided for. • Upgradation of restructured accounts: The substandard accounts which have been subjected to restructuring etc. such NPAs may be straightaway classified under doubtful category and provisioning should be made as applicable to doubtful assets • If the realisable value of the security. would be eligible to be upgraded to the standard category only after a period of one year after the date when first payment of interest or of principal. Period for which the asset remained doubtful Provision required up to 1 year 25 % One to 3 years 40 % More than 3 years 100 % _____________________________________ _____________________________________ _____________________________________ . due to erosion. Therefore. Provisioning Norms The primary responsibility for making adequate provisions for any diminution in the value of loan assets. 05.Career Guide for IOBians 346 _____________________________________ _____________________________________ _____________________________________ Sub-Standard Assets : A general provision of 15 % on total outstanding should be made without making any allowance for ECGC guarantee cover and securities available.40 % Restructured accounts classified as standard advances. • Loan for a non-infrastructure project . Projects under implementation • A loan for an infrastructure project will be classified as NPA if it fails to commence commercial operations within two years from the original Date of Commencement of Commercial Operations (DCCO).in the first year from the date of upgradation 2.75% Advance covered by CGTMSE guarantee In case the advance covered by CGTMSE guarantee becomes nonperforming.25 % commercial real estate 1. The unsecured exposures [realizable value of security is not more than 10% ab-initio of the outstanding exposure] which are identified as “substandard” would attract additional provision of 10 % (total provision 25%).00 % Other advances 0. Standard assets: Bank should make general provision for standard assets at the following rates for the funded outstanding on global loan portfolio basis: Banks exposure Provision required Direct advance to Agr.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .75% 2.classified as NPA if it fails to commence commercial operations within six months from the original DCCO.75% 2. even if it is regular as per record of recovery. & SME Sector 0. even if is regular as per record of recovery ****************** srn/15. The amount outstanding in excess of the guaranteed portion should be provided for as per the extant guidelines on provisioning for non performing advances. • In the first two years from the date of restructuring • In cases of moratorium on payment of interest / principal after restructuring – period covering moratorium and two years thereafter • Restructured accounts earlier classified as NPA and later Upgraded to standard category . no provision need be made towards the guaranteed portion. To enable lenders and other stake holders to get real time current information regarding the securities being mortgaged by borrower. New Delhi. Create a central data repository for collateral related information. _____________________________________ _____________________________________ _____________________________________ . • Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) is a company licensed under section 25 of the Companies Act. • The Registration would be applicable to transactions of security interest over property created to secure loans and advances from the banks and financial institutions as defined under the SARFAESI Act. asset reconstruction and security interest by the banks and financial institutions. • The Company is providing the platform for filing registrations of transactions of securitization. • Any person can also search and inspect the records maintained by the Registry on payment of fees prescribed under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Rules. • Following are the key Goals and Objectives of the Central Registry System: To provide mechanism for registration of transaction of securitization and reconstruction of financial Asset and security interest created under SARFAESI.Career Guide for IOBians 347 _____________________________________ _____________________________________ _____________________________________ Central Registry of Securitization Asset Reconstruction and Security Interest of India • Sec 20 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. • The Company is a Government Company with a shareholding of 51% by the Central Government and select Public Sector Banks and the National Housing Bank are also shareholders of the Company. 2011. • The Registry has come into operation from 31st March 2011. 2002(SARFAESI) provides for establishment of Central Registry to register transactions relating to Securitisation of financial assets Reconstruction of financial assets & Creation of security interest. 1956 and registered by the Registrar of Companies. To develop a web based system for financial institutions and general public to access this information. in.cersai. To collect and disseminate information regarding the priority and amount secured by the charge on securities.5000 per day. the fee would be Rs.250 _____________________________________ _____________________________________ _____________________________________ . For a loan upto Rs. 2 Satisfaction of any existing security interest FORM II 3 Particulars of securitization or reconstruction of financial FORM III Rs. non-registration within the time stipulated will be treated as a default and is punishable with fine upto Rs. Link for registration will be provided to him once he logs on to the system • All the securities created have to be registered with Central Registry (Agricultural lands taken as security need not be registered under CERSAI).Career Guide for IOBians 348 _____________________________________ _____________________________________ _____________________________________ To prevent fraudulent transactions arising out of same asset being mortgaged with multiple lenders.250 for both creation and modification of security interest.500 for creation and for any subsequent modification of security interest in favour of a secured creditor for a loan above Rs. • Fee payable for creation and modification of charge As per the rules framed by Government of India..5 lakh. Amount of fee payable 1 2 3 4 1 Particulars of creation or modification of security interest in favour of secured creditors FORM 1 Rs. following is the amount of fee payable:- S.org.03.5 lakh.2011. equitable mortgages. • To start with. No Nature of transaction to be registered Form No. Provide potential buyers of encumbrances on the assets. assets with information about any Maintaining history of charges created and satisfied on a particular asset.e. • Entity Registration can be done by Central Registry admin user through web portal www. the registration of charges is restricted to the mortgages created by deposit of title deeds i. • As per sec-27 of the SARFAESI Act. This fine is not applicable for registration of cases where mortgage was created prior to 31. • Registration shall be made on-line within 30 days of creation of equitable mortgage which is mandatory. 5000 in all other cases.2012 ***************** Back to index _____________________________________ _____________________________________ _____________________________________ .250 Rs. srn/04. 2500 in case of creation of security interest for a loan upto Rs.1000 4 Particulars of satisfaction or securitization or reconstruction transactions 5 Any application for information recorded/maintained in the Register by any person 6 Any application for condonation of delay upto 30 days • FORM 1V Rs. The fee as shown above is to be collected from the customer to the debit of his account and credit the amount to Sundry creditors account.50 Not exceeding Rs.109).04.Career Guide for IOBians 349 _____________________________________ _____________________________________ _____________________________________ assets Rs. 5 lakh and not exceeding Rs. Then transfer the amount to current account No.970749 with Cathedral branch (code No. the Basel committee decided to update the 1988 Basel-1 accord to include bank capital requirements for market risk. • The present Chairman of the Committee is Mr Stefan Ingves. • Basel I accord: The Basel Committee published in 1988. • The committee is a standing committee under the auspices of the Bank for International Settlements (BIS). China. Belgium. _____________________________________ _____________________________________ _____________________________________ . Indonesia. Hong Kong SAR. • The steps involved in risk management are: Identification of risk Measurement of risk Monitoring and controlling • The methods for measurement and quantification have been well established internationally through the Basel Committee for Banking Supervision (BCBS). the United Kingdom and the United States. Pillar-I Minimum Capital requirements Pillar-II Supervisory Review Process Pillar-III Market Discipline. • The Committee's members come from Argentina. Spain. India. Italy. Switzerland. a place in Switzerland. Saudi Arabia. Russia. a set of minimum capital requirements for banks. • Basel II accord: The Basel Committee replaced the Basel -1 accord with Basel-II in the year 2006. Luxembourg.Career Guide for IOBians 350 _____________________________________ _____________________________________ _____________________________________ Basel accord & Risk Management • Risk Management is a planned method of dealing with uncertainties to reduce losses. Sweden. Canada. Mexico. the Netherlands. This is based on the following 3 pillars. • Basel committee on Banking Supervision (BCBS) is a committee on Banking Regulations and supervisory practices. South Africa. Turkey. Korea. Germany. Australia. Singapore. It is known as the 1996 amendment and went to effect in 1998. Japan. These requirements have come to be known as the 1988 Basel-1 accord • With banks increasingly taking market risks. Governor of Sveriges Riksbank • This committee usually meets every quarter at the Bank of International Settlements in Basel. Brazil. France. Credit risk. However. Different approaches for calculating capital adequacy are: 1. foreign exchange rate etc. people and systems or from external events. Basic Indicator approach 2. 1. legal risk operational risks etc. Eligible total capital funds CRAR = -----------------------------------------------------------------Credit risk RWA+ Market risk RWA + Operational RWA • Market discipline (Transparency & Disclosures) disclosure requirement for external reporting. This covers credit risks. • Credit risk is the possibility of losses sourced by default due to inability or unwillingness of a customer or counterparty to meet commitments relating to lending. settlement and other financial transaction. Mark to market approach • Operational risk is the possibility of loss resulting from inadequate or failed internal processes. Internal rating based (IRB) approaches o Foundation IRB approach o Advances IRB approach. IRB approach is based on measuring Unexpected Loss (UL) and Expected Losses (EL). market risks and operational risk. Market risk and operational risk. market and operational risk enable a bank to choose its approach depending on its own ability to do so. Standard approach 2. Standardised approach 2. Basel Committee suggests the following approaches for calculating Capital adequacy ratio. • Market risk is the possibility of losses caused by changes in the market variable such as interest rate. trading. interest rate risk. _____________________________________ _____________________________________ _____________________________________ . they are broadly classified in to Credit risk. Capital to Risk weighted Assets ratio (CRAR) is calculated as follows. liquidity risks. Different approaches for calculating capital adequacy are: 1. advanced approach • The menu of approaches for credit. sets out the ‘minimum • Banks are financial institutions subject to various risks – both financial and non-financial. Standardized approach 3.Career Guide for IOBians 351 _____________________________________ _____________________________________ _____________________________________ • Basel II accord has laid down the method of calculating the minimum capital requirements. These are highly interdependent events. Operational risk. It is mainly because. • RBI has to be fully satisfied with the bank’s capability to adopt the advanced approaches. subordinated debt is limited to a maximum of 50% of Tier 1 capital. a bank’s capital comprises Tier 1 and Tier 2 capital with a restriction that Tier 2 capital cannot be more than 100% of Tier 1 capital. • Basel III accord • The Basel Committee on Banking Supervision comprehensive reform packages entitled. standard and monitoring” in December 2010. innovative instruments are limited to 15% of Tier 1 capital. banks migrated to the following Credit Risk .Basic Indicator Approach and Market risk – Standardised Duration Approach.The Standardised approach. Within Tier 1 capital. adopting the advanced approaches for its credit. market and operational risk could enable the bank to have lesser capital than when they follow standardized approach. • On implementation of the Basel-II approaches. accord. Perpetual Non-Cumulative Preference Shares along with Innovative Tier 1 instruments should not exceed 40% of total Tier 1 capital at any point of time. • Foreign Banks operating in India and Indian Banks having operational presence abroad adopted Basel-II (New Capital adequacy framework) on 31st March 2008 and all other commercial banks (Except Local area Banks and Regional Rural Banks) migrated to the New framework on 31st March 2009 for computing their capital requirements. • Objective: Improving banking sector resilience by strengthening global capital and liquidity regulations. • The reform package addresses the lessons of the financial crisis and aims at enhancing banking sector’s ability to absorb shocks arising from financial and economic stress. it will have to secure the approval of RBI.Career Guide for IOBians 352 _____________________________________ _____________________________________ _____________________________________ • If a bank desires to adopt advanced approaches. Within Tier 2 capital. • Basel III : Requirements Presently. _____________________________________ _____________________________________ _____________________________________ . (BCBS) has issued “Basel III: A global regulatory framework for more resilient banks and banking systems” and “Basel III: International framework for liquidity risk measurement. Further. Also aims to improve risk management and governance as well as strengthen banks’ transparency and disclosure standards relating to regulatory capital. the counterparty credit risk in the trading book covers only the risk of default of the counterparty. The reform package includes an additional capital charge for Credit Value Adjustment (CVA) risk which captures risk of mark-to-market losses due to deterioration in the credit worthiness of a counterparty. the Tier 1 capital will predominantly consist of Common Equity.2012 Back to index _____________________________________ _____________________________________ _____________________________________ . with a view to improving the quality of capital. • Enhancing Risk Coverage At present.04.Career Guide for IOBians 353 _____________________________________ _____________________________________ _____________________________________ However. under Basel III. **************************** srn/04. 50 lacs. legitimate and the Bank should ensure the conduct and integrity from the approved Valuers at all times. 25 Lakhs and below. • Valuation Report should be obtained from one valuer for all properties valued up to Rs. • In cases of Standard Assets with limits of Rs. by our panel valuer. • Desk Top Valuation (DTV) is valuation done by the First Line Manager. • The immovable property mortgaged as First Charge to the Bank for any advance shall be revalued at least once in 3 years. • Net book value :When the fixed asset is shown as net of accumulated depreciation. • Rotation among the panel Valuers shall be preferred for periodical revaluation. • For our bank’s empanelment. the valuer has to register himself under the Wealth Tax Act ( Sections 34 AA to 34 AE ). • Gross Book Value of a Fixed Asset is its historical cost or other amount substituted for historical cost in the books of account or financial statements. 100 % physical verification of assets has to be done. fair market value ascertained from the local residents and visit to the site.Career Guide for IOBians 354 _____________________________________ _____________________________________ _____________________________________ Valuation of securities • Fair Market Value – is the price that would be agreed to in an open and unrestricted market between knowledgeable and willing parties dealing at arm’s length who are fully informed and are not under any compulsion to transact. • For all loans above the limit of Rs. _____________________________________ _____________________________________ _____________________________________ . 5 Crores. concerning interest of the banks is valid. DTV by branch managers must be undertaken once in three years. based on the property demarcation furnished in the legal opinion of the Bank’s approved counsel. • The professional code of conduct prescribed for Valuers as applicable to Corporate Member / Fellows of Institution of Valuers (India) and also prescribed in “ Handbook on Policy. every year. • Whilst the duration of empanelment is for 5 years. • The duration of empanelment of valuers for immovable properties/TEV consultants by Banking Operations Department and for plant & machinery by Credit Support Services Department at Central Office shall be for a period of five years. the performance of the valuers shall by reviewed by the bank on an annual basis. Standards and Procedures for Real Estate Valuation by Banks and HFIs in India” issued by the Indian Banks’ Association and the National Housing Bank. • The approved valuer should verify the legal opinion of the properties.00 Category of Valuer . • For all NPA accounts (irrespective of the limits) the valuation of property is required to be done once in three years. VALUATION FEE STRUCTURE OF APPROVED VALUERS (For land and buildings only) FEE STRUCTURE BASED ON ASSET VALUE: On the first Rs. 5 Crores. • If the variation in the two valuations is not more than 10%.500.000. and On the balance of the Asset valued 1/8 % of the value.C. the lower value of the two.Rs.25 lacs.00 _____________________________________ _____________________________________ _____________________________________ .100000/. 5 Lakhs.for valuation of land.00 Category of Valuer .Rs. should only be accepted. On the next Rs. 2.1.of the Asset valued ¼ % of the value. the legal opinion which would be a part of the valuation report should contain a clause that the lawyer has personally visited the Registrar Office.50000/.10000/. lowest would be taken as the fair market value of the property.Rs.A .500. a third valuer will be engaged at the cost of borrower and of the three valuations. the minimum fees to be paid to an empanelled valuer for the valuation of a property will be as under : Category of Valuer .of the Asset valued ½ % of the value. searched the records and ensured the correctness of the entries in the Registry and there is no omission of any encumbrances in the E. • If the variation is more than 10%.C . furnished by Bank’s legal counsel. • In the case of Agricultural Advances for more than Rs. • Undertaking letter from the borrower stating that the proposed superstructure will be as per the National Disaster Management Authority (NMDA) guidelines should be obtained. the valuation should be done by a competent person approved by the Bank. 2. • In case of standard assets with limits exceeding Rs. However.B . It should form an integral part of the valuation report. building and machinery for each party account. subject to a maximum of Rs.Career Guide for IOBians 355 _____________________________________ _____________________________________ _____________________________________ • The Branch should obtain minimum two independent valuation reports from Approved Valuers for all properties valued at above Rs. Career Guide for IOBians 356 _____________________________________ _____________________________________ _____________________________________ Note : In case of Diploma Holders.500. If the same property has to be revalued at the instance of Bank. CONDITIONS: Where two or more assets are required to be valued at the instance of an assessee. provided the first set of valuation report/documents are made available to the valuer ****************** srn/11. the minimum fees shall be Rs. all such assets shall be deemed to constitute a single asset for the purpose of calculating fees. the bank shall reimburse the outstation travel TA/DA charges as agreed to between both the parties in the beginning itself before the valuer starts the assignment.00 In case the valuer is required to undertake the valuation in a city other than that in which the valuer normally resides.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .05.1. 50% of the above prescribed charges only is payable for the second instance of valuation. • “Held to Maturity” cost/amortised cost. • Recovery in Non Performing Assets is first appropriated towards interest and the balance.2012 Back to index _____________________________________ _____________________________________ _____________________________________ . if any. • Assets & Liabilities of overseas branches are translated at the closing spot rates notified by FEDAI at the end of each quarter • Income & expenses of overseas branches are translated at quarterly average rates notified by FEDAI at the end of each quarter. towards principal. except in the case of Suit Filed Accounts and accounts under One Time Settlement • Legal expenses in respect of Suit Filed Accounts is charged to Profit and Loss Account. “Available for Sale” and “Held to Maturity” categories in line with the guidelines of RBI. • Individual securities under “Held for Trading” and “Available for Sale” categories are marked to market at quarterly intervals.04. • FCNR/EEFC/RFC/FCA (all foreign currency deposits including interest accrued thereon) and PCFC/WCFC/TLFC/FCL (all foreign currency lendings) are stated at the FEDAI weekly average rate applicable for the last week of the quarter. ***************** srn/04.Career Guide for IOBians 357 _____________________________________ _____________________________________ _____________________________________ Significant Accounting policies of our Bank • Income is recognized on accrual basis on performing assets and on realization basis in respect of non-performing assets as per the prudential norms prescribed by Reserve Bank of India. Vehicles & Office Equipments : 20 % Computers : 33 1/3 % Fire Extinguishers : 100 % • Depreciation is provided for the full year irrespective of the date of acquisition/revaluation. Such amount when recovered is treated as income • Balances in NOSTRO and ACU Dollar accounts are stated at closing rates. • Depreciation is provided on straight-line method at the rates as under : - investments Premises : 2. • Investments in India are classifed into ‘Held for Trading”.50 % Furniture : 10 % are carried at acquisition Electrical Installations. The basic approach of capital adequacy framework was that a bank should have sufficient capital to provide a stable resource to absorb any losses arising from the credit risks in its business. Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes. 6. and market discipline. in a phased manner. but excludes strategic and reputation risk. Credit risk is most simply defined as the potential that a bank’s borrower or counterparty may fail to meet its obligations in accordance with agreed terms. 2004. Reserve Bank has issued guidelines to banks in June 2004 on maintenance of capital charge for market risks on the lines of ‘Amendment to the Capital Accord to incorporate market risks’ issued by the BCBS in 1996. The Revised Framework consists of three-mutually reinforcing Pillars. The Basel Committee on Banking Supervision [BCBS] had published the first Basel Capital Accord (popularly called as Basel I framework) in July. _____________________________________ _____________________________________ _____________________________________ . This definition includes legal risk. supervisory review of capital adequacy. RBI introduced a minimum CRAR of 8% in 1992. 9. 10. 1988 prescribing minimum capital adequacy requirements in banks for maintaining the soundness and stability of the International Banking System. 8. 2008. Pillar 1: Minimum Capital Requirements — which prescribes computation of capital requirements for operational risk in addition to market and credit risk. 2. Indian banks having operational presence outside India and Foreign banks operating in India have migrated to the Standardised Approach for computation of credit risk capital under the revised framework with effect from March 31. The BCBS released the "International Convergence of Capital Measurement and Capital Standards: A Revised Framework" (Basel II) on June 26. Pillar 2: Supervisory Review Process (SRP) — which envisages the establishment of suitable risk management systems in banks and their review by the supervisory authority.accord) 1. The Revised Framework was updated in November 2005 to include trading activities. Pillar 3: Market Discipline — which seeks to achieve increased transparency through expanded disclosure requirements for banks. 4.Career Guide for IOBians 358 _____________________________________ _____________________________________ _____________________________________ Capital adequacy framework (Basel . for the commercial banks based on the recommendations of the Committee on Financial Sector Reforms (Narsimham Committee I). 3. people and systems or from external events. 5. 7. minimum capital requirements. viz. Market risk is defined as the possibility of loss to a bank caused by changes in the market variables. 15. the ratings given by ECRAs shall be either “Long Term” or “Short Term”. Materials by Buyer 4. The names of rating agencies are: _____________________________________ _____________________________________ _____________________________________ . 7. 9. 5. For supply of Raw 3. 6. Based on term of exposure.Career Guide for IOBians 359 _____________________________________ _____________________________________ _____________________________________ Computation 11. non-funded items and other off-balance sheet exposures. Some examples for financial & performance guarantee Financial guarantee 1. taking into account all the fund and non-fund based exposures of a customer). RBI has identified four domestic External Credit Rating Agencies (ECRAs)’s for the purpose of risk weighting for borrowers for capital adequacy purpose. and c) Standard & Poor’s 16. The exposures have to be multiplied by the risk weights assigned to the relevant counter-party for arriving at Risk Weighted Asset (RWA). The equivalent credit risk exposure for the off-balance sheet items for the purpose of computation of risk-weighted assets has to be arrived at by multiplying the face value of each of the off-balance sheet item by a “credit conversion factor (CCF)”. 3. • Matured LCs and LGs –Credit conversion factor For Performance guarantee • : 50% For financial guarantee :100% & for LC I : 20% Under drawn/undrawn portion of term loans – CCF For short term loan : 20% For long term loan : 50% 13. The process for computation of credit risk capital under the Standardized Approach (SA) starts with the segmentation of the balance sheet assets. 12. Performance guarantees Performance of Contract Payment of Bills Warranty Period Retention Money Drawing funds against part execution Bid Bond EPCG Security Deposit Earnest Money Release of Goods Disputed Liability 14. b) Moodys. 10. The Reserve Bank of India has decided that banks may use the ratings of the following international credit rating agencies for the purposes of risk weighting their claims for capital adequacy purposes where specified: a) Fitch. 11. 8. 2. Mobilisation Advance 2. Advance Payment 1. The segregation of the exposures to any one of the above categories has to be done counter-party / customer wise (ie. a rating scale denoted by 'A' on a scale of '1' to '4' (i. e. • Low value of individual exposures criterion: The aggregate exposure to one counterpart should be within absolute threshold limit: • The maximum aggregated retail exposure to one counterpart should not exceed the absolute threshold limit of Rs. personal finance) and small business facilities and commitments. • projected turnover in the case of new entities.The exposure should be to an individual person or persons or to a small business: • Small business is one where the total annual turnover is less than Rs. Under the revised standardized system.e. • Granularity criterion: The RRP should be sufficiently diversified to reduce the risks in the portfolio: • One way of achieving this is that no aggregate exposure to one counterpart should exceed 0. A3 and A4) and 'D' are used. the long term rating symbols display the rating agency's name as a prefix. • The turnover criterion will be linked to the average of the last three years in the case of existing entities. SME Rating Agency of India Ltd (SMERA) 17. • NPA under retail loans are to be excluded from the overall regulatory retail portfolio when assessing this granularity criterion. c. M/s Brickwork Ratings India Pvt Ltd f.50 crore. Credit Rating Information Services of India Limited (CRISIL).g.Career Guide for IOBians 360 _____________________________________ _____________________________________ _____________________________________ a. Four qualifying criteria for claims to be included in the Regulatory Retail Portfolio (RRP) • Orientation criterion . 18. A2.5 crore. auto loans and leases. Eg. student and educational loans. ICRA Limited. A1. • Product Criterion: The exposure should be in the form of any of the following product categories • Revolving credits and lines of credit (including credit cards and overdrafts). and • Both actual and projected turnover for entities which are yet to complete three years. ‘CRISIL AAA’. _____________________________________ _____________________________________ _____________________________________ . personal term loans and leases (e. India Ratings and Research Private Limited (India Ratings) – erstwhile FITCH d. In the short term ratings. b. Credit Analysis and Research Limited (CARE).2% of the overall regulatory retail portfolio. installment loans. which ever is higher for all fund based and non-fund based facilities.75 lacs or more. shall be risk weighted as indicated below. risk weight is : 75% • If LTV ratio is above 75% and loan amount is below 75 lacs. risk weight is : 50% • If LTV ratio is below 75% and amount of loan sanctioned is above Rs. the exposure would mean the actual outstanding. including personal loans and credit card receivables will attract a higher risk weight of 125% • ‘Capital market exposures’ will attract a higher risk weight of 125% • Claims on NBFC-ND-SI: The claims on the rated as well as unrated NBFC-NDSI (other than AFCs). 19. Bank has to maintain capital for undrawn amounts (sanctioned and not availed). irrespective of the LTV ratio risk weight is : 125% • Restructured housing loans should be risk weighted with an additional risk weight of 25 per cent to the risk weights prescribed above. the exposure would mean sanctioned limit or the actual outstanding. 20. shall be uniformly risk weighted at 100 %. 21. • In the case of term loans and EMI based facilities where there is no scope for redrawing any portion of the sanctioned amount.30 lacs and below 75 lacs. • Loans / exposures to intermediaries for on-lending will not be eligible for inclusion under claims secured by residential property but will be treated as claims on corporate or claims included in the regulatory retail portfolio as the case may be. or that is rented. Claims secured by Residential Property: • Lending to individuals meant for acquiring residential property which are fully secured by mortgages on the residential property that is or will be occupied by the borrower. _____________________________________ _____________________________________ _____________________________________ .30 lacs. • If LTV ratio is below 75% and amount of loan sanctioned is up to Rs. regardless of the amount of claim. : 100% • Venture capital : 150% • Risk weight for claims to be included in the Regulatory Retail Portfolio (RRP): 75% • Consumer credit. Risk weight for Specified categories • Commercial real estate. including all forms of off-balance sheet exposures. risk weight is 100% • If the loan amount is Rs.Career Guide for IOBians 361 _____________________________________ _____________________________________ _____________________________________ • For this purpose. Risk weight for Non Performing Assets (NPA) other than qualifying residential mortgage loan: • The unsecured portion of NPA (net of specific provisions): 150% risk weight when specific provisions are less than 20% of the outstanding amount of the NPA. • Other loans and advances to bank’s own staff will be eligible for inclusion under regulatory retail portfolio and will therefore attract a 75 per cent risk weight. which is fully covered by superannuation benefits and/or mortgage of flat/house. 50% risk weight when specific provisions are at least 50% of the outstanding amount of the NPA. • If the specific provisions are 50% or more the applicable risk weights will be 50% 24. 22.Career Guide for IOBians 362 _____________________________________ _____________________________________ _____________________________________ • Staff Loans: Loans and advances to banks own staff. Credit Mitigation Techniques (CRM) techniques under Standardized Approach for taking the capital relief • Collateralised Transactions (through Eligible Financial Collaterals) • Only Cash. will attract a 20% risk weight. Deposit. LIC surrender Value and Gold will be eligible for Financial mitigants (Security). the risk weight applicable to the loan net of specific provisions will be 75%. prorate share of _____________________________________ _____________________________________ _____________________________________ . NPA – Qualifying Residential Mortgage Loan secured by residential property: will be risk weighted at 100% net of specific provisions. If the specific provisions in such loans are at least 20% but less than 50% of the outstanding amount. 23. 100% risk weight when specific provisions are at least 20% of the outstanding amount of the NPA. • On-balance sheet netting • Guarantees as a credit protection • In case of CRM held by leaders in consortium / Multiple banking / syndicating agents on behalf of other member banks. • Export Bills not Under LC covered by ECGC – Risk Weight .20% • SME loan guaranteed by CGTMSE : 0% • The risk weight applicable to central government exposures will also apply to the exposures on the Reserve Bank of India. and CGTMSE: Zero risk weight. • The claims on ECGC will attract a risk weight of 20%. 5 7 7 7 7 Minimum Total Capital* 9 9 9 9 9 9 Minimum Total Capital +CCB 9 9 9. Capital Conservation Buffer: The capital conservation buffer (CCB) is designed to ensure that banks build up capital buffers during normal times (i.25 10. The capital conservation buffer in the form of Common Equity will be phased-in over a period of four years in a uniform manner of 0. 25. 2017 March 31. In addition to the minimum total of 8% above.5 5.25 1. The Basel III capital ratios will be fully implemented as on March 31.5 Minimum CET1+ CCB 4.625 1. 2014 March 31. 27.5 5. 2013 March 31.5% of RWAs in the form of Common Equity to withstand future periods of stress bringing the total Common Equity requirement of 7% of RWAs and total capital to RWAs to 10. Basel III: “A global regulatory framework for more resilient banks and banking systems” is released during December 2010. 29.Scheduled Commercial Banks (excluding LABs and RRBs) (% of RWAs) Minimu m capital ratios April 1.625% per year. 2015 March 31.5 5 5.Career Guide for IOBians 363 _____________________________________ _____________________________________ _____________________________________ CRM has to be incorporated in the CRCC.5%.5 Capital conservation buffer (CCB) - - 0.875 2.375 8 Minimum Tier 1 capital 6 6.e.125 6. 2016. 2013.5 5. commencing from January 1. Branches have to collect this information from leader bank and add this in CRCC data.75 7. banks will be required to hold a capital conservation buffer of 2. outside periods of stress) which can be drawn down as losses are incurred during a stressed period. 2018. Date of implementation of Basel III capital regulations is April 1.875 11. _____________________________________ _____________________________________ _____________________________________ .5 5 6. 2018 Minimum Common Equity Tier 1 (CET1) 4.625 10. 2016 March 31. Transitional Arrangements . 26.5 Phase-in of all deductions from CET1(in%) 20 40 60 80 100 100 28. Stock surplus (share premium) resulting from the issue of common shares. the Common Equity component of Tier 1 capital will comprise the following: Common shares (paid-up equity capital) issued by the bank which meet the criteria for classification as common shares for regulatory . Accordingly. Statutory reserves.05. Elements of Common Equity Tier 1 capital will remain the same under Basel III.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . Other disclosed free reserves. Capital reserves representing surplus arising out of sale proceeds of assets.Career Guide for IOBians 364 _____________________________________ _____________________________________ _____________________________________ 30. srn/16. if any. Elements of Common Equity Tier 1 Capital a. in particular when they are able to support losses on an ongoing basis without triggering liquidation. may be treated as a part of Tier II capital within the overall ceiling of 1. They can be included in capital.25% of total Risk Weighted Assets Hybrid capital instruments. • General provisions/loss reserves will be admitted up to a maximum of 1. and Capital reserves representing surplus arising out of sale proceeds of assets. if they represent accumulations of post-tax profits and are not encumbered by any known liability and should not be routinely used for absorbing normal loss or operating losses revaluation reserves. etc.25 per cent of the total risk-weighted assets.25 percent of total risk weighted assets. Innovative Perpetual Debt Instruments (IPDI) eligible for inclusion as Tier I capital. Perpetual Non-cumulative Preference Shares (PNCPS) eligible for inclusion as Tier I capital . statutory reserves. Those instruments which have close similarities to equity. and other disclosed free reserves. It would be prudent to consider revaluation reserves at a discount of 55 percent while determining their value for inclusion in Tier II capital. the provisions on ‘standard assets’ together with other ‘general provisions/ loss reserves’ and ‘provisions held for country exposures’ will be admitted as Tier II capital up to a maximum of 1. which is general in nature and not made against any identified assets. if any. • Banks are allowed to include the ‘General Provisions on Standard Assets’ and ‘provisions held for country exposures’ in Tier II capital. • 'Floating Provisions' held by the banks. general provisions and loss reserves.subject to laws in force from time to time. • Excess provisions which arise on sale of NPAs would be eligible Tier II capital subject to the overall ceiling of 1. may be included in Tier II capital. However. Such reserves will have to be reflected on the face of the Balance Sheet as revaluation reserves.25 percent of total risk weighted assets. _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 365 _____________________________________ _____________________________________ _____________________________________ Capital Structure of banks Basel II 'Capital funds' would include the components Tier I capital and Tier II capital. The elements of Tier II capital include undisclosed reserves. The elements of Tier I capital include Paid-up capital (ordinary shares). • Foreign exchange contracts with an original maturity of 14 calendar days or less. and Foreign exchange risk (including open position in precious metals) throughout the bank (both banking and trading books). these will be treated on par with NPAs for deciding the appropriate risk weights for credit risk. and should not be redeemable at the initiative of the holder or without the consent of the Reserve Bank of India. _____________________________________ _____________________________________ _____________________________________ . • Minimum requirement of capital funds: Banks are required to maintain a minimum CRAR of 9 percent on an ongoing basis. • Banks should not issue Tier 1 or Tier 2 capital instruments with ‘step-up option’ so that these instruments continue to remain eligible for inclusion in the new definition of regulatory capital. irrespective of the counterparty. • Limit for Tier II elements: Tier II elements should be limited to a maximum of 100 percent of total Tier I elements for the purpose of compliance with the norms. unsecured. • Computation of capital charge for market risk: The Basel Committee has suggested two broad methodologies for computation of capital charge for market risks 1. may be assigned "zero" risk weight as per international practice. • These securities will attract capital only for credit risk. the banks’ Internal Risk Management models (IRM) method. free of restrictive clauses. these will be treated on par with NPAs for deciding the appropriate risk weights for credit risk. • Market risk is defined as the risk of losses in on-balance sheet and off-balance sheet positions arising from movements in market prices. such instruments can be issued with only ‘call option’ as per existing rules. However. which have already matured and remain unpaid. • The market risk positions subject to capital charge requirement are: The risks pertaining to interest rate related instruments and equities in the trading book. On completion of 90 days delinquency. • Capital for market risk would not be relevant for securities. These securities will attract capital only for credit risk. subordinated to the claims of other creditors. the Standardised method and 2.Career Guide for IOBians 366 _____________________________________ _____________________________________ _____________________________________ subordinated debt: the instrument should be fully paid-up. • On completion of 90 days delinquency. which have already matured and remain unpaid. • Banks shall continue to apply the Standardised Duration Approach (SDA) for computing capital requirement for market risks. • Capital for market risk would not be relevant for securities. • All commercial banks in India shall adopt Standardised Approach (SA) for credit risk & Basic Indicator Approach (BIA) for operational risk. • The capital requirements for the implementation of Basel III guidelines may be lower during the initial periods and higher during the later years. 2.e. srn/04.f 01.Career Guide for IOBians 367 _____________________________________ _____________________________________ _____________________________________ Operational risk capital charges The New Capital Adequacy Framework outlines three methods for calculating operational risk capital charges in a continuum of increasing sophistication and risk sensitivity: 1. and 3.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . the Standardised Approach (TSA). The Basel III capital ratios will be fully implemented as on March 31. Advanced Measurement Approaches (AMA). Basel III : • Implemented w.05. the Basic Indicator Approach (BIA). 2018.2013.04. 000 & above) will continue to require prior authorization • Domestic scheduled commercial banks (other than RRBs) has been granted permission to open Administrative Offices and Central Processing Centres (CPC) / service branches in Tier.RBI cir.3 to Tier.11. Back to index Ref: .999 Tier 6- Less than 5000 Further.000 to 99.999 Tier 4- 10. • Domestic scheduled commercial banks (other than RRBs) are free to open branches in Tier 3 to Tier 6 centres as identified in the Census 2001 (with population up to 49.999 Tier 5- 5.999 Metropolitan centre 10.000 to 19.000 to 99.00.00. • Opening of branches by domestic scheduled commercial banks (other than RRBs) in Tier 1 and Tier 2 centres (with population of 50. subject to reporting.6 centres and in rural. Dt.Career Guide for IOBians 368 _____________________________________ _____________________________________ _____________________________________ Branch Authorisation Policy of RBI: • Opening of new Branches and shifting of existing branches of Banks are governed by provision of Sec 23 of BR Act 1949.000 and above Tier 2- 50. • New private sector banks are required to ensure that at least 25% of their total branches are in semi-urban and rural centres on an ongoing basis. Population-group wise classification of centres Rural Centre Population upto 9.999 Urban centre from 1.20. semi urban and urban centres in the North Eastern States and Sikkim.000 to 49.99.999 Tier 3- 20.00.999) under general permission.000 to 9. subject to reporting.000 and above Classification of centres(tier-wise) Population(as per 2001 Census) • Tier 1 - 1.2012. new private sector banks are required to ensure that at least 25% of their total branches are in semi-urban and rural centres on an ongoing basis.999 Semi-urban centre from 10.000 to 9. _____________________________________ _____________________________________ _____________________________________ . • Domestic scheduled commercial banks (other than RRBs) have been permitted to open offices exclusively performing administrative and controlling functions (RegionalOffices/Zonal Offices) in Tier 1 Centres without the need to obtain prior permission in each case. need to be granted below the base rate for the purpose of viability of restructure. • All categories of loans (exempted categories are give below) should are priced only with reference to the Base Rate. o Cost of deposits/funds o Cost of capital o NIL return for CRR balance o Low return on SLR investments o Unallocated overhead costs and deployable funds o Average return on networth o Incidence of NPA Present Base rate of our Bank is 10. the same are not considered as violation of Base Rate principle • Since the Base Rate is the minimum rate for all loans. • The following categories of loans could be priced without reference to the Base Rate: a. • Base rate will be arrived at taking the following factors into consideration. • Base Rate shall include all those elements of the lending rates that are common across all categories of borrowers.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 369 _____________________________________ _____________________________________ _____________________________________ Base Rate • • Working Group on Benchmark Prime Lending Rate (Chairman: Shri Deepak Mohanty recommended for Base Rate for banks in lieu of BPLR.2013 srn/19. if interest rate charged goes below the Base rate.25 % w.05. Where interest subvention is available. banks are not permitted to resort to any lending below the Base Rate. loans to banks’ own employees c. DRI advances b. Funded Interest Term Loan (FITL) etc. • In case of restructured loans. such lending rate will not be construed as violation of base rate guidelines. Loans to banks’ depositors against their own deposits • Government of India extends interest subvention for Agricultural loans and some export finances.02.f 18. 2010.e. if some of the working capital term loan (WCTL). • The Base Rate system replaced the BPLR system with effect from July 1. Bullion / Gold coins in transit will be escorted as done for cash. Upto Rs. 6.50 lakhs -1 Armed guard Above Rs. 30 lakhs -No armed escort Above Rs. Usage of fire extinguishers • Appropriate fire extinguisher to extinguish the fire as under: Electrical fire . One set of the cash box key should be available at the Currency Chest / branch where such remittance / withdrawal are carried out.Career Guide for IOBians 370 _____________________________________ _____________________________________ _____________________________________ Security arrangements in Bank 1. Wood/carpet/cloth/paper . Detection and impounding of counterfeit Bank notes • The designated Nodal Officers (identified by Regional Offices) should obtain details of detection and impounding from branches (including NIL report) and maintain a record for verification.Use DCP or CO2 type fire extinguisher. Computer fire -Use CO2 type fire extinguisher. Insurance coverage for cash in transit is Rs. 4. • In such cases.300 lakhs -2 Armed guards Above Rs. • At least 2 confirmed employees must accompany all remittances. • The escort should walk a few paces behind the carrier. Both the DCP & CO2 fire extinguishers are to be refilled once in two years. 5.2 (two) lakhs. cash may be sent on foot. Issuance of cover is based on escort. • Refilling Of Fire Extinguishers Both the DCP & CO2 fire extinguishers are to be refilled once in 2 years.Use CO2 or DCP type fire extinguisher. In case the distance covered is short and no mode of transport is available. remittance should not exceed Rs.300 lacs 2. 3 crore-Police escort 3. The key of the cash box should not accompany the remittance / withdrawal party. Other fire viz. 30 lakhs upto Rs. _____________________________________ _____________________________________ _____________________________________ . 50 lakhs upto Rs. (Ref: CO:SECY:17:4 29 May 2012) 7. Cash remittances will be escorted as follows: (CO: SECY: 17: 5 04 June 2012). • Filing FIR separately then and there in case of detection of five or more in a single transaction. srn/17. • A “NIL” report should be submitted in case there was no detection in any month. • A consolidated report of both categories should be submitted to Issue Dept of RBI having jurisdiction over the concerned District.Career Guide for IOBians 371 _____________________________________ _____________________________________ _____________________________________ • Reporting in a consolidated manner every month to Central Crime Branch /District Crime branch along with the impounded FICN in respect of detection having 1 to 4 pieces in a single transaction.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .03. Career Guide for IOBians 372 _____________________________________ _____________________________________ _____________________________________ Application supported by blocked amount (ASBA) • SEBI has introduced an alternative mode of payment for Initial Public Offer called Application Supported by Blocked Amount • Under this process. there is no responsibility for the branch receiving the ASBA application form. to the Controlling Branch • The ASBA Application will be retained by the SCSB for a period of 6 months and thereafter forwarded to the issuer. • In order to encourage ASBA facility. block for the entire amount will be removed.e. part amount only will be debited and the block for the remaining amount will be removed.2010 and permitted to accept the ASBA Applications from 01. enter the data in our CBS package. • Even the account holder can be different from the applicant. • Self Certified Syndicate Bank is a Bank (SCSB). • Our Bank has been recognized as ASBA Bank (SCSB) by SEBI. the application amount will be blocked and will be debited to applicant’s account only upon allotment. the bank accounts (with any branch of our Bank) except specialized branches) are blocked to the extent specified by investors.e. • After approval of the entries. • As the Bank account and demat account of the customers are being opened at Banks/DPs only after complying with all KYC norms including verification of PAN. Hence.2010. • All the entries will be uploaded to NSE/BSE by the Controlling Branch • The application particulars are transmitted to Registrar and Transfer Agent (RTA) to Issue by NSE/BSE. • RTA finalises allotment and sends file to each ASBA Bank i. • In case of part allotment. the branches should provide acknowledgement to the Investors. included in SCSB list w.11.12. ASBA application has a provision for the signature of the applicant and of the account holder. • After receipt of ASBA Applications. in the case of non-allotment. which has been recognized by Securities and Exchange Board of India (SEBI) to accept application (ASBA) for an Issue from the customers who hold bank accounts with our bank. • All applications received should be punched on the same day. ASBA banks are now being offered a marketing fee by the issuing companies. • Similarly.f 15. _____________________________________ _____________________________________ _____________________________________ . People who want to apply through ASBA bring their deposit into our bank account. • Only for blocking the account. • SEBI has restricted an account for only 5 applications. • All branches of Indian Overseas Bank (except specialized branches) have to accept ASBA applications tendered at the Branch by any IPO / FPO / Rights applicant. • No ASBA application completed in all respects and which is eligible for being accepted can be rejected by any of the branches of the Bank for any reason.Career Guide for IOBians 373 _____________________________________ _____________________________________ _____________________________________ • As the applicant can be different from the account holder ASBA is very useful for contributing to CASA of the Bank. amounts in the accounts held at various branches are automatically debited/part-transferred/ unblocked depending upon the status of allotment. the branch has to verify the signature with that available in the application or in the relevant box (if the applicant is different from account holder). The Escrow account opened at the controlling branch is also credited automatically. • The funds collected in the account are transferred to the account of Bankers to the Issue/Company as the case may be by means of RTGS. srn/22.05. • Rejection of a valid ASBA application by any Branch has financial implications and can therefore attract severe action on the Bank by the Regulatory Authority.2013 Back to index _____________________________________ _____________________________________ _____________________________________ . when the data provided by the Registrar is run at the controlling branch. • After finalisation of the basis of allotment. 1956. located near the entry point of the banking hall. The facility of allowing opening of minor’s accounts with mothers as guardians may be extended to Savings Bank and fixed Deposit Accounts. whatever business hours are convenient to it i. after due notice to its customers. Banks do not open current accounts of entities which enjoy credit facilities (fund based or non-fund based) from the banking system without specifically obtaining a No-Objection Certificate from the lending bank(s). while father is alive. • Opening of current accounts . _____________________________________ _____________________________________ _____________________________________ . • Observance of Customers Day on 15th of every month. Violation of the above would make the concerned banks liable for penalty under Banking Regulation Act. up till one hour before close of the working hours. Banks should extend business hours for banking transactions other than cash. Banks may open current accounts of prospective customers in case no response is received from the existing bankers after a minimum waiting period of a fortnight. except very small branches should have “Enquiry” or “May I Help You” counters either exclusively or combined with other duties.Career Guide for IOBians 374 _____________________________________ _____________________________________ _____________________________________ Customer Service • Monthly staff meeting to discuss about new products.e.. to work in double shifts. In this way. to observe weekly holiday on a day other than Sunday or to function on Sundays in addition to the normal working days. stipulates that the father alone should be deemed to be the guardian. 1949. These accounts are not allowed to be overdrawn and that they always remain in credit. Therefore accounts are opened in the name of minors with father as guardian. Hence banks may fix. the minors' capacity to enter into contract would not be a subject matter of dispute. • Business hours No particular banking hours have been prescribed by law. subject to observing normal working hours for public transactions. • To hold meetings of small group of customers every fortnight • Opening of account of minors Section 6 of the Hindu Minority and Guardianship Act. • Helping customers All branches. 000/. • Persons with Autism. a mark can be obtained on the cheque / withdrawal form which should be identified by two independent witnesses. are invariably offered to the visually challenged as they are legally competent to contract. Duplicate draft. in lieu of lost draft. Banks should issue duplicate Demand Draft to the customer within a fortnight from the receipt of such request.Career Guide for IOBians 375 _____________________________________ _____________________________________ _____________________________________ Operation in old/sick account holders With a view to enabling the old / sick account holders operate their bank accounts. credit cards etc.may be issued to the purchaser on the basis of adequate indemnity and without insistence on seeking non payment advice from drawee office irrespective of the legal position obtaining in this regard. 1999 for the purposes of opening / operating bank accounts with due precautions and with due compliance regarding approval from competent authorities. Net banking facility. one of whom should be a responsible bank official. For the delay beyond this stipulated period. ATM facility. The customer may also be asked to indicate to the bank as to who would withdraw the amount from the bank on the basis of cheque / withdrawal form as obtained above and that person should be identified by two independent witnesses. The person who would be actually drawing the money from the bank should be asked to furnish his signature to the bank • Facilities to visually challenged persons: Banks to offer banking facilities such as cheque book facility including third party cheques. o Where the customer cannot even put his / her thumb impression and also would not be able to be physically present in the bank.. • Issue of Duplicate Demand Draft. banks were advised to pay interest at the rate applicable for fixed deposit of corresponding maturity in order to compensate the customer for such delay. Cerebral Palsy.. Mental Retardation Banks are to rely upon the Guardianship Certificate issued either by the District Court under Mental Health Act or by the Local Level Committees under the National Trust for the Welfare of Persons with Autism. it should be identified by two independent witnesses known to the bank. up to and including ` 5. Cerebral Palsy. locker facility. • Returning dishonoured cheques _____________________________________ _____________________________________ _____________________________________ . o Wherever thumb or toe impression of the sick/old/incapacitated account holder is obtained. retail loans. banks may follow the procedure as under. Mental Retardation and Multiple Disabilities Act. one of whom should be a responsible bank official. 2013 Back to index _____________________________________ _____________________________________ _____________________________________ . IOB Grams has been modified to have a Standardised Public Grievance Redressal System (SPGRS). Standardised Public Grievance Redressal System (SPGRS ) Our bank had introduced IOB Grams – (IOB Grievances Redressal And Monitoring System) for the redressal and monitoring of public complaints.Career Guide for IOBians 376 _____________________________________ _____________________________________ _____________________________________ • Banks to implement the recommendation of the Goiporia Committee dishonoured instruments are to be returned / despatched to the customer promptly without delay.in. Resolved complaints have to be closed by Regional Offices on collecting necessary documentary evidence such as mail/letter from the complainant by Regional Office.of India. ATM and Net Banking related complaints have to be attended by Transaction Banking Department (TBD) at Central Office from day one of complaint and if they notice any discrepancy due to branch action.5 Days For ROs . In the new system the public can register the complaint online through our website www. Banking Ombudsman and Directorate of Public Grievances and Ministry Of Finance (MoF) will be closed by CO after satisfactory redressal of the complaints.iob. Such complaints can be viewed by the branch through the Menu option "Receive Complaints-OnLine channel Time Limit for redressal of Complaints: For Branches . The complainants can monitor the status of their complaint on a day to day basis.5 Days Complaints pending for more than 5 days in branch will be automatically escalated to the concerned Regional Office. corrective action should be made by TBD. As also the case of complaints pending with RO – escalated to CO dept. in any case within 24 hours. Standardised Public Grievance Redressal System called SPGRS is uniform in all banks.05. Govt. Other Complaints should be closed by the concerned Regional Office after satisfactory redressal of the grievances. The complaints received from RBI. As per the instructions of Department of financial services. ************************** srn/12. Career Guide for IOBians 377 _____________________________________ _____________________________________ _____________________________________ Compensation Policy This policy is to establish a system whereby the bank compensates the customer for any financial loss he/she might incur due to deficiency in service on the part of the bank or any act of omission or commission directly attributable to the Bank Policy covers only compensation for financial losses which customers might incur due to deficiency in the services offered by the bank which can be measured directly. • Erroneous transactions reported by customers in respect of credit card operations which require reference to a merchant establishment will be handled as per rules laid down by card association. • In case verification of the entry reported to be erroneous by the customer does not involve a third party. the bank shall complete the verification process within a maximum period of one month from the date of reporting of erroneous transaction by the customer. 2. the bank will compensate customer for such loss. the bank will compensate the customer to the extent of such financial losses. • Further. the verification involves a third party. the entry will be reversed immediately on being informed of the erroneous debit. the guidelines of Reserve Bank of India regarding provision of explanation /documentary evidence to the card holders within a maximum period of 60days shall be followed by the Bank. _____________________________________ _____________________________________ _____________________________________ . • In case. the bank shall arrange to complete the process of verification within a maximum period of 7 working days from the date of reporting of erroneous debit . if the customer has suffered any financial loss incidental to return of a cheque or failure of direct debit instructions due to insufficiency of balance on account of the unauthorised/erroneous debit. • In the event the unauthorised/erroneous debit has resulted in a financial loss for the customer by way of reduction in the minimum balance applicable for payment of interest on saving bank deposit or payment additional interest to the bank in a loan account. 1. Unauthorised/Erroneous debit • The bank has raised an unauthorised/erroneous direct debit to an account. after verifying the position. In case of erroneous debits arising out on Fraudulent or other transactions • The bank would compensate the customer forthwith without demur. where the bank is at fault. • Not withstanding internal regulations for the members of VISA International on disputes of credit card transactions. • As a measure of our Bank’s commitment to speedy customer service.00 lac where erroneous debits have taken place in the customers accounts . 6. the bank shall reverse the transaction and give value dated credit to protect the interest of the customer. 3. • Any consequential financial loss to the customer will be compensated as explained earlier. Issue of duplicate drafts and compensation in case of delay. if any. • Inward remittances will be credited within 7 days from the date of credit in our nostro account. bank shall take appropriate steps to investigate and to handle the complaint and to compensate the customer for financial losses. if the beneficiary’s account particulars are available correctly. and the fault lies elsewhere in the system. the bank would not only reverse the charges immediately but also pay a penalty without demur to the recipient amounting to twice the value of charges reversed as per regulatory guidelines in this regard. _____________________________________ _____________________________________ _____________________________________ . 7. 4. • Customers will be compensated by way of interest for the delayed credits beyond 7 days at 2% above SB interest rate. • Such debits will be reversed within 2 working days of the customer intimating the transaction to the Bank 5. Where it is established that the bank had issued and activated a credit card without written consent of the recipient. then also bank would compensate the customer. Violation of the Code by banks agent: In the event of receipt of any complaint from the customer that the bank’s representative/courier or Direct Selling Agent has engaged in any improper conduct or acted in violation of the Code of Bank’s Commitment to Customers which the bank has adopted voluntarily. • Duplicate draft will be issued within a fortnight from the receipt of such request from the purchaser thereof. 1.either through our fault or where the fault is elsewhere in the system after getting necessary approval from the concerned layer of authority. Undue delay in crediting foreign remittance: • Bank will compensate the customer for undue delays in affording credit once proceeds are credited to the Nostro Account of the bank with its correspondent. Payment of cheque after stop payment instructions: • In case a cheque has been paid after stop payment instruction is acknowledged by the bank.Career Guide for IOBians 378 _____________________________________ _____________________________________ _____________________________________ • Even when the bank or the customer is not at fault. the customer will be compensated up to Rs. if any.Career Guide for IOBians 379 _____________________________________ _____________________________________ _____________________________________ • For delay beyond the above stipulated period. • In the event of death of owner of the property. srn/12. Returning of securities to the borrowers & compensation in case of delay: • In terms of the Code of Bank’s Commitment to customers adopted by the bank. due to delay in return of the same.5000/-.2013 Back to index _____________________________________ _____________________________________ _____________________________________ .05. 8. the title deed would be delivered as per bank’s policy for settlement of deceased customer asset. interest at the rate applicable for Fixed Deposit of Corresponding period will be paid as compensation to the customer for the delay. the bank would return to the borrowers all the securities/documents/title deeds to mortgaged property within 15 days of repayment of all dues agreed to or contracted subject to right of set off. if any. • In the event of loss of title deeds to mortgage property at the hands of the bank the compensation will cover out of pocket expenses for obtaining duplicate documents plus a lump sum amount of Rs. • The bank will compensate the borrower for monetary loss suffered. 15. Staff Clerical: • Duties attracting special pay in our bank Special Assistants Head Cashier – II Single Window Operator ‘B” • Some of the duties of Single Window Operator ‘A’ Passing and cash payment of all cheques/withdrawal forms/banker’s cheques/gift cheques etc upto and including of Rs..15. the joint custodians viz.. Cash Department: • For any shortage in cash balance held under the single custody of the cashier.000/ Passing independently clearing and transfer cheques/vouchers etc upto and including of Rs. upto and including Rs. _____________________________________ _____________________________________ _____________________________________ .25.25.000/ Receipts of cash and issuance of pre-signed drafts/gift cheques/travellers’s cheques/pay orders/bank orders etc.000/- 2. the Officer and/or cashiers who have signed the denomination slips shall be responsible for the shortage.000/- • Some of the duties of Single Window Operator ‘B’ Passing and cash payment of all cheques/withdrawal forms/banker’s cheques/gift cheques etc upto and including of Rs. upto and including Rs.000/ Receipts of cash and issuance of pre-signed drafts/gift cheques/travellers’s cheques/pay orders/bank orders etc. • In case of any shortage in any book of notes.10. he / she is solely responsible. • As regards the genuineness and quality of the currency notes of all denominations. • Any excess in the cash balance must be credited to Sundry Creditors Account on the same day after the preparation of a credit voucher bearing complete particulars of such excess cash. the responsibility for the same will vest on the cashier who has accepted such notes. • For any shortage in vault balance.000/ Passing independently clearing and transfer cheques/vouchers etc upto and including of Rs. the supervising official and the cashier shall be jointly responsible.Career Guide for IOBians 380 _____________________________________ _____________________________________ _____________________________________ Staff Matters 1..20. Hence the shortage must be recovered on the same day from the concerned cashier. 4. Commencement of employee’s working hours – 15 minutes before the commencement of working hours : Goiporia Committee Recommendations.50/-.and b.10. • Amounts which have been lying unclaimed for more than six months will be transferred to Central Office every half year by March and September. the following cases where the fraudulent intention is not suspected/proved at the time of detection will be treated as fraud and reported accordingly.to be reported as fraud if the intention to cheat/defraud is suspected/proved. • It helps the Branch to detect the fraudulent transactions/wrong posting of vouchers so that necessary remedial measures can be immediately taken to avert the loss and to avoid customers’ complaints/ grievances. Cases of cash shortage more than Rs. • All reports of exceptional transactions have to be checked and authenticated by Branch Manager. 5. • The cashier is solely responsible for quality of notes of denominations above Rs.000/. • Cases of ‘negligence and cash shortages’ upto Rs.5.000/.1/= to Rs. Checking of supplementary/reports • Checking of supplementary is a must even in CBS environment.10. _____________________________________ _____________________________________ _____________________________________ . • The Officer/SA or any authorised official who recounted notes packet are jointly responsible for quantity of notes in such packets 3. Cases of cash shortage more than Rs. • However. a.000/.50/=. Rotation of duties in respect of both workmen and officer employees: Ghosh Committee Recommendations.Career Guide for IOBians 381 _____________________________________ _____________________________________ _____________________________________ • Such instances of excess cash should be reported to Regional Office on the same day.if detected by management/auditor/inspector and not reported on the day of occurrence by the persons handling the cash. • The cashier preparing the packets remains responsible for both the quality and quantity of the notes in the packets prepared by him for denominations from Rs. • The Supervising staff checking the supplementary shall ensure that the number of vouchers shown in the supplementary corresponds to the number of vouchers available for verification. manually or online. • Debits vouchers exceeding Rupees One lakh Fifty thousand must be Countersigned and passed finally by the Branch Manager • Special cadre assistants can pass independently. srn/04.and also clearing and transfer instruments. 7.5. Non-wearing of Identity Card while on duty is a misconduct as per Bipartite Settlement. Second signature in vouchers – passing by supervisory staff • In case of cash payments exceeding Rupees Twenty thousand. • Transfer debit vouchers using Cheques for amounts exceeding Rupees Fifty thousand. This is a mandatory provision.04. All Staff members should wear Identity Card while on duty. cash instruments up to Rs.000/- 8.2012 Back to index _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 382 _____________________________________ _____________________________________ _____________________________________ 6. • In clearing Cheques for amounts exceeding Rupees Fifty thousand. Staff Subordinate: • Some of the duties – carrying of cash not exceeding Rs.35000/. Karta : Senior most male member of a Hindu Undivided family (HUF). copyrights. Articles of Association: It is a document of a company which sets out its by-laws or rules and regulation that govern the management of its internal affairs and the conduct of its business. investment in banks. Co-parcener : The male members other than the Karta in a HUF. its objective etc. trade mark right Some fictitious assets like expenses like preliminary expenses not charged to profit & loss account. land. Fixed Assets: Are the long term assets/capital assets employed by the enterprise for production of goods or services. securities 9. A bank or any other person lending to a company for purposes ultrvires the memorandum of association cannot recover. Gross block: Represents the original cost of fixed assets – without adjustment of depreciation. Current Assets: Are the short term assets of an enterprise which can be converted to cash within a period of one year. Eg: Inventories. competent to enter into a contract. vehicles. 2. It defines the scope of company’s activities and its relation with the outside world. Eg: Building. It is a conclusive evidence that all the requirements of the Companies Act have been complied with in respect of registration. Receivables (book debt). 4. In some states female members are also co-parcenors Some terms used in balance sheet: 6. 8. 5. Certificate of Incorporation: It is a certificate issued by Registrar of companies (ROC). 3. Memorandum of association: It is a public document of a company. post offices and other Govt. cash. Eg: Good will.Career Guide for IOBians 383 _____________________________________ _____________________________________ _____________________________________ Some terminologies used in financials 1. 7. furniture & fixture etc. _____________________________________ _____________________________________ _____________________________________ . plant & machinery. patents. Intangible Assets: These items represent monetary values different rights enjoyed by the enterprise. bank deposits. It sets out the constitution of the company. These items are not for sale in the normal course of business. Issued Capital: A part of the company/subscribed by the investors authorised capital issued by the 12. Paid up capital: This is the portion or full of the issued capital paid by the investors. In the context of balance sheet analysis. In other words. the portion of term loan due during the year. Authorised Capital is not forming part of balance sheet. receipts or other surplus of an enterprise kept aside by the management for a general or specific purpose. Net Working Capital (NWC) The long term sources of funds which are available. Authorised Capital: The maximum number of shares a company can issue in terms of the documents of its incorporation. 16. Reserves & Surplus : This consist of the portion of the earnings. Gross Working Capital (GWC) = Total Current Assets (TCA) 17. bank overdraft. 13. In other words gross working capital is nothing but total current assets. Gross Working Capital (GWC) The funds required to finance the total current assets of a unit. Examples: creditors. forfeited shares etc. The need for GWC arises from the operating or cash cycle of the unit. the term capital refers to subscribed and paid up capital.Career Guide for IOBians 384 _____________________________________ _____________________________________ _____________________________________ 10. NWC = TCA – TCL OR Long term source (LTS) – Long Term Use (LTU) _____________________________________ _____________________________________ _____________________________________ . The operating cycle refers to the length of time required to convert noncash current assets into cash. taxation. current liabilities Money owed by the business that is generally due for payment within 12 months of balance sheet date. NWC is the excess of current assets over current liabilities or Excess of long term sources over the long term uses. 15. 14. for financing current assets. 11. Capital Reserve This represent the premium on issue of shares. 2013 Back to index _____________________________________ _____________________________________ _____________________________________ . Total current assets (financed by) = Net working capital + other current liabilities + Bank borrowing 19. 23. permanent staff wages. 24. Debt Service Coverage Ratio (DSCR) : It is ratio indicating the capability of an enterprise with regard to servicing of the debt (interest & principal) DSCR = NPAT + Depreciation + Interest on TL Annual Principal instalment + Interest on TL 22. WCG = TCA – OCL or NWC + BB WCG is financed by NWC (long term sources) and BB (Bank borrowing). Eg. Used to decide as to go for debt or equity in terms of profitability. Raw materials cost. Debt Equity Ratio (DER): This gives the relation between debt and equity of an enterprise.Career Guide for IOBians 385 _____________________________________ _____________________________________ _____________________________________ 18. Eg. Building lease costs. This indicates solvency of the firm. Working Capital Gap (WCG) The portion of current assets which are not financed from other current liabilities is known as working capital gap (WCG). Gearing ratio: A ratio of debt to equity and indicates the relationship between long-term borrowings and shareholders' funds. 21.04. Fixed cost: A cost which does not vary with changing sales or production volumes. Capital gearing ratio: Capital Gearing Ratio = Fixed Charge bearing Long term fund Total Long Term Fund ******************** srn/04. commission payments etc. fuel cost. 20. rates. depreciation of capital items. Variable cost: A cost which varies with sales or operational volumes. cumulative and recurring deposits. unpaid dividends. Other Demand and Time Liabilities (ODTL) ODTL include interest accrued on deposits. margin held against letters of credit. These include fixed deposits. funds are transacted on an overnight basis • Under notice money market. the balances outstanding in the blocked account pertaining to segregated outstanding credit entries for more than 5 years in inter-branch adjustment account. time liabilities portion of savings bank deposits. funds are transacted for a period between 2 days and 14 days. bills payable. Participation Certificates issued to other banks. These include current deposits. and Primary Dealers 2. cash certificates and cumulative/recurring deposits.30 pm on Saturdays or as specified by RBI from time to time. Call/Notice Money market: • Under call money market. net credit balances in branch adjustment account etc. margins held against letters of credit/guarantees. Mail Transfer (MTs). Demand Drafts (DDs). suspense account balances representing amounts due to other banks or public. unclaimed deposits. Time Liabilities Time Liabilities of a bank are those which are payable otherwise than on demand. if not payable on demand.Career Guide for IOBians 386 _____________________________________ _____________________________________ _____________________________________ Some monetary terms 1. deposits held as securities for advances which are not payable on demand and Gold deposits. 4. the margin _____________________________________ _____________________________________ _____________________________________ . • Deals in the call/notice money market can be done upto 5. Co-operative Banks other than Land Development Banks. balances in overdue fixed deposits. cash certificates. demand liabilities portion of savings bank deposits. staff security deposits. • List of Institutions Permitted to Participate in the Call/Notice Money Market both as Lenders and Borrowers Scheduled Commercial Banks (excluding Regional Rural Banks). outstanding Telegraphic Transfers (TTs). Demand Liabilities Demand Liabilities of a bank are liabilities which are payable on demand. credit balances in the Cash Credit account and deposits held as security for advances which are payable on demand.00 pm on weekdays and 2. 3. • Eligible participants are free to decide on interest rates in call/notice money market. Marginal Standing Facility (MSF) scheme Under this facility. gold (valued at current market price). • In order to determine the rupee equivalent liability under FCNR (B) Scheme for the purpose of Cash Reserve Ratio (CRR). RBI Reference rate announced on the Reserve Bank’s web site at around 12:30 pm for the purpose of converting foreign assets/deposits for reporting in Form A Return is used w. The value of such assets of a SCB shall not be less than such percentage not exceeding 40 per cent of its total demand and time liabilities in India as on the last Friday of the second preceding fortnight • SLR is maintained in the form of cash.Career Guide for IOBians 387 _____________________________________ _____________________________________ _____________________________________ money on bills purchased / discounted and gold borrowed by banks from abroad. unencumbered approved securities and net balance with any scheduled bank. 6. 5. _____________________________________ _____________________________________ _____________________________________ . Cash Reserve Ratio (CRR) • CRR is maintained in terms of RBI Act 1934 • RBI is empowered to fix CRR without a floor limit or ceiling • CRR is computed on bank's total of demand and time liabilities. up to two per cent of their respective NDTL outstanding at the end of the second preceding fortnight. the eligible entities may borrow overnight. also should be included in ODTL.2012. penal interest will be recovered for that day at the rate of three per cent per annum above the Bank Rate on the amount by which the amount actually maintained falls short of the prescribed minimum on that day and if the shortfall continues on the next succeeding day/s.f 13. 7. • In cases of default in maintenance of CRR requirement on a daily basis which is presently 70 per cent of the total CRR requirement.07.e. penal interest will be recovered at a rate of five per cent per annum above the Bank Rate. • No Interest Payment on Eligible Cash Balances maintained by SCBs with RBI under CRR • All Scheduled Commercial Banks are required to maintain minimum CRR balances up to 70 per cent of the required reserves on a daily basis on all days of the fortnight during a reporting fortnight so that the average balance will be equal to minimum CRR requirement. • SLR is maintained in terms of provisions contained in Banking Regulation Act 1949 • RBI can prescribe the SLR for Scheduled Commercial Banks (SCB) in specified assets. Statutory Liquidity Ratio (SLR) • The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR). it shall be liable to pay to RBI in respect of that default. 10. both for short term and long term credit. This is the most important tool in the hands of RBI through which it controls the credit flow.Career Guide for IOBians 388 _____________________________________ _____________________________________ _____________________________________ • 8. while banks with scores greater than three are considered to be less-than-satisfactory establishments. 9. The system helps the supervisory authority identify banks that are in need of attention. The six factors examined are as follows: C . If a banking company fails to maintain the required amount of SLR. banking companies and other financial institutions.Asset quality M . _____________________________________ _____________________________________ _____________________________________ . the penal interest may be increased to a rate of 5 per cent per annum above the Bank Rate for the concerned days of default on the shortfall CAMELS rating system In the on-site examination process. If a bank has an average score less than two it is considered to be a highquality institution. Bank Rate The Standard rate at which RBI is prepared to buy or rediscount bills of exchange or other commercial paper eligible for purchase under the RBI Act.Capital adequacy A . The Bank rate of the RBI is a pace settler to other market rates of interest.Management quality E . the Banks are rated by the regulator on CAMELS model once in a year.Liquidity S – System & Procedure compliance Bank supervisory authorities assign each bank a score on a scale of one (best) to five (worst) for each factor.Earnings L . Repo rate: Repo is a collateralized lending of RBI to banks. the penal interest for that day at the rate of 3 per cent per annum above the Bank Rate on the shortfall and if the default continues on the next succeeding working day. The rate at which RBI advance money to banks. Career Guide for IOBians 389 _____________________________________ _____________________________________ _____________________________________ The banks which borrow money from Reserve Bank to meet short term needs have to sell securities. ******************************** srn/30. Reverse Repo rate: Reverse Repo rate is the rate at which the RBI borrows money from commercial banks. usually bonds to Reserve Bank with an agreement to repurchase the same at a predetermined rate and date. Reserve bank charges some interest rate on the cash borrowed by banks.2012 Back to index _____________________________________ _____________________________________ _____________________________________ .06. An increase in reverse repo rate can prompt banks to park more funds with the RBI to earn higher returns on idle cash. It is also a tool which can be used by the RBI to drain excess money out of the banking system. This interest rate is called ‘repo rate’. 11. 2.Career Guide for IOBians 390 _____________________________________ _____________________________________ _____________________________________ Miscellaneous Points 1. by their memorandum dated: 14.as household income per annum _____________________________________ _____________________________________ _____________________________________ . • Additional Interest subvention of 3% as an incentive to those farmers who repay their short term crop loans as per schedule. Lok Adalat : Eligible Accounts • Pre-litigative cases / accounts with outstanding upto Rs.000/. • This has an additional four digits that will be hidden from the common man. Sikhs. Ministry of Welfare. • the cases referred to Lok Adalat conducted by the DRT – No ceiling 3. These four digits. will change as and when the resident changes his pin number or residence • As far as people are concerned. Christians. there would only be a 12-digit number that would be relevant for their identification and use. • In addition to the above interest subvention on post harvest loans up to 6 months against warehouse receipt was also available Minority communities:The following communities have been notified as minority communities by the Government of India. Advances • INTEREST SUBVENTION SCHEME for Short Term Crop Loans had been extended for the 2012-13. Muslims. 3 lakhs per farmer.a for short term production credit/crop loans upto Rs. For EWS Rs.11. ten fingerprints and iris – of each individual. • The UID number is stored in a centralised database and linked to the basic demographics and biometric information – photograph.Zoroastrians & Buddhists. 4. which the authority terms a ‘virtual number’. Acceptable use policy Acceptable use policy deals with the use of information and information system assets for purposes and in the manner acceptable to the bank. 5. Economically weaker sections & Low Income Group Ministry of Housing and Urban Poverty Alleviation (MoHUPA) fixed income limits/ceiling with respect to EWS and LIG as under. Interest subvention for Agri.20 lacs • Suit filed cases/accounts where the plaint amount does not exceed Rs.1. 6. Aadhaar: • It is a 12-digit unique identification (UID) number which the Unique Identification Authority of India (UIDAI) is issuing for all Indian residents. 00. • Interest subvention at 2% p.20 lacs.2012. 00 lakh or more per Bill of entry. 000/.Urban/Metro centres 50% &. Rs.as household income per annum 7. Rural and semi urban centres 75% b.10.1.. 00.50 lakh per currency chest. Cheques bearing date in Hindi as per the National Calendar (Saka Samvat) should. w. Detection and Impounding of Counterfeit Bank Notes • The counterfeit notes can be impounded by all branches of public sector banks.Career Guide for IOBians 391 _____________________________________ _____________________________________ _____________________________________ For LIG Rs. Saka Samvat as well as Gregorian calendar. Acts of Parliament.to 2. • Each banknote impounded by the branch should be affixed with a stamp of impounding and an acknowledgement receipt should be issued to the tenderer. Scheme of incentives and penalties for bank branches based on customer service : Incentives • Opening of and maintaining currency chests at centres having less than 1 lakh population in under-banked States: a. Rs.2012.e. • In no case. the counterfeit note should be returned to the tenderer or destroyed by the bank branches/treasuries. b.e.50 denomination. National calendar: Government of India has accepted Saka Samvat as National Calendar. be accepted by banks for payment.20 and Rs. Revenue cost : 50% of revenue expenditure for the first 3 years • Exchange of soiled notes / adjudication of mutilated banknotes a. Adjudication of mutilated notes – Rs. bear both the dates i. 00. notifications. Capital cost . b. Capital cost: 50% of capital expenditure subject to ceiling of Rs. _____________________________________ _____________________________________ _____________________________________ . 8.25 per bag 10.25 per bag • Establishment of vending machines : a. etc.2.5. instrument written in Hindi having date as per Saka Samvat calendar is a valid instrument.001/.00 per piece • Distribution of coins counter : Rs. Exchange of soiled notes -One Rupee per packet in Rs.f 17. Payment of customs duty: Central Board of Excise & Customs have made e_payment mandatory for all the importers registered under Accredited Clients Programme and importers payment Customs Duty of Rs. Operational cost @ Rs. All Government statutory orders. 1.09. 9. It should be done in the presence of the tenderer. therefore. • The proposed new software for Risk Based Internal Audit is called ‘eTHIC’. • All notes in the denomination of Rs 100 and above should be processed through Note Sorting machines.2013). • In compliance with Sec 39 of Cr. District-wise Nodal Officers designated for reporting detection of counterfeit notes are advised to furnish to AML CELL. the impounded counterfeit notes should be submitted to the Police along with the consolidated report/FIR.01. before issuing them over the counter or through ATMS.( Transient Series (File: 7-D) Circular No. Inspection Dept. Central Office Inspection • The system of present auditing is Risk Based Internal Audit (RBIA) (Inspection/ Misc/237/2012-13 dt. to enable them to escalate the same to FIU-IND. • Audit Periodicity: The overall risk category referred above in ARM will determine the audit intervals of the branch concerned: OVERALL RISK CATEGORY AUDIT INTERVALS IN MONTHS Low 15 Medium 12 EXTENSION OF TIME.2012) 11.C. • The audit plan for a branch will be fixed by mapping the Inherent Business Risk and Control Risk in an Audit Risk Matrix (ARM). Central Office the name of branch.Career Guide for IOBians 392 _____________________________________ _____________________________________ _____________________________________ • Branches shall report the detection of counterfeit notes to the Police on a monthly basis in a consolidated manner in respect of detection upto 4 pieces in a single transaction. • Dispensation of counterfeit notes through ATMS would be construed as an attempt to circulate counterfeit notes by the banks concerned. Maximum by 3 months Maximum by 2 months _____________________________________ _____________________________________ _____________________________________ . 3 of 2012-13 Date: 12.P. • All bank branches having average daily cash receipts between Rs 50 lakhs and above shall use Note Sorting machines. • If detection is 5 pieces and above. 19. • Hence. conforming to ‘Note Authentication and Fitness Sorting parameters’ prescribed by RBI. • Counterfeit notes identified and impounded by the Bank have to be reported to FIU-IND as per regulations of PMLA-2002.06. details of counterfeit notes detected and a copy of the FIR within 7 days from the date of detection. IF NECESSARY PERMISSIBLE BY GM INSPECTION. separate FIR should be filed then and there. METRO BRANCHES: within 45 days from the date of closure of audit.10. Implementation of formation of Preventive Vigilance Committee: • Criteria for the Formation of Preventive Vigilance Committees: All Branches having the staff strength of 10 excluding watchman/Armed Guard staff and above have to constitute the Preventive Vigilance Committee at Branch Level. Branches where fraud has been detected shall also constitute Preventive Vigilance Committee irrespective of the staff strength.2010 In the second phases : The Preventive Vigilance Committee has to be formed at all our large Branches.Career Guide for IOBians 393 _____________________________________ _____________________________________ _____________________________________ High/Very High/ Newly opened/ Upgraded/tak 09 Maximum by 1 month 09 … • Branches will be rated as below: • Grading Very Good Good Satisfactory Moderate Poor Critical Time schedule for submission Risk Low Low Medium Medium High High of reply by. • Vigilance Committee is to be formed in all branches in a phased manner as follows: In the first phase : The Preventive Vigilance Committee have to be formed in all Regional Offices and at Branches classified as “Very large” and above.04. This comes into effect from 01.2010 _____________________________________ _____________________________________ _____________________________________ . This came into effect from 01. Rural and Semi Urban Branches: within 30 days from the closure of audit. Branches which are identified as “High Risk” & ‘Medium Risk” based on the Fraud Sensitivity Analysis submitted by the Central Office Inspectors during the inspection of Branches irrespective of the staff strength. URBAN. All the Regional Offices. 12. Career Guide for IOBians 394 _____________________________________ _____________________________________ _____________________________________ In the third phase: The preventive Vigilance Committee has to be formed in other branches (as per the criteria given above). _____________________________________ _____________________________________ _____________________________________ . This comes into effect from 01.04. Constitution of committee : • Branches having staff strength 15 and above Branch Manager (member Convener of the Committee) Two Officers (rotates at yearly interval) Two Award staff members (rotates at yearly interval) Branches having staff strength 10 and above but less than 15 Branch Manager One Officer (Rotates at yearly interval) One Award staff member (rotates at yearly interval) Other branches identified as High & Medium Risk/ where fraud detected irrespective of the staff strength Branch Manager Two staff members (officer/Award Staff rotated at yearly interval) At Regional Office Regional Head AGM/CM AGM/CM of Local Branch (to be called by rotation at yearly interval) Officer at Regional Office looking after Vigilance matters (the convener) Periodicity of Preventive Vigilance Committee Meeting • The Preventive Vigilance Committee shall meet once in a month in the Branches identified as “High Risk” and once in quarter in Branches identified as “Medium Risk” The Preventive Vigilance Committee at other Branches and Regional Offices should hold meetings on a quarterly basis • Fraud – reporting The cases of ‘negligence and cash shortages’ and ‘irregularities in foreign exchange transactions’ are to be reported as fraud irrespective of the amount if the intention is to cheat / defraud is suspected /proved.2011. • All Branches having the staff strength of 10 excluding watchman/Armed Guard staff and above have to constitute the Preventive Vigilance Committee at Branch Level. Rs. Obtention of certificates for pensioners The following certificates are to be obtained from the Central/Civil/Defence/Telecom/Railway Pensioners in the month of November every year by the pension paying branches. considering each branch as a Business Unit • A Transfer Price is an internal rate of interest used to calculate transfer income or cost due to an internal flow of funds in a financial institution. Rs. viz. • The branches are responsible only for the credit risk. • Transfer Pricing Mechanism (TPM) is market related (w. a.65/.10. Family pensioner. 13. the following cases where fraudulent intention is not even suspected /proved at the time of detection still it shall be treated as fraud.Rates • Transfer Pricing Mechanism (TPM) is an effective tool to analyse the profitability of Business Units (BU). Oct 2012).5. Cash shortage of more than Rs.per transaction 14. • Transfer Price interest receivable by branches (BID RATE) is different for CASA deposits and Term deposits.12. • The framework is designed based on the concept called Matched Funds Transfer Pricing Mechanism (MFTP).Re-marriage/marriage certificate 15. 5. Transactions Receipts …. 100/. • Pricing is risk based.00 per transaction Payments other than pension …. interest rate risk and liquidity risk etc are for the fund centre (corporate office) through this TPM. Life certificate b.50 paise per Rs. TRANSFER PRICING MECHANISM (TPM) . • All elements of market risks. Non-employment certificate c.5. _____________________________________ _____________________________________ _____________________________________ .Career Guide for IOBians 395 _____________________________________ _____________________________________ _____________________________________ However. The agency commission payable to agency banks – Govt.f.50/.e.per transaction E receipts ……… Rs.000 will not be treated as a fraud if the intention is not suspected/ proved.000 if detected by the Management/ Auditor /Inspecting Officer and not reported on the day of occurrence by the persons handling cash. • Cash Shortage cases upto Rs.turnover Pension payments ….000 and Cash shortage more than Rs. Subsequent changes in Transfer price shall not affect the transfer price for existing deposits.25% NIL 0. l Crore & above Retail Deposits = Single Rupee Term Deposits up to less than Rs.75% at present For Core portion of CASA = TPM applicable for 5 year deposit i.Hence market related.00% at present.50% 3.20% TD up to < 1 year TD 1 year up to 3 years TD > 3 years Overdue Deposits FCNR Deposits Overdue FCNR Deposits Spread CARD rate for the respective period (Yield Curve) Card Rate for 15 days Cord Rote NIL For Retail deposits=0. Retail Deposit rate of the bank for 5 year period (presently 9%) + Retail Spread (1. • For term deposits: Tenure of deposit Benchmark fixed For Retail deposits =0.l crore The Transfer Price for Term Deposit shall be fixed at the time of origination of the deposit liability.00% For Bulk Deposits = 0. This transfer price shall remain fixed till maturity of the deposit.25% For Retail deposits =1.Career Guide for IOBians 396 _____________________________________ _____________________________________ _____________________________________ • For CASA deposits In CASA deposits. The minimum balance of Savings Account & Current Account of the Branch for the period of computation shall be treated as Core and balance portion as Volatile.25%) + Retail Spread (0.50% For Bulk Deposits =0. interest is calculated separate for volatile portion and Core portion.75% For Bulk Deposits= 0.e. The transfer price for term deposits (TO) shall be account specific _____________________________________ _____________________________________ _____________________________________ .50%) =Effective rate becomes 7.00% Bulk Deposits= Single Rupee Term Deposit of Rs. CASA Deposits Current Account & Savings Account CO Interest to be received by Branches For Volatile portion of CASA = Retail Deposit rate of the bank for 91 day (presently 7.00%) = Effective rate becomes 10. The TP rates for CASA shall vary from time to time based on change in retail term deposit rates in 91 days and 5 years period . 1 Crore and above having Internal Rating equivalent to IOB 4 and IOB 5 Exposures of Rs. 2 Crore and above having Internal Rating equivalent to IOB 4 and IOB 5 Exposures of Rs.50% 1.00% 1. 2 Cr and above having Internal Rating equivalent to lOB 1.50%) = 7. 2 Crore and above having Internal Rating equivalent to lOB 6 and below and unrated Others For all retail /Schematic Loans like Housing Loan.25% 1.1 Crore irrespective of internal rating Exposure of Rs.50% 2.25 % 9.25% 1. 2 Crore and above having Internal Rating equivalent to lOB 6 and below and unrated Non-MSE borrowers Exposures below Rs.lOB 2 and lOB 3 / external rating AAA/AA/A (Any one) Exposures of Rs.25% The Transfer Price rates are linked to the internal rating / external rating of borrowers in case of limits of Rs.00% 1. This TP rate shall decided at the time of origination of loan and continue till maturity.25% 2.50% 9.25% at present) + Retail Spread (0.75% 9.00% 9.50% 9.1 Crore and above {(s.75% 1.75% 9. Vehicle Loan Others not classified elsewhere Above 91 day Retail Bid Rate = 91 day domestic deposit rate (7.75% at present spread Effective rate 1.00% 9.50% 9.1 Cr and above having Internal Rating equivalent to lOB 1.25% 9. 2 Crore and above in case of MSE) The Transfer price for loan I advances linked to floating rate are benchmarked to 91 days retail deposit bid rate The transfer price for floating option loans would correspondingly vary with revision in Base Rate The Transfer Price rates for loans / advances under fixed rate option are linked to corresponding period retail deposit Bid rate with spread.lOB 2 and lOB 3 / external rating AAA/AA/A (Any one) Exposures of Rs.25% 1. Back to index _____________________________________ _____________________________________ _____________________________________ .50% 9.Career Guide for IOBians 397 _____________________________________ _____________________________________ _____________________________________ • Transfer Price interest payable by branches (OFFER RATE) Bench marked Loans and advances linked to Base Rate/BPLR MSE Borrowers Exposures below Rs.2 Crore irrespective of internal rating Advances Exposure of Rs. 75% 0.Career Guide for IOBians 398 _____________________________________ _____________________________________ _____________________________________ The staff loans and loans/advances against deposits ore kept spread neutral.00% Loans/cash credit against deposit 16.50% 9.25% >3 years 0.50% - 5.25% Upto < 1 year 0. • The periodicity of computing CO interest is monthly covering period 16th of previous month – 15th of the current month.00% 1yr to 3 years 0. • Branches headed by Managers in Scale I to IV will forward their request to their respective Regional Office.25% 8.25% 9.00% Funded Interest Term Loan Applied rate - Applied rate Applicable deposit rate - Same as deposit TPM Staff Loans Applicable rate - Applicable rate NPA balance Flat rate - 5.25% 10.10 lacs and above but less than Rs.50% 10. Issuance of high value demand drafts • Branches headed by AGM and above are permitted to issue High Value drafts and there is no change in the existing procedure.for Rs.00% 0.00% Upto < 1 year Corresponding retail bid rate 1yr to 3 years >3 years Non MSE Borrowers Compensation categories Agriculture & allied advance Export/Gold loans(FC)/Foreign currency loans Flat rate Applicable rate 100 bps less than the corresponding rate Restructured advances 91 day retail bid rate 1. _____________________________________ _____________________________________ _____________________________________ .10 crores (the maximum permissible in our bank).25% 10. Benchmark fixed Advances spread Effective rate as on date Loans/Advances under fixed rate option MSE borrowers 0.50% 10. bank has introduced the “SMS >< REDRESS” facility. Corporate social Responsibility (CSR) • "CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stake holders on a voluntary basis".75 _____________________________________ _____________________________________ _____________________________________ . • The customer has to type ”REDRESS Space IOB Branch Code” in his mobile. 18.00 5.. branch should create lot and post the details in the ‘High Value data entry menu’ in CBS to enable Regional Office to authorise the transaction and enable the branch to post and pass. SMS >< REDRESS • In order to offer the customers with much convenient and faster way to access the bank.00 1. 20. • The CBO shall handle all inward clearing cheques related to the branches in their centre and as well as other CBS branches ie. 19. 17. 22.00 5. cheques that are received under speed clearing system. • Electronic mode of complaint handling system is called “IOB Grievance Redressal and Monitoring System” (IOB GRAMS).00 0. Personal Accident Insurance Scheme (PAI) • IOB provides Personal Accident Insurance Schemes to the following deposit customers: Scheme SB-Silver SB-Gold CD Classic CD Super RD Gold SB Student Account SB Corp SB Platinum Insurance cover (Rs.in lacs) 1. City Back Offices (CBO) • City Back Offices are established in our bank as part of the CCO / Main branch in some centres. Clayton’s rule: • Payments are presumed to be appropriated to debts in the order in which the debts are incurred. SMS has to be sent to +919551099007.00 1.00 1.00 1.Career Guide for IOBians 399 _____________________________________ _____________________________________ _____________________________________ • After forwarding the request to Regional Office. IOB GRAMS. 21. 2012) 25. Issue of Demand Draft Reserve Bank of India has advised banks to ensure that demand drafts of Rs.and above are issued invariably with account payee crossing.20. • In respect of SB-Gold and CD Super maximum coverage per account is Rs.Career Guide for IOBians 400 _____________________________________ _____________________________________ _____________________________________ • The Insurance is provided free-of cost to the customers • The maximum coverage for SB-Silver. • It will facilitate the incorporation of the said reference number in the ECS debit data to correlate the transactions. One Time Settlement Policy For Sick Non-Viable MSME Accounts • Our Bank’s policy covers all NPA accounts including those assets where action is initiated under SARFAESI Act. Reserve Bank of India has directed that with effect from 1st April .00 lacs irrespective of whether the customer is having more number of accounts in the same branch or at different branches. Registration Of Mandate For ECS Debit • As per Reserve Bank of India guidelines Debit ECS mandate has to be registered with the Account holder’s Bank and a unique reference number generated from their system has to be advised to the User organization. DRTs.05. Lok Adalats. if they are presented beyond the period of three months from the date of such instrument. 27.00 lacs • The maximum coverage under PAI scheme is Rs. Decreed accounts subject to obtaining consent decree from Court DRT/Lok Adalat. CD Classic and RD gold is Rs.5. 2012. • Accounts falling under willful default Fraud /Malfeasance shall be considered on a case to case basis with permission of CO • Consortium if any with 75 % lenders consent • Security value is 75 % of the FMV of the property OR Net Present Value as per our existing policy outlined herein whichever is lower. 1.5. 24. 23. • This reference number has to be quoted in the data given by the user organization for cross verification at the time of processing the data. _____________________________________ _____________________________________ _____________________________________ . Details of MICR code and IFSC code of the branch must be made available in the passbook/ statement of account of all account holders (MSD/MISC/139/2012-13 dt. banks should not make payment of cheques / drafts /pay orders/ Banker’s cheque bearing that date or any subsequent date.000/.00 lac only per account. 26.24. PAYMENT OF CHEQUES /DRAFTS/PAY ORDERS/ BANKER’S CHEQUES In exercise of the powers conferred by Section 35A of the Banking Regulation Act 1949. The deposit insurance scheme is compulsory and no bank can withdraw from it. Small Savings Scheme.1. Each depositor in a bank is insured upto a maximum of Rs. 30. Charge creation • Hypothecation is defined in SARFAESI Act 2002 • Pledge is defined in Contract Act 1872 • Mortgage is defined in Transfer of property act 1882 29. • As per the rules of small savings schemes. Hypothecation The term ‘hypothecation’ is defined in SARFAESI Act. 45/ per chalan (transaction) 33. the assets over which the charge has been created will be distributed in proportion to the creditors' respective holdings. Deposit Insurance and Credit guarantee Corporation (DICGC) All commercial banks including branches of foreign banks functioning in India. till maturity. the rate of interest on an investment made in all schemes except PPF. 1968 on a particular date. remains unchanged for the entire duration of the investment. • Our Bank has been enabled to receive Customs Duty on behalf of all customs locations in India on “Anytime Anywhere” basis. local area banks and regional rural banks are insured by the DICGC.00. Paripassu charge: • The phrase is used to indicate simultaneous and equal charge or to describe similar ranking of securities • The use of "Pari Passu" when creating a charge means that when company/firm goes into dissolution.000 for both principal and interest amount held by him in the same right and _____________________________________ _____________________________________ _____________________________________ . • Income @ Rs.Senior Citizen Savings Scheme – 2004 • The interest rates on SCSS 2004 will be aligned with G-Sec rates with a spread of 100 bps (1%). • The interest rates for every financial year will be notified before April 01st of that year. irrespective of the revisions in subsequent years.Career Guide for IOBians 401 _____________________________________ _____________________________________ _____________________________________ 28. 31. 32. • Every branch of our Bank can help their customer to make payments through their own accounts. E-collection of Customs Duty – EASeR-C • Our Bank is one of the 17 accredited agency banks for handling online payment of Customs duty. fixed. 34. In the case of amalgamation / merger of banks. no provision need be made towards the guaranteed portion 35. the liquidator prepares depositor wise claim list and sends it to the DICGC for scrutiny and payment.5%).5% + 8%=17. The DICGC pays the money to the liquidator who is liable to pay to the depositors. • Banks may assign zero risk weight for the guaranteed portion. Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH) • The Ministry of Housing & Urban Poverty Alleviation. will now be treated as two separate accounts.100 (ie. and each category of the joint account will be eligible for a claim upto Rs. The deposits kept in different branches of a bank are aggregated for the purpose of insurance cover and a maximum amount upto Rupees one lakh is paid. • In case the advance covered by CRGFTLIH guarantee becomes nonperforming. The deposits held in two separate joint accounts in combination of say "A" and "B" and "B" and "A". current. etc. Deposit insurance premium is borne entirely by the insured bank In the event of a bank's liquidation of a bank. one lakh. Held-to-Maturity • Accounting standards necessitate that companies/banks classify any investments in debt or equity securities when they are purchased. The balance outstanding in excess of the guaranteed portion would attract a risk-weight as appropriate to the counter-party. The investments can be classified as.Career Guide for IOBians 402 _____________________________________ _____________________________________ _____________________________________ same capacity as on the date of liquidation/cancellation of bank's license or the date on which the scheme of amalgamation/merger/reconstruction comes into force The DICGC insures all deposits such as savings.a) at half yearly intervals. banks are liable to pay to DICGC interest on such amount at such rate not exceeding 8% over bank rate ( At present it is 9. recurring. of individuals. _____________________________________ _____________________________________ _____________________________________ . the amount due to each depositor is paid to the transferee bank All the registered banks are liable to pay corporation insurance premium at the rate of 10 paise per annum for every deposit of Rs. Government of India has set up the CRGFTLIH • The Trust guarantees housing loans extended by eligible lending Institution(s) to an new eligible borrower in the low income housing sector (both EWS/LIG categories) in urban areas for housing loan not exceeding 5 lakh by way of housing loans on or after entering into an agreement with the Trust. Any default in payment of premium.10% p. 0. 18.25% Marginal Standing facility rate: 8.05. Monetary Policy Rates (as on 18.2013 Total Business Rs.05.00% 39.S. 37.2013) CRR : 4.2013 Kindly mail your feedback to unnisarjun@gmail. • This type of security is reported at amortized cost on a company's financial statements and is usually in the form of a debt security with a specific maturity date. Structured Financial Messaging System(SFMS) : Public Sector Banks issued LC or LG through SFMS. • A held to maturity security is a debt or equity security that is purchased with the intention of holding the investment to maturity.co.Raghavan ************************ srn/18.05. IOB – as at 31.Career Guide for IOBians 403 _____________________________________ _____________________________________ _____________________________________ Held to maturity.66. Total Capital Fund Rs.com
[email protected] Cr Percentage of shares held by GOI 73. Held for trading or Available for sale.501 Cr.in Back to index _____________________________________ _____________________________________ _____________________________________ .3.V.80 Percentage of shares held by Public 26.25% 38.25% Reverse Repo Rate : 6.2013) Bank rate : 8.20 RBI nominee Director Sri.03.00% SLR : 23. 36. Reserve Ratios (as on18.25% Repo Rate : 7.366. Documents Similar To Career EnglishSkip carouselcarousel previouscarousel nextCdd Aml Handbook 2010Brochure_KYCAML_and_CFT_Jan_2016.docxKyc FrameworkAMLCAML & KYCnpakycIllicit FlowsamlkycbasicsSteps in IOB for PromotionsMONEY LAUNDERING Documentation_editedDigital Customer Due Diligence2021355_635225149650095000.pptRBI Guidelines on KYCAnti Money Laundering0bc34f1d-102e-4c59-b8f7-4e1a793412b6-16070215133013_bibilographyMoneyAML TERMS229kyc Aml Cft Pmla1AMLA (1)MONEY LAUNDARY .pptxFoundation Course in Aml - IndiakycAMLPingBills | Senate Bill 45AMLHany Abou El Fotouh_press Quote (27)AML TRAINING PPT.pptUpdated M1 to M5 PRMore From Ajinkya AgrawalSkip carouselcarousel previouscarousel nextIndia _ Economic IndicatorsIndia Foreign Exchange Reserves _ Actual Data _ Forecasts _ CalendarResume SampleIndia Central Bank Balance Sheet _ Actual Data _ Forecasts _ CalendarGARCH Investexcel.netGold - Monthly Price (Indian Rupee Per Troy Ounce) - Commodity Prices - Price Charts, Data, And News - IndexMundicv-sample.docIndian Central Bank s Forex Gold Reserves Fell 15% - Shanghai Metals MarketInd Country en Excel v2GARCH Example on Simulated Data v2Iif ProjectsGARCH - Tutorial and Excel SpreadsheetEMRC_2017Gold Analysis5119(1)India Foreign Exchange Reserves _ Actual Data _ Forecasts _ CalendarIndian Central Bank s Forex Gold Reserves Fell 15% - Shanghai Metals Market2nd Mrp Find Flucution Gold Silver (1)India _ Economic Indicators13572141 Aepforeign Exchange Reserves Global Currency Imbalances 100211195041 Phpapp01Total reserves (includes gold, current US$) _ Data _ Table8b1276c3-e360-47a4-8d30-3ba8191aa68cHow the Gold Standard Works, How the Gold Standard FailedWhat is Electronic Banking MiniGold Analysis(282685198) 1_FCP0104111 MIS Unit 1 Roles of ITMajor Final2fed99af-a7f6-419c-b773-97bc2ece9b38Best Books About ChequeFaith's Checkbook: Daily Devotions to Treasureby Charles H. SpurgeonBankingby Anthony AnamgbaGnucash 2.4 Small Business Accounting: Beginner's Guideby Ashok Ramachandran"Life is Good - Once You Know How." (Survival Tips for Young Adults)by Terry W Parsons and Jennifer ParsonsBANK-cor-RUPTby Michael HillierCash Advance Loans Online: Pay Attention to Financial Repercussionsby Frank CoyFooter MenuBack To TopAboutAbout ScribdPressOur blogJoin our team!Contact UsJoin todayInvite FriendsGiftsLegalTermsPrivacyCopyrightSupportHelp / FAQAccessibilityPurchase helpAdChoicesPublishersSocial MediaCopyright © 2018 Scribd Inc. .Browse Books.Site Directory.Site Language: English中文EspañolالعربيةPortuguês日本語DeutschFrançaisTurkceРусский языкTiếng việtJęzyk polskiBahasa indonesiaSign up to vote on this titleUsefulNot usefulMaster Your Semester with Scribd & The New York TimesSpecial offer for students: Only $4.99/month.Master Your Semester with a Special Offer from Scribd & The New York TimesRead Free for 30 DaysCancel anytime.Read Free for 30 DaysYou're Reading a Free PreviewDownloadClose DialogAre you sure?This action might not be possible to undo. Are you sure you want to continue?CANCELOK