Rural Banking

TEACH YOURSELF - CAIIB
SMALL & QUICK BOOK FOR CAIIB-III

(Only 127 pages book and 8-10 hours revision to get more than 60% marks WITH
RECALLED & EXPECTED QUESTIONS)
RURAL BANKING
(CAIIB PAPER -3: ELECTIVE)
(For 17.12.2017 Examination)
Sanjay Kumar Trivedy

sktrivedyiibf@gmail.com / 9987519725
Preface
Dear Friends,
The Globalization has opened up World Economy & the distances between Buyer & Seller are reduced
considerably. The other effect which is witnessed in this scenario is banking. Hitherto, to maintain Bank
account /to operate account, the customer had to visit Branch frequently. This is now reduced as
Customer can open account Online, get Statement of account online & request for Cheque book on line.
He has to visit Bank branch only for submitting KYC Documents & other documents.
Indian Banking is in its most exciting phases. The impact of liberalization has been wide spread and has
thrown up both challenges and opportunities for bankers. Ever increasing competition is a part of
professional life and the banker who is ahead of his peers in terms of knowledge skill, technology and
quick response will be the winner.
Banking/Financial sector in our country is witnessing a sea change and banker’s business has become
more complex & difficult in this driven era of knowledge & technology. There are mass retirements
happening due to superannuation & many new recruits are joining the Bank. More than 60% staff
strength is newly recruited in last five to six years.
An official working in the Banking sector has to keep pace with Updated knowledge, skills & attitude, as
the same is required everywhere. Employees play vital role in Banking/service organizations and they
need to be transformed into Knowledge Assets to remain competitive in the dynamic environment and it
is more so with Banks as they are very service sensitive. Thus it is imperative for the bank staff to serve
the clientele with updated information of bank's products & services to accomplish corporate objectives.
This book titled “TEACH YOUR SELF – CAIIB : Small & Quick Book” is first version has many unique
features to its credit & consists of all topics/latest syllabus required for CAIIB examination with clear
concept & simple language with latest changes during 2017-18 (as per IIBF/ JAIIB exams. requirement )
also included. This Book is divided into three modules namely Theory, MCQs & Case studies based on
latest IIBF syllabus for Elective papers of CAIIB for exam. Dec. 2017. It has been seen that last so many
years in CAIIB/IIBF Examination, nearly 75-85% questions are very general in nature and in this regard
this book is of immense use. Generally 60-65% theory based (knowledge Testing / conceptual grasp) and
35-40% case study / problem solving/Analytical /Logical exposition. This book is only 127 page books
for last 6-8 hours revision to get more than 60% marks and also very helpful in solving all types of
questions. The book is prepared based on last more than 15 years of experience and pattern of questions
asked in the examination. It is quickest book both for revision and fresh preparations (Only twenty four
hour books) to get good scores.
All possible care is taken to provide error free information, however, readers may note that the
information given herein is merely for guidance/reference and they need to refer the relevant circulars
& Manuals for full details.
I express my sincere thanks to friends/colleagues for their support in encouraging the idea and
contributing the required resources for release of this TEACH YOUR SELF – CAIIB: Small & Quick Book.
I solicit your views on the content and quality of the topics for further improvement.
I wish you all the Success and hope the study material will help in achieving the goal.
Date: 16.12.2017 Sanjay Kumar Trivedy

sktrivedyiibf@gmail.com / 9987519725
Compiled by Sanjay Kumar Trivedy, Chief Manager, Canara Bank, Shrigonda,Ahmed Nagar, Maharashtra 1|P a g e
About the Author
Mr. Sanjay Kumar Trivedy (Native: Motihari, Bihar), Presently working as Chief Manager ( Scale-IV) in
Canara Bank, Shrigonda branch in Ahmednagar distt. of Maharashtra state. He Joined Canara Bank as
DRO/PO (AEO) on 10.03.1997 and and worked in various places, starting from Maujgarh branch (1997-
2000), Near Abohar(Punjab), Sirsa Main- Haryana (2000-2004), BMC, Jalandhar (2004-2006) Toiladungari,
Sakchi, Jamshedpur(2006-2009), Jhalak near Chaibasa (2009-2011), J B Nagar, Andheri East , Mumbai
( 2011-2013) and then Faculty as well as College in charge ( Principal ) in Regional Staff Training College,
Mumbai (2013-2016), Govt.Link Cell, Nagpur (01.05.2016 to 15.07.2017), Itwari Branch, Nagpur
( 17.07.2017 to 15.09.2017 ) and then Shrigonda Branch ( Since 16.09.2017…. ).He won more than 200
awards in various fields of Banking by his Bank – Canara Bank, which includes twice gold coin for CASA
mobilization. His best achievement was as an officer/AEO, he converted his Section: Agril Finance into
Hi-tech Agril. Branch at BMC, Jalandhar and while working in Jhalak branch near Chaibasa (Jharkhand),
won twice best rural banker award from NABARD during 2009-10 &2010-11 in SHG credit linkage &
Farmers Club Formation. During this journey started from 1997 to till date he worked in almost all area
of Banking.
Mr. Sanjay Kumar Trivedy is M.Sc. (Agril), CAIIB, PGDCA, MBA, MBA (Finance),Diploma (IIBF) in Rural
Banking, Treasury, Investment and Risk Management, Commodity Derivatives for Bankers, Advanced
Wealth Management, Certificate (IIBF) in Trade Finance, Certificate in Anti-Money Laundering / Know
Your Customer, Certificate Examination in SME Finance for Bankers, Certificate Examination in Customer
Service & Banking Codes and Standards, Certificate Examination in CAIIB – Elective Subjects ( Retail
Banking & Human Resource Management) & Certificate Examination in Microfinance
Mr. Sanjay Kumar Trivedy has teaching experience of more than 16 years, from Sirsa Main Branch (2000-
2004) , he started teaching to his colleagues/staff and in this long journey he has given good results both
in Promotion test as well as JAIIB /CAIIB examination. He has taken IIBF-JAIIB & CAIIB classes at Mumbai.
He has compiled/authored more than 20 books in last three years related banking – JAIIB, CAIIB, Book on
Promotion Test ( all cadres), Interview , Drishti (Current Banking Topics –Interview book for Scale iv &
above), Group Discussion, Certificate course on Customer Service & BCSBI, AML& KYC, MSME Finance for
Bankers, Book on Abroad Posting, Confirmation Test for PO, Banking & Technology and many more books
on day today banking and many more in the offing.
Mr. Sanjay Kumar Trivedy is working in a mission mode to reduce knowledge gap among bankers with
objective to provide educational support free of cost to all in general and bankers in particular with
objective to empower Banker colleagues specially young banker who join the bank in last more than one
decade for their better productivity, Sense of satisfaction, Customer delight with ultimate increase of
quality banking business for their organisations.
He can be only contacted through e-mail: sktiibf@gmail.com & whatsapp no. : 9987519725
The best way to find yourself is to lose yourself in the service of others – Mahatma Gandhi
RURAL BANKING – INDEX
SI. CONTENTS Page No.
No
1. ABOUT CAIIB 04-06
2. SYLLABUS 07-07
3. THEORY PART ( MODULE – A, B, C & D ) 08-70
4. MEMORY BASED QUESTIONS 71-79
5. TEST YOUR SELF : MCQs ON RURAL BANKING 80-120
6. LATEST ON RURAL BANKING 120-133
There are certain breakthrough moments when you began to think & See the field differently
(Please send Memory based questions on sktrivedycan@gmail.com; sktrivedyiibf@gmail.com )
1. ABOUT CAIIB EXAMINATION
OBJECTIVE :
CAIIB aims at providing advanced knowledge necessary for better decision making covering Treasury Management, Risk Management,
Balance Sheet Management, Credit Management, International Banking, Economic Analysis etc.
ELIGIBILITY :
Candidates must have completed JAIIB or PART-1 of the Associate Examination, and their membership subscription should not be
in arrears.
SUBJECTS OF EXAMINATION :
I. Compulsory Paper
1. Advanced Bank Management
2. Bank Financial Management
II. Elective Papers (Candidates to choose any one of their Choice)
1. Corporate Banking 7. Human Resources Management
2. Rural Banking 8. Information Technology
3. International Banking 9. Risk Management
4. Retail Banking 10. Central Banking
5. Co-operative Banking 11. Treasury Management
6. Financial advising
There is no exemption in any of the above subject/s for prior qualification/s.
The Institute has introduced electives to give opportunities for candidates to specialize in the vertical of their choice. Candidates may choose
the elective in the area they are currently working or in the area they would like to work in future. It is suggested that the candidates may
choose the elective in the area they are currently working and later move to other elective as this will enable appropriate skills / build up for
handling different banking verticals.
PASSING CRITERIA :
1. Minimum marks for pass in the subject are 50 out of 100.
2. Candidates securing at least 45 marks in each subject with an aggregate of 50% marks in all subjects of examination in a single attempt will
also be declared as having completed the Examination.
3. Candidates will be allowed to retain credits for the subject they have passed in a attempt till the expiry of the time limit for
passing the examination as mentioned below:
TIME LIMIT FOR PASSING THE EXAMINATION :
1. Candidates will be required to pass the examination within a time limit of 2 years (i.e. 4 consecutive attempts).
2. Candidates not able to pass examination within stipulated time period of two years are required to re-enroll themselves afresh.
Such candidates will not be granted credit/s for subject/s passed, if any, earlier.
3. Time limit of 2 years will start from the date of application for First attempt. Attempts will be counted irrespective of whether a candidate
appears at any examination or otherwise.
EXAMINATION FEES :
Description Fee
First attempt fee Rs. 2,700/ Plus convenience charges and Taxes as applicable
2nd attempt fee Rs. 1,000/ Plus convenience charges and Taxes as applicable
3rd attempt fee Rs. 1,000/ Plus convenience charges and Taxes as applicable
4th attempt fee Rs. 1,000/- Plus convenience charges and Taxes as applicable
Please Note : Candidates are required to Register for every attempt separately As a measure to streamline the traffic for registration,
Institute will charge regular examination fee to candidates who registers for the examination during the regular open period fro
registration. For the extended days of registration, late fee of Rs.200 plus taxes, will be charged in addition to regular examination fee.
This extended days of registration, also gives candidates addition opportunity to register for the examination, having missed the regular
open period of registration. The fee once paid will NOT be refunded or adjusted on any account.
MEDIUM OF EXAMINATION :
Candidates are allowed to attempt the examination either in Hindi or English, and should clearly fill in their choice of medium at the
time of registration of application. In any case change of medium will not be allowed at a later stage.
PATTERN OF EXAMINATION :
(i) Question Paper will contain 100 objective type multiple choice questions for 100 marks including questions based on case studies
/ case lets. The Institute may however vary the number of questions to be asked for a subject. Generally 60-65% theory based (
knowledge Testing / conceptual grasp ) and 35-40% case study / problem solving/Analytical /Logical exposition.
(ii) The examination will be held in Online Mode only
(iii) There will NOT be negative marking for wrong answers.
(iv) Questions for the examination will be asked for :
(i) Knowledge testing (iv) Problem solving
(ii) Conceptual grasp (v) Case analysis
(iii) Analytical / logical exposition
DURATION OF EXAMINATION :
The duration of the examination will be of 2 hours. PERIODICITY AND EXAMINATION CENTRES :
a) Examination will be conducted on pre-announced dates published on IIBF Web Site. Institute conducts examination on half yearly
basis, however periodicity of the examination may be changed depending upon the requirement of banking industry.
b) List of Examination centers will be available on the website. (Institute will conduct examination in those centers where
there are 20 or more candidates.)
“CLASS OF PASS” CRITERIA :
1. The Institute will consider the FIRST PHYSICAL ATTEMPT of the candidate at the examination as first attempt for awarding
class. In other words, the candidate should not have attempted any of the subject/s pertaining to the concerned examination any
time in the past and has to pass all the subject as per the passing criteria and secure prescribed marks for awarding class.
Candidates re-enrolling for the examination after exhausting all permissible attempts as per the time limit rule will not be
considered for awarding class.
2. First Class : 60% or more marks in aggregate and pass in all the subjects in the FIRST PHYSICAL ATTEMPT
3. First Class with Distinction: 70% or more marks in aggregate and 60 or more marks in each subject in the FIRST PHYSICAL
ATTEMPT.
PROCEDURE FOR APPLYING FOR EXAMINATION :
Application for examination should be registered online from the Institute’s website www.iibf.org.in. The schedule of examination and
dates for registration will be published on IIBF website.
STUDY MATERIAL / COURSEWARE :
The Institute has developed a courseware to cover the syllabus. The courseware(book) for the subject/s will be available at outlets of
publisher/s. Please visit IIBF website www.iibf.org.in under the menu “Exam Related” for details of book/s and address of publisher/s
outlets. Candidates are advised to make full use of the courseware. However, as banking and finance fields are dynamic, rules and
regulations witness rapid changes. Therefore, the courseware should not be considered as the only source of information while preparing
for the examinations. Candidates are advised to go through the updates put on the IIBF website from time to time and go through Master
Circulars/ Master Directions issued by RBI and publications of IIBF like IIBF Vision, Bank Quest, etc. All these sources are important from
the examination point of view. Candidates are also to visit the websites of organizations like RBI, SEBI, BIS, IRDAI, FEDAI etc. besides going
through other books & publications covering the subject / exam concerned etc. Questions based on current developments relating to the
subject / exam may also be asked. Cut-off Date of Guidelines / Important Developments for Examinations :
The Institute has a practice of asking questions in each exam about the recent developments / guidelines issued by the regulator(s) in
order to test if the candidates keep themselves abreast of the current developments. However, there could be changes in the
developments / guidelines from the date the question papers are prepared and the dates of the actual examinations.
In order to address these issues effectively, it has been decided that:
(i) In respect of the examinations to be conducted by the Institute for the period February to July of a calendar year, instructions /
guidelines issued by the regulator(s) and important developments in banking and finance up to 31st December will only be considered
for the purpose of inclusion in the question papers".
(ii) In respect of the examinations to be conducted by the Institute for the period August to January of a calendar year, instructions /
guidelines issued by the regulator(s) and important developments in banking and finance up to 30th June will only be considered for
the purpose of inclusion in the question papers.
The table given below further clarifies the situation.
Particulars Cut-off Date of Guidelines / Important
Developments for Examination/s
For the examinations to be conducted by the Institute for the period February 2017 to July 31st December 2016
2017
For the examinations to be conducted by the Institute for the period August 2017 30th June 2017
to January 2018
TYPES OF QUESTIONS
100 Objective Type Multiple Choice Questions - carrying 100 marks – 120 minutes and question will be based on Knowledge Testing,
Conceptual Grasp, Analytical / Logical Exposition, Problem Solving & Case Analysis.
TypeofQuestions–Basicallyfour types of MultipleChoiceQuestions askedinExamof WhichType –A:Knowledge/ConceptbasedStraight
Questions(40-50QUES-0.5MARKS EACH);Type–B:Problems&Solutions (15-20QUES- 1.0MARKS EACH);Type–C: Appliedtheorybased
Questions (15-20QUES-2.0MARKS EACH); Type–D:CaseStudy&Case-letsbasedQuestions(10-15QUES -2.0MARKS EACH)
QUESTIONS MODELS : TYPES OF QUESTIONS

Type – A : MULTIPLE CHOICE – QUESTIONS & ANSWERS
The Best Method for assessing working capital limit used by the bank for seasonal Industries is :
1. Operating Cycle Method, 2. Projected Networking Method, 3. Projected Turn over Method & 4. Cash Budget Method
Type – B : MULTIPLE CHOICE – PROBLEMS & SOLUTIONS
Mr. Ram Kumar is having overdraft account with Canara bank upto Rs.100,000. The present Debit Balance in the account was Rs. 80550.00.
The bank has received attachment order from Income tax deptt. For Rs. 16,200.00. What can the bank do in this situation ?
- Unless the bank is a debtor, there can be no attachment and an unutilized overdraft account does not render the bank a debtor ( but
creditor ) & hence can not attach.
Type – C : MULTIPLE CHOICE – APPLIED THEORY – QUES. & ANS
Financial Institution wish to have the money lent by them repaid in time. Secured advances sanctioned by banks possess what kind of security ?
- Secured Advances have impersonal security i.e. Tangible Security
Type –D : MULTIPLE CHOICE – CASE STUDIES & CASE LETS (PROBLEMS & SOLUTIONS )
Economic development of a country to a large extent depends upon Agril. & Industrial sectors. Development of agril. Depends upon irrigation
facilities while industrial development on availability of power,good transport and fast communication facilities. All these are called
infrastructure. Read the caselet & explain which industries constitute infrastructure ?
a. Energy, Transport & Communication
b. Irrigation, construction of bridges & dams over Rivers & stable govt. at Centre.
c. Availability of Funds for PMEGP , SJSRY & Indira Awas Yojana
CAIIB EXAMINATION –DEC 2017
Examination DATE TIME SUBJECTS

03/12/2017 Sunday ONLINE - Will be given in the admit Letter Advanced Bank Management
10/12/2017 Sunday ONLINE - Will be given in the admit Letter Bank Financial Management
Corporate Banking
Rural Banking
International Banking
Retail Banking
Co-operative Banking
17/12/2017 Sunday ONLINE - Will be given in the admit Letter Financial Advising
Human Resources Management
Information Technology
Risk Management
Central Banking
Treasury Management
2. SYLLABUS: CAIIB ELECTIVE PAPER – III
RURAL BANKING
SYLLABUS:
The details of the prescribed syllabus which is indicative are furnished in the booklet. However, keeping in view the
professional nature of examinations, all matters falling within the realm of the subject concerned will have to be studied
by the candidate as questions can be asked on all relevant matters under the subject. Candidates appearing for the
examination should particularly prepare themselves for answering questions that may be asked on the latest
developments taking place under the various subject/s of the said examination although those topics may not have been
specifically included in the syllabus. The Institute also reserves to itself the right to vary the syllabus / rules / fee structure
from time to time. Any alterations made will be notified from time to time. Further, questions based on current
developments in banking and finance may be asked. Candidates are advised to refer to financial news papers / periodicals
more particularly “IIBF VISION” and “BANK QUEST” published by the Institute
Module - A: Rural India

Demographic features; Population, occupation, literacy, socio-economic development indicators, health, nutrition and
education, - urban migration. Characteristics of Rural Society; Caste and power structure - rural social stratification,
Economic Features; Economic life of rural people, share in National income -Trends in per capita income, rural money
markets, rural indebtedness, rural poverty - main causes and methods of measuring rural poverty. Rural infrastructure;
Transport, Power, Markets and other services. Agriculture Economy; Structure and characteristics of Indian agriculture,
Role of agriculture in economic development, agriculture-industry linkages, Resources and technical changes in
agriculture, constraints to agriculture development, Emerging issues in Indian Agriculture. Rural Development Policy;
Govt. policies and programmes for rural farm and non-farm sectors. Economic reforms and its impact on rural economy.
Rural Issues; Development issues, Management Issues, Marketing issues, Pricing issues,
Module - B : Financing Rural Development Regulation of Rural Financial Services
Function and policies of RBI in Rural Banking, NABARD Main functions, role, refinance support. Lead bank approach,
State level and District level Credit committees. Rural Credit Institutions; Co-operative Credit Societies and Banks, Land
Development Banks, Regional Rural Banks, Commercial Banks. Role of Information and communication technologies in rural
banking-Models, Financial inclusion & inclusive growth for rural development banking, rural insurance micro insurance
scheme, concept of Business Facilitators and Business Correspondents in rural financing. Financing agriculture / allied
activities; Crop Loans Assessment, Sanction, Disbursement, rephasement. Term loans for irrigation, Farm mechanization,
Godowns / cold-storage facilities etc. Financing allied agriculture activities like Horticulture, Fisheries, Social forestry, etc.
Finance against Warehouse / cold storage receipts, Financing Rural Non-Farm Sector (RNFS); Importance of RNFS,
Segments in RNFS, Role of Development and Promotional Institutions in RNFS, SME Finance; Definition of SME.
Importance to Indian economy. Financing of SME and small enterprise Refinance from SIDBI. Project funding techniques and
requirement assessment. Cluster based approach and joint finance with SIDBI. MSMED Act 2006, CGTMSE, Working capital
assessment of SMEs. Risk rating of SME proposals, role of rating agencies and rating methodology. Revival of sick units; revival
package and implementation, Stressed assets under rehabilitation. Debt restructuring mechanism for SMEs.
Module - C : Priority Sector Financing and Govt initiatives

Components of priority sector. RBI guidelines. Government initiatives; Poverty alleviation programmes / Employment
programmes / Production oriented programmes-rationale and philosophy, progress and impact, problems and
deficiencies. Rural housing and Urban housing schemes under priority sector, their refinance, Educational loans
Module - D: Problems and prospects in Rural Banking

Role of rural banking. Problems of Rural branches of Commercial banks - transaction costs and risk costs. Technology
based Financial Inclusion. Emerging trends in rural banking-financing poor as bankable opportunity, Micro Credit, Self Help
Groups / NGOs, linkages with banking, latest guidelines of GOI and RBI.
3. THEORY PART ( MODULE – A, B, C & D )
MODULE – A : RURAL INDIA

Population of India exceeded one billion marks in 2001. The growth rate of population is still high compared to many developing
countries. Longevity and literacy are the most important indicators of human development. In India life 'expectancy at birth was 63.9
years for males and 66.9 years for females and literacy rate was 64.8 per cent in 2001. The human development indicators were still
lower in India than in many developing countries. In 2007, India ranked 134 among 182 countries for which Human Development
Index has been calculated by UNDP; Kerala's Human Development Index is comparable to developed countries. Other states which
fared well were Punjab, Maharashtra, Tamil Nadu and Haryana. In general in all aspects rural areas are worse than urban areas and
poorer sections are worse off than better of sections. In order to escape from unemployment in rural areas, agricultural labourers
migrate to urban areas in search of employment thus there is spill over of rural poverty to urban areas.
Population .Density The number of persons living in one sq. km.
Sex Ratio: The number of females per 1000 males.
Work Force Participation: The ratio of working population to total population.
Literacy Rate (adult): The percentage of persons aged 7 and above, who can both read and write with understanding in any language.
Human Development Index: It is equivalent to Human Deprivation Index subtracted from 1.
Human Deprivation Index: It is average of people's deprivation in life expectancy, literacy and income for a decent standard of living.
Life Expectancy at Birth: It indicates the number of years a new born infant will live if the prevailing pattern of mortal* at the time of
its birth remain the same.
GEOGRAPHICAL AREA
Total Area of the Country 3287263 sq. km
Reporting Area for Land
Utilisation Statistics 307.796 million hectare
7517 km Length of Coast line Exclusive Economic Zone
2.02 million sq. km
0-53 million sq. km Conti nental Shel f Area Percentage of World Area
2-42 per cent (7th Place) Forest & Tree Cover Area
794245 sq. km (24.16% of the total area)
Total Forest Cover Area 701673 sq. km
(Including 4662 km2 area under (21.34% of the total
mangroves) geographical area)
Agricultural Land/Cultivable Land (2013-14) 181.85 million hectare
Cultivated Land (2013-14) 155-58 million hectare
Net Area sown (2013-14) 141.43 million hectare
Per Capita Agricultural Land (2013-14) 0.145 hectare
Gross Irrigated Area 95.77 million hectare
(2013-14) (47.7% of total cropped area)
• Rainfed Area as % of net
sown area (2013-14) 52.3%
• Largest State (Areawise) Rajasthan
• Smallest State (Areawise) Goa
• State touching boundaries of Uttar Pradesh
Maximum States (Touches boundaries of 8 StatesUttarakhand, Himachal Pradesh, Haryana, Rajasthan, M.P.,
Chhattisgarh, Jharkhand and Bihar) • Area under foodgrains (2014-15)
124.299 million hectare (87-89% of net sown area)
POPULATION
• Total Population of the Country

(Census 2011) 121.0854 crore
• Decadal Growth Rate (2001-11) 17.7%
 Rural Population Growth 12.3%
 Urban Population Growth 31-8%
 Percentage of World Population (2011) 17.5%
 Total Rural Population (2011) 83.37 crore
 Total Urban Population (2011) 37-71 crore
 Rural-Urban Population Ratio (2011) 68.84: 31.16
 Sex Ratio (2011) 943
(Female per thousand male)
 Child Sex Ratio (2011) (0-6 years) 919
 State with highest Female-Male
Ratio (2011) Kerala (1084)
 Labour Force (2009-13) World Bank 48.43 crore
 Total workers (2011 census) 48.17 crore
Male 33.18 crore
Female 14.98 crore
 Density of Population (2011) 382 per sq. km
 Birth Rate (2016) 19.28 per thousand population
 Death Rate (2016) 7.3 per thousand population
 TFR per woman (2016) 2.45
 Maternal Mortality Rate 167
(Per 100000 live births) (2011-13)
 Infant Mortality Rate (2014) 39 per thousand
live births
Rural 43
Urban 26
Males 37
Female 40
 Child (0-5) Mortality Rate 2016
(Per 1000 Children) 54.46
CENSUS 2011
Figures At a Glance-India
Population Person 12108 100.00
s Rural million 68.8
Urban 833.7 31.2
Decadal Population million
Absolute Percentag
Growth 2001-11 e rowth
Person 18,19,89,49 rate 17.7
s Males 6 12.3
Female 9997 million 31.8
Density cif Population s 99.99382
(per sq. km)
Sex Ratio. 943
(Females per 1000
males) Percentage
Populaition in the age Absolute to total
group 0-6 population
Person 164-5 13.6
s Rural million 14-6
Urban 121.3 11.5
Literacy rate Person million 73.0
s 80.9
Males 64.6
Femal
(Th census 2011 resu is of Mao-Masam, Paomata and Parul subdivisions of Senapati dis net of Manipur were with-held due
to administrative reasons. The figure have now been finalized and declared by office of the registrar General of India on 07-01-
2014. Above gi ven census data is after the inclusion of the census of three subdivisions of Senapati District of Manipur.)
 Life Expectancy (at the time of birth) (2010-14) 67.9 years
Male 66.4 years
Female 69.4 years
 Literacy Rate (2011) 73.0 per cent
Male 80.9 per cent
Female (2016) 64.6 per cent
 Literacy (2011)
Rural Male 77-2%
Urban Male 88-8%
Rural Female 57.9%
Urban Female 79.1%
 Religionwise Population (2011)
Hindu population (%) 79.8%
Muslim population (%) 14.2%
Christian population (%) 2.3%
Sikh population (%) 1-7%
GVA Growth in Various Sectors of the

Economy
(At Basic Prices 2011-12)
(in %)
2016-17
Sector 2015-16 IInd
(AE)
1. Agriculture Forestry and Fishing 0.8 4.4
2. Mining and Quarying 12.3 1.3
3. Manufacturing 10.6 7.7
4. Electricity, Gas, Water Supply 5.1 6.6
andOther Utility Services
5. Construction 2.8 3.1
6. Trade, Hotel Transport, Commu- 10.7 7.3
nication
7. Financial Real Estate and Profe- 10.8 6.5
ssional Services
8. Public Administration Defence 6.9 11.2
andOther Services
GVA at Basic Prices 7.8 6.7
Growth Rates
(At Constant Prices)
(in %)
2015-16 2016-17
'Ind AD Es
1. GDP 7.9 7.2
.
2, NDP 80 7-2
GVA at Basic Prices 7.8 6.7
GNI 7.9 72
NNI 8.0 7.2
Per Capita Income 6.6 5.9
 Population Growth % (2001-11)

Hindu 16.8%
Muslim 24-6%
Christian 15.5%
(iv) Sikh 8.4%
NATIONAL. INCOME ESTIMATES

 New Base Year 2011-12
 Real GDP or GDP at Current Price
2015-16 (Ist RE) Z 136.75 lath crore
2016-17 (IInd AE) Z 152.51 lath crore
 Gross Value Added at
Basic Price (on Constant Prices 2011-12)
Compiled by Sanjay Kumar Trivedy, Chief Manager, Canara Bank, Shrigonda,Ahmed Nagar, Maharashtra 10 | P a g e
2015-16 (Ist RE) Z 104-69 lath crore
2016-17 (lInd AE) Z 111.68 lath crore
 GDP at Constant Prices (2011-12)
2016-17 (IInd AE) Z 121.65 lath crore
 GM at Constant Price (2011-12)
2015-16 (Ist RE) Z 112.22 lakh crore
2016-17 (Hnd AE) Z 120.28 lakh crore
 NNI at Constant Price (2011-12)
2015-16 (1st RE) Z 99.46 lakh crore
2016-17 (IInd AE) Z 106.66 lakh crore
 Per Capita Income at Constant Price (2011-12)
2015-16 (1st RE) Z 77524
2016-17 (IInd AE) Z 82112
 GM at Current Price
2015-16 (Ist RE) Z 135.15 lakh crore
2016-17 (IInd AE) ' 150.83 lakh crore
 NNI at Current Price
2016-17 (IInd AE) ' 134.85 lakh crore
 Per Capita Income at Current Prices
2015-16 (Ist RE) Z 94178
2016-17 (IInd AE) Z 103818
ECONOMIC INDICATORS
 Index of Industrial Production (2016-17) 183.5
(December 2016)
 Share of Industrial Sector in GVA
(Average Ratio for 2011-12 to 2014-15) 31.8%
 Index of Agricultural Production (2014-15) 123.9
(Base : 2007-08 = 100)
 Wholesale Price Index Average (December 2016)
(Base : 2004-05 = 100) 182.8
 Consumer Price Index for Industrial Workers 275 (December 2016) Average (Base : 2001 = 100)
 Consumer Price Index for agricultural labourers
(December 2016) 876
 Consumer Price Index for Rural Labour
(December 2016) 881
 Consumer Price Index (Base : 2012 = 100) 1304
Combined (December 2016)
 Consumer Price Index (Base : 2012 = 100) 132.8
Rural (December 2016)
 Consumer Price Index (Base : 2012 = 100) 127.6
Urban (December 2016)
 Consumer Price Index based inflation Rate (December 2016)
Combined 5.61%
 Number of Industries Reserved for Public Sector 02

 Atomic Energy (Production, separation or enrichment of special fissionable material and substances and operation of the
facilities).
 Railway operations only : Private investment has been allowed in Railways for other construction, operation and maintenance.
 Number of Industries Requiring Compulsory License 04
(i) Cigars and Cigarettes of tobacco and manufactured tobacco substitutes.
(ii) Electronic Aerospace and defence equipments.
 Industrial Explosives including detonating fuses, safety fuses, gun-powder, nitrocellulose and matches.
(iii) Specified Hazardous chemicals i.e.,
(a) Hydrocyanic Acid its derivatives
(b) Phosgene and its derivatives.
(c) Isocyanates and disocyanates of hydrocarbons.
 Micro, Small and Medium Enterprises
(MSMEs) Contribution in country's GDP 37.5%
 Main Food Crop of India Rice
SixthEconomicCensus(2014)
 Total Enterprises 5.847 crore
Rural 3.502 crore (59.9%)
Urban 2-345 crore (40-1%)
 Top 5 states having maximum Uttar Pradesh
Enterprises (In Descending Order) : West Bengal, Tamil Nadu & Andhra
 India's place in the World Production of
(i) Sugar and Sugarcane First
(ii) Milk First
(iii) Banana First
(iv) Jute First
(v) Steel Third
(vi) Manufacturing Sixth
(vii) Fish Second
(viii) Rice Second
(ix) Fruits Second
 State with Highest Production of
Wheat (2014-15) Uttar Pradesh
Rice (2014-15) West Bengal
Pulses (2014-15) Madhya Pradesh
Coarse Cereals (2014-15) Rajasthan
Total Foodgrains (2014-15) Uttar Pradesh
 State with Highest Production of total
Oilseeds (2014-15) Madhya Pradesh
Sugarcane (2014-15) Uttar Pradesh
 State with Highest Production of Cotton Gujarat
(2014-15)
Potato (2014-15) West Bengal
Onion (2014-15) Maharashtra
Jute and Mesta (2014-15) West Bengal
 Krishi Vigyan Kendra (2014-15) 641
 Agriculture Universities (2014-15) 70
 Horticulture Crops 341
ANNUAL RATE OF GROWTH OF GDP (At constant prices)
First Plan (1951-56) 3.6%
Second Plan (1956-61) 4-1%
Third Plan (1961-66) 2-5%
,
Three Annual Plan (1966-69) 3 8%
Fourth Plan (1969-74) 3.3%
Fifth Plan (1974-78) 5.0%
Annual Plan (1979-80) 6-0%
Sixth Plan (1980-85) 5.4%
Seventh Plan (1985-90) 5.8%
Annual Plan (1990-92) 3.0%
Eighth Plan (1992-97) 6.7%
Ninth Plan (1997-2002) 5.5%
Tenth Plan (2002-07) Target 8.0%
Achieved 7.8%
Eleventh Plan (2007-12) Target (Original) 9%
Target (Revised) 8.1%
Achieved 7.9%
12th Plan (2012-17) Target 8.0%
MAIN PRODUCTION
Foodgrains (2014-15) 252.02 million tonnes
Foodgrains
2015-16 251.57 million tonnes
2016-17 (IInd AE) 271.98 million tonnes
Raw Steel (2014-15) 86.5 million tonnes
Production of Selected Commodities (2015-16) :
• Coal Reserves 306-60 billion tonnes
• Lignite Reserves 43-25 billion tonnes
• Coal Production 637.87 million tonnes
• Lignite Production 44.44 million tonnes
• Cement Production 285.83 million tonnes
 Fertilizer's Production
(i) Urea 24-461 million tonnes
(ii) DAP 3.822 million tonnes
(iii) Mixed (Other than DAP) 8-379 million tonnes
(iv) SSP 4.355 million tonnes
 Crude Oil 36.95 million tonnes
 Refining Capacity 230.66 million tonnes per annum 4.62 million tonnes per day
 Refinery Throughpul 231.92 million tonnes
 Natural Gas 32.00 billion cubic meter
 Total Vehicles 23,960,940
(i) Passenger Vehicles 34,13,959
(ii) Commercial Vehicles 7,82,814
(iii) Three Wheeler 9,33,950
(iv) Two Wheeler 1,88,29,786
 Power Generation-installed Capacity (2016-17) : 315426-32 MW
(i) Thermal Power 215214.89 MW
(A) Coal Based 189047.88 MW
(B) Gas Based 25329.38 MW
(C) Diesel Based 837.63 MW
(ii) Nuclear Power 5780.00 MW
(iii) Hydro Power 44413.43 MW
(iv) Renewable Energy Source 50018.00 MW
 Power Generation (April-February 2017) : 1057.74 billion kwh
(i) Therm al Power 903.693 billion kwh
(ii) Hydro Power 114.330 billion kwh
(iii) Nuclear Power 34-136 billion kwh
(iv) Bhutan Import 4.859 billion kwh
Agriculture Production
(Million Tonnes)
2014-15 2015-16 2016-17
(Hnd AE)
Total Foodgrains 252.02 251-57 271.98
Total Pulses 17.33 20.75 22.14
Total Oilseeds 27.51 25.25 33.60
Rice 105-48 104.41 108.88
Wheat 86-53 92-29 96.64
Coarse Cereals — — —
Minimum Support Prices for Rabi Crops of 2016-17 Season to be Marketed in 2017-18 (rate per quintal)
Commodity MSP for 2017-18 Season
Wheat 1625
Barley 1325
Gram 4000
Masur (Lentil) 3950
Rapeseed/Mustazd 3700
Minimum Support Prices for Kharif Crops

for 2016.17 Season
(' per quintal)
MSP for 2016-17
Commodity Variety Season
Paddy Common 1470
Grade A 1510
Jowar Hybrid 1625
Maldandi 1650
Bajra — 1330
Maize — 1365
Ragi . — 1725
Tur (Arhar) — 5050
Moong — 5225
Urad — 5000
Groundnut in-shell — 4220
Soyabean Yellow 2775
Sunflower Seed — 3950
Sesamum — 5000
Nigerseed — 3825
Cotton Medium Staple 3860
Long Staple 4160
FOREIGN TRADE (In $ billion)

2015-16 2016-17
Exports 261.14 274-645
Imports 379.50 380.368
Trade Balance – 118.46 105.723
 Establishment of First Trade Point
in India New Delhi
(August 16, 1994)
 Commodity with Highest Share in Total Export
Value (2015-16) Gems and Jewellery
15.08%
 Country with Highest Foreign Trade
with India (2015-16) China
 % Share of Indian
exports in total world exports (2015) 1.62%
 India's share in world imports (2015) 2.3%
 WTO Profile India (2015) :
Merchandise Export (f.o.b.) $ 267.147 billion
Merchandise Import (c.i.f.) $ 395.977 billion
Rank in World Trade
(2015) Exports Imports
Merchandise 19th 13th
Commercial Services 8th 10th
Trade in Commercial Services $ 155.288 billion $ 122-225 billion
FOREIGN EXCHANGE RESERVES (As on March 31, 2017)
 Foreign Currency Assets 346.319 billion dollar
 Gold 19869 billion dollar
 Reserve Tranche with IMF 2-321 billion dollar
 SDR F447 billion dollar
Total Foreign Exchange Reserved 369-955 billion dollar
TRANSPORT
 Total Rail Route (March 31, 2016) 66,687 km
 Electrified Rail Route (March 31, 2016) (42% of
Total)
 Percentage of passenger traffic operated
on electric traction (Approximate) 50.5%
 Percentage of freight traffic operated
on electric traction (Approximate) 65.2%
 Rail operating ratio 2015-16 90-5%
 Rail operating ratio 2016-17 (R.E.) 94.6%
 Rail operating ratio 2017-18) (B.E.) 94.6%
 Asia's First and World's Second
Largest Rail System Indian Railways
 Largest Railway Zone Northern Railway
 Total Road Network 52.32 lakh km
 Total Length of National Highways/
o Expressways (March 2016) 103933 km I
 Total Length of State Highways 161487 km
 Total Length of Other Roads 5207044 km
 State with Highest Road Length Maharashtra
(608140 km)
 Number of Major Ports 13
 Number of Non-Major Ports 200
MONETARY AND CREDIT POLICY

(Status as on April 6, 2017)
Bank Rate 6.50%
Marginal Standing Facility Rate 6.50%
Cash Reserve Ratio (CRR) 4.0%
Statutory Liquidity Ratio (SLR) (7.2.17) 20.50%
Repo Rate 6.25%
Reverse Repo Rate 6.00%
External Debt (End-December 2016)
 Total External Debt $ 456.066 billion
 Long-term External Debt $ 372.245 billion
(81.6% of total debt)
 Short-term External Debt $ 83.821 billion
(18.4% of total debt)
India's Key External Debt Indicators

(Status at end-December 2016)
1 . External debt to GDP (2015-16) 23.5%
2 . Debt Service Ratio 8.8%
3 . Concessional Debt to Total Debt 9-2%
4 . Foreign Exchange Reserves to Total Debt 78.7%
5 . Short-term External Debt to Foreign 23.4%
Exchange
Reserves
6 . Short-term External Debt to Total Debt 18.4%
Currency Composition of External Debt (At
end-December 2016)
(% share)
1 . US Dollar 54.7
2 . Indian Rupee 31.1
3 . Japanese Yen 4-4
4 . SDR 5.9
5 . Euro 2.7
6 . Sterling Pound 0.7
7 . Others 0.5
Banking in India (1st March, 2017) Public Sector Banks
(i) SBI and its Associate 06
(ii) Nationalised 19
(iii) IDBI Bank 01
(iv) Bhartiya Mahila Bank 01
(v) Regional Rural Banks 56
Private Sector Banks
(i) Old Private Banks 13
(ii) New Private Bank 09
(iii) Payments Banks 02
(iv) Small Finance Banks 03
Foreign Banks Operating in India 43
Cooperative Credit Institutions in India (As at end of March 2016)
(A) Rural Co-operatives (Short-Term Credit)
 State Co-operative Banks -32
 District Central Co-operative Banks -370
 Primary Agricultural Credit Societies -93042
Maximum FDI inflow in (Sector)
Services Sector (1 8-0%), followed by construction (8.0%), Telecommunication (7-0%)
The 2nd Advance Estimates of production of major crops for 2016-17 have
been released by the Department of Agriculture, Cooperation and Farmers Welfare
on 15th February, 2017.
As per 2nd Advance Estimates, the estimated production of major crops during
2016-17 is as under :
Foodgrains-271.98 million tonnes (record)
* Rice-108.86 million tonnes (record)
* Wheat-96-64 million tonnes (record)
* Coarse Cereals-4434 million tonnes (record)
* Maize-26.15 million tonnes (record)
* Pulses-22-14 million tonnes (record)
* Gram 9.12 million tonnes
* Tur - 4-23 million tonnes (record)
* Urad - 2-89 million tonnes (record)
Oilseeds-33.60 million tonnes (record)
* Soyabean-14-13 million tonnes
* Groundnut-8.47 million tonnes
* Castorseed-1-74 million tonnes
Cotton-32-51 million bales (of 170 kg each)
Sugarcane-309-98 million tonnes
-
Rural areas are served by a network of different types of banks like commercial banks, cooperative banks and regional rural banks. It
i§ essential for a banker (particularly, if he/she is coming from urban areas) to understand the basic structure of the rural society.
Panchayati raj has been playing an important role in the development of villages and a banker has to interact with the panchayats for
all developmental activities. Thus, understanding the functioning of Panchayati raj is also important for the bankers for working in
the rural areas.
The rural banker should have an idea of the characteristics of rural society which he is serving. The two major local institutions in rural
areas are Gram Panchayat and Primary Agriculture Credit Society. Though panchayat is an ancient institution, it received a fillip with the
implementation of recommendations of Balwantray G. Mehta committee in 1958. However, progress of these institutions was uneven in
the country. With the expanSion of anti-poverty programmes and setting up of district level agencies like DRDA in 1980s it was felt that
there was a need for integrating Panchayati Raj system with development programmes. At the same time a clear need for constitutional
support to Panchayati Raj bodies was emerging as a result of lukewarm response of state Governments for creation of Panchyati Raj
bodies and sharing power with them. In view of this the central Government passed 73rd amendment to the constitution on 22
December 1992. Thus Panchayati Raj bodies have the constitutional support.
The rural structure is constituted by family, kinship, caste, stratification, power and religion. This structure is constantly changing
because of political changes, spread of education and also due to invasion of satellite TV. Therefore one should not treat rural
society as a fixed entity with fixed design and pattern but something which is changing. Though the caste pattern varies from state to
state it basically falls into Brahmins, Non-Brahmins and Scheduled Castes and Tribes, whose relative status is defined by social
intercourse. Each region has its own unique customs, ceremonies, dress, food and language that separates its villages from all other
villages. Most of the lands owning class belong to 'haves' of the village. The 'have nots' have to somehow eke out a living working as
labourers and doing odd jobs or migrating to nearby towns and cities. Most men in the villages interact monetarily rather than by
-
ritualistic traditions. Though villages do have headmen and traditional panchayat, theit. influence and power have been greatly
reduced. Thus villages reflect the diversity of many castes and religions existing together united by geography and tradition.
Panchayati Raj: It is a complex system of rural local self government.

73rd amendment of constitution: Constitutional amendment bill passed by Parliament on 22 December, 1992 to remove all the
weakness of Panchayati Raj and to give support of the constitution to Panchayati Raj bodies.
Gram Sabha: It is a name given to a village body consisting of all eligible voters in that village.
Panchayat Samiti: It is the name given to intermediate level of panchyat usually at the level of block or Taluk.
Zilla Parishad: It is the name gilidn to District Level Panchayat.
Three Tier Panchayati Raj System: It is the name given to the Panchayati Raj System having panchayats at the village, Panchayat
samitis at the intermediate level (Block or taIuk) and Zilla Parishads at the district level.
The economic life of rural people is based on agriculture and related activities. Other farm activities are allied activities like dairy,
poultry and fisheries. There are some non-farm activities also. Rural money market is characterized by both formal and informal
sources. Over the time importance of formal market is reducing but it still occupies an important position in rural society. The extent
ofrural indebtedness is a cause of worry for the policy makers. Although the country's developmental activities are trying to improve
the economic life of the people, a large part of the population, particularly in the rural areas are still poor. This chapter discusses all
these issues.
The share of agricultural sector in GDP has been declining over the years, but it accounts for 52 per cent of the employment in the
country. It provides food and fodder and raw materials to industry.
Out of total workers of 402 million in 2001, 78 per cent were main workers and 22 per cent were marginal workers. Among the total
workers, 32 per cent were cultivators, 26 per cent were agricultural labourers, 4 per cent were working in household industry and
the remaining 38 per cent were other workers (engaged in occupation like non-household industries, trade, commerce, construction
and repair and other services). In the rural areas, 40 per cent of the total workers were cultivators and another 33 per cent were
agricultural labourers.
The proportion of workers in agricultural sector in India showed a decline over the last few decades (66.85% in 1991 to 58.2% in
2001). Consequently, the participation rate in secondary and tertiary sectors registered an increase. This indicates a shift of
dependence of workers from farm-based occupations to non-farm based ones, indicating a sectoral shift in the economy of the
country.
Since 1951, the proportion of cultivators in the work force declined from 50 per cent to 38 per cent in 1991 and further to 13 per cent in
2001 census. On the other hand, the proportion of agriculture labourers increased from 20 per cent in 1951 to 26 per cent in 1991, but
came down sharply to 11 per cent in 2001.
The Indian rural economy is still very much dependent on agriculture as nearly 52 per cent of people derive their livelihood from it.
However as in many developed countries, the share of agricu'lture in the national economy is decreasing. Much of the increase in
production of goods and services has been absorbed by the growing population. Non-farm sector is gaining importance over time
employing 42% of the rural people.
The farmers require credit to fund their agricultural operation. It was estimated in 2002 that 26.5 per cent of the rural households
were in debt. The proportion of debt incurred for farm business is increasing and it was 41 per cent in 2002. The proportion of rural
debt supplied by institutional sources has been increasing over the years. There has been a tremendous expansion of number of
outlets of credit institutions in rural areas since nationalization of major commercial banks in 1969. As a result the role of
moneylenders has come down in the supply of credit in rural areas. However, the institutional sources have not been able to
completely eliminate them. During the recent years, Self Help Groups have come up, under the encouragement of voluntary agencies
and banks. These SHGs are, to limited extent taking care of the credit needs of poor people. Though there is a good network of units of
institutional credit agencies in rural areas, they are faced with the problem of poor recovery. This has led to choking of the line of
credit in rural areas.
Poverty is causing serious concern to the planners in the country. It is estimated that more than 200 million people are still poor.
With such large number of people still remaining poor eradication of poverty assumes tremendous importance and urgency. Level of
poverty, however, is declining in recent years, the latest NSS survey for 2004-05 showed poverty at 27.5. The interstate variation in
poverty situation is still quite large.
GNP: Gross National Product is GDP plus net income from abroad.
GDP: Gross Domestic Product is the total value of goods and services produced within an economy in a year.
NDP: Is the gross national product less depreciation, i.e., the total money value of cost of production of country's final goods
excluding depreciation.
Per capita NNP: Is the NNP at current prices or constant prices divided by the population.
Non-institutional Sources of Credit: Are those agencies which provide credit and are not under control of central monetary authority.
Short term credit: The credit which is given or obtained for a period less than 18 months.
Medium-term credit: Is the credit which is given on obtained for a period exceeding 18 months and less than 7 years.
Long term credit: Is the credit which is given or obtained for a period exceeding 7 years.
Self-help Group: Is a group of people who have come together for mutual help, saving, utilization and credit dispensation among
themselves.
RURAL DEVELOPMENT
 INDIA has been a welfare state since independence. The policies and programmes have been designed
with the aim of alleviation of rural poverty which has been one of the primary objectives of planned development in
India.
 Rural development implies both the economic betterment of people as well as greater social
transformation. For this, increased participation of people, decentralization of planning, better enforcement of land
reforms and greater access to credit are envisaged.
 Accordingly, Community Development Programme, inaugurated on October 2, 1952, was an important
landmark in the history of rural development.
MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE ACT (MGNREGA)
 MGNREGA is a rights based wage employment programme implemented in rural areas of the country.
 This programme aims at enhancing livelihood security by providing upto one hundred days of
guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do
unskilled manual work.
 Objectives of the Scheme are:
 creation of productive assets of prescribed quality and durability;
 strengthening the livelihood resource base of the poor;
 pro-actively ensuring social inclusion; and
 strengthening Panchayati Raj Institutions.
NATIONAL RURAL LIVELIHOODS MISSION (NRLM)

 The government launched National Rural Livelihoods Mission (NRLM), subsequently renamed as
Aajeevika in 2011.
 It aims at mobilizing all rural poor household into Self Help Groups (SHGs) in a phased manner.
 NRLM also aims at supporting all women SHGs of the poor, including those promoted by other state
agencies and Non-Governmental Organizations (NGOs).
 The key features of the restructured NRLM include:
 mobilization of at least one woman member from each rural poor household in the country
into SHG network in a phased manner;
 special focus on the mobilization of women from the Scheduled Castes (SCs) and the
Scheduled Tribes (STs), the Particularly Vulnerable Tribal Groups (PVTGs), the disabled and other vulnerable and
marginalized household;
 promotion of SHG federations at village and cluster levels—Village Level Self Help Group
Federations (VLF) at village level and Cluster Federation (CF) at cluster (groups of villages) level;
 provision of Revolving Fund (RF) support at the rate of 10,000-15,000 per eligible SHG to
supplement own funds;
 provision of Vulnerability Reduction Fund (VRF) to meet community level food security,
health and nutrition security;
 intensive support to link each SHG to bank credit;
 Women SHGs who will repay in time will get an additional subvention of 3 per cent.
 25 per cent of NRLM allocation is earmarked for skill development.

RURAL SELF EMPLOYMENT TRAINING INSTITUTE (RSETI)
 The government has decided to set up one RSETI in each district of the country.
 RSETIs are bank lead initiative with the active support of state government.
 The Government of India provides one time infrastructure support of rupees one crore.
 The core strength of the RSETI lies in its short term training and long term handholding to the rural
entrepreneurs for setting up micro enterprises.
MAHILA KISAN SASHAKTIKARAN PARIYOJANA (MKSP)

 MKSP is a subcomponent of NRLM to meet the specific needs of women farmers and achieve their
socio-economic and technical empowerment predominantly small and marginal.
 During 2015-16, a new scheme named Start-up Village Entrepreneurship Programme (SVEP) was
included in NRLM.
 The SVEP is to provide the supported enterprises with business skills, exposure, loan for starting and
business support.
PRADHAN MANTRI GRAM SADAK YOJANA (PMGSY)

 PMGSY was launched in 2000 as a centrally sponsored scheme to assist the states, though rural roads
are in the state list as per the Constitution.
 The primary objective of the Yojana is to provide connectivity by way of an all-weather road to the
reliable unconnected habitations as per core network with a population of 500 persons (as per 2001 census) and above in
plan areas.
 In respect of ‘Special Category States’ the objective is to connect eligible unconnected habitations as
per core-network with a population of 250 persons and above (Census 2001).
INDIRA AWAAS YOJANA RURAL HOUSING

 The rural housing scheme Indira Awaas Yojana (IAY) implemented by Ministry of Rural
Development, aimed at providing houses to families below the poverty line (BPL) in rural areas.
 In the context of Government’s priority for “Housing for All” by 2022, the rural housing scheme IAY has
been restructured to Pradhan Mantri Awaas Yojana-Gramin (PMAY-G), which came into effect from 2016-17.
 The main features of the scheme of PMAY-G include:
 providing assistance for construction of 1.00 crore houses in rural areas over the period of 3
years from 2016-17 to 2018-19;
 enhancement of unit assistance from 70,000 to 1.20 lakh in plain and from 75,000 to 1.30
lakh in hilly states, difficult areas and IAP districts;
 identification of beneficiaries based on the Socio-Economic and Caste Census (SECC 2011)
data covering households that are
 houseless or living in houses with kutcha walls and kutcha roof with two rooms or less after
excluding households falling under the automatic exclusion category; and
in addition, the beneficiary will get 12,000/- as assistance for construction of toilet.
NATIONAL SOCIAL ASSISTANCE PROGRAMME
 The Directive Principles of State Policy in the Constitution of India enjoin upon the state to undertake
within its means a number of welfare measures.
In particular, Article 41 of the Constitution directs the State to provide public assistance to its citizens in case of unemployment, old
age, sickness and disablement within the limit of its economic capacity and development.
NSAP is a social assistance programme for poor BPL households for the aged, widows, disable and also include provision for one
time assistance in the case of death of the primary bread winner in a BPL family.
At present, NSAP comprises
Indira Gandhi National Old Age Pension Scheme (IGNOAPS),
Indira Gandhi National Widow Pension Scheme (IGNWPS),
Indira Gandhi National Disability Pension Scheme (IGNDPS),
National Family Benefit Scheme (NFBS) and Annapurna.
DEEN DAYAL UPADHYAYA – GRAMEEN KAUSHALYA YOJANA (DDU-GKY)
DDU-GKY is the flagship placement linked skill training programme under the Ministry.
Announced in 2014, DDUGKY is a critical component of the National Skill Development Policy.
The ultimate aim is to convert India’s demographic surplus into a demographic dividend by developing rural India into a globally
preferred source of skilled labour.
DDU-GKY is a pioneer in standards-led delivery of skilling in India, the first to notify standard operating procedures for training, and
the first to introduce IT solutions for skilling.
Key Features: DDU-GKY follows a 3 tier implementation architecture in PPP mode.
The focus of this programme is on the rural youth from poor families, in the age group of 15 to 35 years, belonging to:
MGNREGA worker household in which household members have together completed 15 days of work;
RSBY household;
Antyodaya Anna Yojana card household;
BPL PDS card households;
NRLM-SHG household; and
Household covered under auto inclusion parameters of SECC 2011.
 50 per cent allocation to SC/ST groups, 15 per cent to minorities and 33 per cent for women and 3 per cent for persons with
disabilities.
 A special sub-scheme
for the youth of Jammu Et Kashmir, called Himayat;
for the rural youth of poor families in 27 most-affected Left-Wing Extremist (LWE) districts across nine states, called Roshni and
10 per cent of DDU-GKY’s capital investment is reserved for projects from North-East region.
 Focus on quality is done through its framework of guidelines and Standard Operating Procedures (SOPs), curricula from NCVT or
QP-NOS developed by SSCs of NSDC, rating/grading systems for projects and states implementing the projects.
 Placement in wage employment is mandated for a minimum of 70 per cent of all successful candidates, with a minimum salary of
6,000 per month.
 Post-placement support is given to candidates.
 Support for job retention, career progression and foreign placements are also given to PIAs.
 In allocation of skills projects, primacy is given to training partners who can train and support overseas placement and captive
placements.
 The programme promotes Make in India, through proactive partnership with industry through multi-pronged engagement.
 Transparency and accountability through:
geotagged time stamped biometric attendance;
CCTV and audio recording of all classroom and lab sessions;
independent mechanism for project appraisal and project monitoring.
SAANSAD ADARSH GRAM YOJANA (SAGY)
 SAGY was launched in 2014, the birth anniversary of Loknayak Jayaprakash Narayan.
 Mahatma Gandhi’s concept of rural development revolves around creating model villages for transforming ‘swaraj’ into ‘su-raj’.
 The goal of SAGY is to translate this comprehensive and organic vision of Mahatma Gandhi into reality, keeping in view the present
context.
 SAGY aims at instilling certain values. These values include: ensuring the involvement of all sections of society in all aspects
related to the life of village, especially in decision-making related to governance.
 Salient Features of the Scheme:
aims to develop three Adarsh Grams chosen by MPs, by March 2019, of which one would be achieved by 2016. Thereafter, five such
Adarsh Grams (one per year) will be selected and developed by 2024;
focus on ‘Jan Bhagidar’ (community participation);
members of parliament will guide and lead the initiative;
not an infrastructure centered scheme; and
holistic development of the village.
 The programme is primarily about unleashing people’s power, converging and implementing existing government
schemes/programmes and adopting bottom-up approach in planning and execution.
 Village Development Plan would be prepared for every identified Gram Panchayat. THE NATURAL LAND REFORMS
MODERNIZATION PROGRAMME
The Scheme of National Land Reforms Modernization Programme (NLRMP) has been renamed as Digital India Land Records
Modernization Programme (DILRMP).
Ministry of Panchayati Raj (MoPR)
MoPR has the primary objective to ensure the compliance of the provisions of Part IX of the Constitution, provisions regarding the
District Planning Committees as per Article 243 ZD and PESA.
As per the Constitution, three tiers of Panchayats are to be constituted, through elections every five years, except in states with
population less than 20 lakh, where Panchayats at two tiers may be created.
The Constitution recognizes the Gram Sabha, i.e., all the electors in a Village Panchayat.
The Constitution provides that seats and offices of chairpersons be reserved for the Scheduled Castes (SC) and Scheduled Tribes
(ST) in proportion to their respective population, and not less than one third seats and offices of chairpersons be reserved for
women, including within SC and ST reservations.
Article 243 ZD of the Constitution mandates the setting up of District Planning Committees (DPCs) in every district, to consolidate
the plans prepared by the Panchayats and Municipalities in the district.
The Constitution provides that State Election Commissions (SECs) be set up and vested with the superintendence, direction and
control of the preparation of electoral rolls and the conduct of elections to the Panchayats.
The Constitution further provides that State Finance Commissions (SFCs) be constituted every five years.
SFCs are to make recommendations to the Governor regarding
distribution between the State and Panchayats of the net proceeds of taxes, duties, toll, fees, etc.,
determination of taxes, duties, tolls and fees which may be assigned to, or appropriated by, the Panchayats,
grants-in-aid to the Panchayats from the Consolidated Fund of the State,
measures needed to improve the financial position of Panchayats.
The state legislatures are to decide on the nature of devolution to the Panchayats, including the 29 matters in the Eleventh Schedule.
Powers to impose taxes by the provision of funds to the Panchayats are determined by state.
The powers of Gram Sabhas are also decided by states.
BASIC DETAILS OF PANCHAYATS
Today, there are more than 2.55 lakh Panchayats in the country, which include 2,48,263 Gram Panchayats, 6,618 Block Panchayats
and 595 District Panchayats.
There are more than 30 lakh Panchayat representatives which also include nearly 14.37 lakh Elected Women Representatives.
RAJIV GANDHI PANCHAYAT SASHAKTIKARAN ABHIYAN
To improve the functioning of PRIs the MoPR has been implementing the Rajiv Gandhi Panchayat Sashaktikaran Abhiyaan (RGPSA) in
the 12th Five Year Plan period.
The RGPSA addresses the major constraints of inadequate devolution of powers, lack of manpower, inadequate infrastructure and
limited capacity in the effective functioning of Panchayats.
RASHTRIYA GRAM SWARAJ ABHIYAN (RGSA)
RGSA to help Panchayati Raj Institutions to develop governance capabilities to deliver on the inable Development Goals (SDGs) was
announced in 2016.
RGSA will have the following sub-schemes:-  capacity building;
 mission mode project on e-panchayat;  ATM services in panchayat bhawans; and  incentivization of panchayats.
The thrust of the new scheme will be on the lines of the Gramoday se Bharat Uday programme which focus on social
empowerment, economic empowerment and enabled Gram Sabhas through convergence of resources at the Panchayat level.
MoPR has supported states to develop state specific guidelines for Gram Panchayat Development Plans (GPDP) which converge all
the resources over which the Panchayats have command including FFC funds, MGNREGS funds, Swachh Bharat funds, etc.
E-PANCHAYAT INITIATIVES
e-Panchayat is one of the Mission Mode Projects (MMPs) under the Digital India programme of Govt. of India.
The project seeks to completely transform the functioning of Panchayati Raj Institutions, making them more transparent,
accountable and effective.
The states are also being provided financial support through RGPSA scheme.
RECOMMENDATIONS OF FOURTEENTH FINANCE COMMISSION (FFC)
FFC award for the period 2015-20 grants to the tune of 2,00,292.20 crore are being devolved to Gram Panchayats in the country to
ensure stable flow of resources at regular intervals which will augment resources available with them to discharge their statutorily
assigned functions.
The FFC has not recommended grants to Non-Part IX areas under Schedule VI in Meghalaya, Mizoram, Tripura and Assam, the areas
in the hill districts of Manipur, rural areas of Nagaland and Mizoram.
The states are to distribute the grants to Gram Panchayats as per the approved formula recommended in the latest State Finance
Commission (SFC) report.
However, in the absence of SFC formula, grant should be distributed using population of 2011 Census with a weight of 90 per cent
and area with a weight of 10 per cent.
PRIASoft (web based Panchayat accounting software) and Plan Plus (web based participatory planning software) are the two
important Applications under e-Panchayat Mission Mode Project (MMP) that foster transparency and accountability in PRIs.
MINISTRY OF DRINKING WATER AND SANITATION
The Ministry of Drinking Water and Sanitation is the nodal Ministry for the overall policy, planning, funding and coordination of the
flagship programmes of the Government of India viz.,
 National Rural Drinking Water Programme (NRDWP) for rural drinking water supply
 Swachh Bharat Mission (Gramin) [SBM(G)] for sanitation in the country.
NATIONAL RURAL DRINKING WATER PROGRAMME (NRDWP)
NRDWP is a Centrally sponsored scheme aimed at providing adequate and safe drinking water to the rural population of the country.
NRDWP is a component of Bharat Nirman which focuses on the creation of the infrastructure.
SWACHH BHARAT ABHIYAN
The concept of Swachh Bharat Abhiyan is to pave access for every person to sanitation facilities including toilets, solid and liquid
waste disposal systems, village cleanliness and safe and adequate drinking water supply. The programme is implemented by the
Ministry of Drinking Water and Sanitation.
An Action Plan has been drawn up for a Swachh Bharat to become a reality by 2019, the 150th birth anniversary of Mahatma Gandhi.
The Abhiyan aims to triple the growth percentage of toilets from present 3 per cent to 10 per cent by 2019.
The Action Plan calls for an Open Defecation Free (ODF) India in five years.
Priority is being given to build toilets for boys and girls in all schools of the country. This is envisaged to be completed in one year.
SWACHH BHARAT MISSION (GRAMIN)
History:
Central Rural Sanitation Programme (CRSP) in 1986
Total Sanitation Campaign (TSC) in 1999
Nirmal Bharat Abhiyan (NBA) in 2012.
Though these programmes had their successes, there still remained a large portion of the rural population which did not have access
to toilets.
To significantly upscale the programme, and bring the focus on the issue of sanitation, the Swachh Bharat Mission (Gramin) was
launched in 2014.
The focus is to provide flexibility to state governments (sanitation being a state subject), to decide on their implementation policy
and mechanisms, taking into account state specific requirements.
BHARAT NIRMAN
Bharat Nirman was launched by the Government of India in 2005 as a programme to build rural infrastructure.
Rural drinking water is one of the six components of Bharat Nirman.
Agricultural and industrial productions require infrastructural facilities, which are also called economic and social overheads. The
infrastructural facilities broadly cover power, transport, communication, banking finance, insurance and social overheads like health and
educational facilities. Indian planners always attached great importance to infrastructural development. Considerable advancement in the
capacity creation of infrastructure has taken place in recent years. Traditionally, however, there was a bias towards infrastructural
development in urban areas. The relative neglect of infrastructure in rural areas resulted in inadequate development and employment in
rural areas, which, in turn, led to migration of people from rural to urban areas in search of employment, accentuating the problem of
growth of slums, urban congestion and transport bottlenecks. The India Rural Infrastructure Report prepared by NCEAR (2006), proposed
government subsidy for encouraging private players to invest in rural infrastructure development, which would require huge amount of
fund. The government had initiated several programmes for development of rural roads, rural electrification, markets and other
infrastructural facilities. Postal service and rural telephony played very important roles in Indian development.
Infrastructure: All the facilities and supporting services like power, transport, credit required for agricultural and industrial
production are collectively called infrastructure.
National Highway System: It is the primary road grid connecting metro cities and other major cities and is the backbone of road
systems in India.
State Highway: Along with major district roads form the secondary road system and they are arteries of the road system.
Rural Roads: Roads connecting villages and small towns.
Mandl: Rural wholesale market
Hat: Weekly village market Regulated market: Market backed by law for a specific commodity or a group of commodities.
This section attempts to summarize the subject matter covered in this Unit on structure of India agriculture. Agriculture relates to
science and practice of cultivation of soil including raising of livestoc Agriculture sector includes crops, livestock, forestry and fishery.
Agricultural sector contributes abou 18 per cent to national income and 12 per cent to foreign exchange earnings in the national
econom (2007-08).
Indian agriculture is diverse in nature and a multitude of crops and livestock are raised across a variety of climatic zones and soils types.
Cropping activities are on throughout the year depending on availability of moisture. Indian agriculture is largely dependent on monsoon.
About 90 per cent of annual rainfall i received during monsoon season, i.e. months of June to September. However, there is a wide spatial
an temporal variation in rainfall. One important characteristic of Indian agriculture is related to small size o holdings. The average size of
farm has been declining over time. It has decreased from 2.3 ha, in 197071 to 1.33 ha. in 2000-01.
Prominent features of land use in India are that net sown area was nearly 47 per cent of reporting area with cropping intensity of
136 per cent in 2005-06. Although cultivable waste showed a steady decline fallow lands increased indicating that investments in
rehabilitating wastelands were nullified by additions in fallows lands which in due course would turn to cultivable wastes. Nearly 32
per cent of operationa holding was irrigated in 2000-01.
Among different crops, foodgrains covered 63 per cent of total cropped area. And foodgrains production was at nearly 231 million
-
tonnes in 2007-08. The allied activities, in 2007-08, contributed 104.8 million tonnes of milk, 53.5 billion eggs, 44 million kg wool and
2.6 million tonnes of meat. In milk production, India was the first in the world.
Agriculture sector: Includes crops, livestock, forestry and fishery. Barren land: Land not fit for agriculture.
Cultivable waste: Land not under cultivation for last, more than five years.
Diversification: Undertaking more activities than one.
Economy: Includes production, distribution, exchange and consumption of goods and services.
Extensive cultivation: Cultivation involving large areas.
Intensive cultivation: Cultivation involving small area with higher cropping intensity.
Old fallow: Land not under cultivation for last one to five years.
Operational holding: Area under operation which is equal to area owned plus area leased in minus area . leased out.
Small holder agriculture: Relates to small farms.
The concept of economic development included basic needs such as food, clothing, shelter along with education, health, self esteem
and freedom of choice. Economic development is a process and is about the way change occurs or proceeds and affects people's lives.
Then we discussed the role of agriculture in economic development in terms of product contribution (food and raw material for
industry), factor contribution (labour and capital contribution), market contribution (trade with other sectors) and foreign exchange
contribution. It is significant to keep in mind that these contributions assume a technologically progressive and prosperous agriculture. If
agriculture is weak, then, the contributions agriculture can make to overall economic development are jeopardized. Thus, the process of
agricultural development is related with the process of overall economic development. However, countries like Singapore and Hong
Kong are exceptions because their agricultural base is insignificant and non-agriculture sectors are leading in the economy.
If the concept of agri-business which includes inputs sector to agriculture, agricultural production and agro- processing is used to
denote contribution of agriculture in an economy, then, its share is larger and also declines at a much lower rate over time. This
broader view of agriculture in terms of agri-business is related to the concept of inter-industry linkages involving backward and
forward linkages and assumes significance due to modernizations of agriculture.
Finally, the Unit raises three pertinent economic development issues. These relate to agricultural development versus industrial
development, state intervention versus free markets and export promotion versus import substitution for economic development.
Comparative Advantage: It is a situation in which a nation is relatively more efficient in producing some goods because of its lower
opportunity cost, and gains by trading, for goods that another nation is more efficient in producing.
Economic Development: Relates to economic growth with equity and sustainability.
Export Promotion: An outward orientation of an economy in terms of encouraging exports.
Gross Domestic Product (GDP): It is total value of goods and services produced within an economy in a year.
Gross National Product (GNP): It is GDP, plus net income from abroad.
Import Substitution: Trying to become self-sufficient by encouraging domestic production and replacing imports.
Net National Product: It is GNP minus depreciation. National Income: It is Net National Product.
Land in economics includes all natural resources. Land in its geographical dimensi limited, therefore, area expansion for agriculture cannot be
done indefinitely. Intensive use of laii, becomes imperative. India has a vast array of agricultural labor. Indications are that the number o
agricultural labourers is increasing. Given the limited labour absorption capacity of agriculture even wi 1 improved technology, alternative
employment in rural non-farm sector assumes special significance.
Scarcity of capital is a typical symptom of developing economy. India is no exception to it. For gro and development, it is capital formation that
is crucial. There are reports that capital formation is deck in agriculture: Corrective measures need to be taken to increase capital formation in
agriculture.
Management, perhaps, is the most important factor of production in the sense that it basically organizes all other factors together to
produce. It involves the crucial functions of planning, implementation arid control. In India, millions of farmers are managers of their farm,
small and large. Of course, educa and experience are significant in influencing efficacy of management.
The concept of productivity and efficiency are useful in relation to resource use. As resources limited or scarce, their use has to be in
activities or processes where productivity is high. Their should be efficient in the sense of not being wasteful and idle.
The discussion on technical change or technological change in agriculture is an important one beta it is this factor to which much of increase
in agricultural production in recent decades is attribut Seeds, chemical fertilizers and irrigation have been the three basic components of this
technolo Tremendous increase in output has been experienced through adoption of HYV technology. However; is also reported that
instability in agricultural production has increased over time. At the same time, into' regional disparities in agricultural incomes have also
increased. There are also signs of soil and water related environmental problems in intensive agricultural zones. Improved water
management methods and biotechnology advances are expected to correct some of the ills of green revolution technology.,
Average productivity: Relates to a measure of productivity on an average and is obtained as total outp divided by total input.
Capital: Capital in economics usually consists of durable produced goods that are in turn used production.
Credit: This relates to the ability to borrow money.
Efficiency: Relates to a situation where resources are effedtively used, i.e. resources are not idle or n wastefully used
Green revolution: This relates to increase in crop output due to high yielding varieties, chemical fertilize and irrigation
Technical change: A change in the process of production or introduction of new inputs such that increased output can be obtained
from the same bundle of inputs.
The major constraints to agricultural development are identified under five broad categories — (i) Ian ownership and operation, (ii)
capital formation, (iii) marketing and (iv) organization.
Land ownership and operation in India presents a case of preponderance of small and marginal farm Land reform measures such as land
ceiling and land tenancy legislation have contributed to it along wit inheritance laws. The suggestion that is being made is to ease the land
tenancy market so that lan resources are used more efficiently. Regarding capital formation, there are serious concerns for th negative
growth rates in public investment in Indian agriculture. Government policies along with bankin sector have to contribute in correcting the
situation. The issues in marketing are generally related wit infrastructural development concerning input and output marketing. It is felt
that development of marketin infrastructure has not kept pace with developments in production of agricultural commodities. Terms o
trade in agriculture need to be kept in favour to attract investments in agriculture for growth. Organizations, whether in the form of
public, corporate, co-operative or informal initiatives, have to play a significant role in development of agriculture. Good
organizations with desirable characteristics are needed. Village panchayats can play an important role in this regard. However, a lot
of ground work is required before these can really serve the purpose.
Capital formation: Capital formation or investment implies net change in capital stock of an economy.
Farming system approach: It is a holistic approach to agricultural research and extension that considers farm households in their
entirety,
Horizontal integrations: Horizontal integration relates to the who range of planning activities involving various sectors at the regional
level.
Inelastic demand: Refers to proportionately less change in quantity demanded with respect to a proportionate change in price.
Land reform: The term land reform broadly conveys the changes in rules and regulations under which land is owned and operated in
an agrarian economy.
Land tenure: The term land tenure connotes ownership and operation of land in an agrarian economy.
Minimum support price: The price of crop output fixed by government well in advance of growing season of the crop at which the
government is obliged to purchase all the quantity of crop output offered for sale.
Panchayat system: The village panchayfit system has three organs - gram sabha (general body), gram panchyat (executive) and nyaya
panchayat (legal body).
Terms of trade: Terms of trade of agriculture vis-a-vis non-agriculture are usually expressed as a ratio of an index of agricultural
prices to an index of non-agricultural prices. A ratio of more than unity (more than 100 if expressed as per cent) represents
favourable terms of trade for agriculture.
Vertical integration: Integration of national and regional planning is called vertical integration in planning.
The emerging concerns in Indi agriculture relate to environmental problems and their mitigation and agricultural diversification and
fo security.
Of late, environmental degradation issues such as decline in water table, water logging and soil salinity, soil erosion, pesticide
residues in plant, soil and water, have become significant in some areas. Though some technologies are available for mitigation of
these problems, more research and extension are required to develop environment friendly technologies that would ensure
sustainable agriculture. We need to develop environmental consciousness among farmers in areas where such soil and water related
problems are merging. Government has a responsibility to make people aware of environmental degradation through education and
spearheading environmental protection programmes by actively involving people and non-governmental organizations.
Diversification generally is a consequence of structural transformation of an economy. Agricultural diversification is instigated by
income increasing or risk minimizing considerations. Due to liberalization which implies increased role of market forces, income
increasing considerations have become more important. Available evidence suggests that ongoing agricultural diversification into non-
foodgrain crops is not posing any challenge to foodgrains availability in the country. This however, should not make us complacent
about food security concerns which remain serious as far as access to food by all is concerned.
Comparative advantage: It is a situation in which a country is relatively more efficient in producing a commodity because of its lower
opportunity costs, and gains by trading for some other commodity that another country is more efficient in producing.
Cost of production: It is the cost incurred in producing one unit of output. For example, cost of production for wheat is Rs. 4000/Qt1,
say for the year 1996-97.
Entitlement: Entitlement legitimizes ownership in the form of enjoying the fruits of one's own capabilities.
Food security: Food security is defined as access by all people at all times to the food required for a healthy life.
Environment-friendly Technology: A technology that does not have adverse environmental effects is called environment-friendly
technology.
Agricultural and rural development policies have to meet several objectives. The focus of this section is on the policies of rural
development which deal with poverty, unemployment, infrastructural development, social consumption needs and regional
imbalances. The programmes discussed here are: (i) Self Employment Programmes, (ii) Wage Employment Programmes, (iii)
Minimum Needs Programmes, (iv) Area Specific Programme, (vi) Integrated Rural Energy Programme, (v) Development of Dry-land
Farming, (vi) Soil and Water Conservation, and (vii) Rural Infrastructure Development Fund.
All these programmes had some success. The number of poor in the rural areas has gone down. There has also been rise in the work,
opportunities both for the self-employed and for those in wage employment. The programmes have also contfibuted in enhancing
the productive capacity in the rural areas by creating durable physical assets like roads, minor irrigation works and social forestry.
The performance of some of these programmes was not according to expectation. Some of the old programmes were either closed
or merged with some newer programmes. Their progress is reviewed and corrective steps are taken periodically.
Self Employment: Earning one's living directly from one's own profession or business.
Wage Employment: Earning one's living from wages.
Backward areas: Undeveloped regions.
Small farmer: A cultivator with a land holding of 2.5 to 5 acres.
Marginal farmer: A person with a land holding of 2.5 acres or below.
Landless labourer: A person without any land and his main source of income is from wages as agricultural or non-agricultural
labourer.
Beginning mid-1991, the government introduced far reaching economic reforms which were of k. distinct types — macroeconomic
stabilization and structural reforms. Key reforms introduced macroeconomic stabilization were fiscal — monetary reforms. The
important structural reforms includ trade and capital flows reforms, industrial deregulation and public sector reforms. It was
recogniz that vibrant and competitive financial system is necessary to support the proposed economic refofm Based on the
recommendations of committee (Chairman M. Narismham), major financial sector refo were initiated since 1991-92.
There was no direct impact of the reforms on rural economy as no direct reforms have been underta in agricultural sector which is
the major economic activity in the rural areas. However, the econom reforms had indirect effect on the rural economy.
The impact of economic reforms on rural economy is discussed in the following areas: (i) flow of cre for agriculture and rural
development, (ii) investment in agriculture, (ii) input subsidies, (iv) agricul export, (v) poverty alleviation and employment generation
programmes. The relaxations in export con measure had a positive impact on agricultural exports. The participation of government
in providin input subsidies and assistance under poverty alleviation and employment generation programmes continu almost at the
pre-reform level. However, the share of public investment in the gross capital formation agriculture and the credit flow to primary
sector has also decreased.
Thus, there was far reaching effect of these reforms on the rural economy mainly because no dire reforms have been introduced in
the agricultural sector. The Economy Survey 1996-97 rightly obsery as under.
Ìndustrial Policy Reform cannot be treated in isolation with agricultural sector continuing to rema fettered. Industry has benefited
greatly from deregulation. Similar benefits must be sought for agricul through phasing out numerous restrictions currently imposed by
the central and state governmen Export-Import policy for agriculture should ensure exports of high value of agricultural product& return
for low value essential agricultural commodity imports. Reform in agricultural sector need to pursued vigorously so as to improve the
climate for a higher growth in agriculture and improvement in its terms of trade.'
Capital formation: Connotes change in capital stock of an economy

Structural reforms: Sectoral adjustments designed to tackle the problems of supply side of the economy.
Macroeconomic stabilization: State of economy having low and stable inflation and a sustainable fiscal and balance of payments
position.
Specific rural development effort is required as rural areas face several problems like backwardness, poverty, unemployment, poor
infrastructure, traditional farming, inadequate support and high level of indebtedness. In this section several measures, like infusion of
capital, upgrading technology, developing natural resources and improving human resources for tackling the problems are discussed.
Rural development is the process of managing rural resources for improving quality of life of rural people. Productivity, equity, sustainability
and empowerment are the major development issues in human development. Rural management is the process of planning, organizing
and facilitating an environment for achievement of rural development. The key rural management issues include sustainable development,
promoting responsive rural development organizations, human resource development and infrastructure development. A sound rural
management system is the key to rural prosperity in India.
Rural marketing is a major issue in rural management as it is directly linked to the income levels and economic conditions of the rural
people. The rural marketing system suffers from many deficiencies resulting in exploitation of the rural producers. Government has
taken a number of steps to ameliorate the conditions of the farmers, notable among them being establishment of regulated
markets, price policy support, creation of storage and warehousing facilities and promotion of cooperative marketing efforts. The
emergence of NAFED for agricultural marketing holds promise for modem and globally competitive agricultural production and
marketing in India. The emerging issues in agricultural marketing include integration of production, processing and marketing, agro-
processing for value added exports, creation of infrastructure for global competiveness and increasing the producer's share in the
price paid by the consumer's share in the organization of marketing.
Agricultural prices have great human and political implications as they have a profound effect on gro equity and stability of the
economy. On account of peculiar characteristics of farm produce, agricul prices have shown a trend of continuous increase and wide
fluctuations. As stable agricultural prices gT, essential for economic development, it would be necessary to have an agricultural
policy, which safeguard the interests of both producers and consumers and will act as an instrument of growth.- current agricultural
price policy involves both price support and non-price measures. The Comrniske on Agricultural Prices and Costs (CAPC) plays a key
role in price support measures by recommendin support prices to the Government. The price support measures continue to be
relevant even in liberalized economic environment. Agricultural price management is complex as, many issues are involy such as,
maintaining terms of trade, focusing on target groups in public distribution systems. In conclusion it may be said that a well balanced
package of government interventions including promotion of technolo infrastructural investments and production subsidies, apart
from a pragmatic agricultural pries polio, will be necessary for economic development.
-
Agricultural Prices. Price of goods produced in agricultural sector - crops, livestock, and fruits.
Buffer stocks: Stocks maintained by Government to cushion the stocks of fluctuations in supply an prices caused by floods, wars,
earthquakes, transport bottlenecks.
Capital Formation: Connotes change in the capital stock of an economy.
Minimum Support Price: Price at which government undertakes to purchase all quantities offered to
Terms of trade (Farmer): The farmer's terms of trade connotes the ratio of the indices of prices receive and paid by the farmers.
MODULE B & C : FINANCING RURAL DEVELOPMENT & PRIORITY SECTOR ADVANCES

The Reserve Bank was established on April 1, 1935. The main functions of the Reserve Bank are broadly the same as those of other
central banks all over the world. Considering the dominance of agricultdre in the Indian economy, the Reserve Bank was assigned a
greater role to expand and coordinate the credit facilities available to the agricultural sector.
The first two decades were devoted primarily to making a realistic assessment of the rural credit structure, its strength and weak
aspect, the assistance it needed and to provide guidance to States to organize or strengthen the cooperative credit structure. During
the period, the Reserve Bank also undertook several steps to establish appropriate procedures to ensure smooth flow of credit.
The Reserve Bank had a special responsibility in the development of the cooperative credit system on sound lines. As the central
Bank of the country, the banking operations of the cooperative credit structure were also to be brought within the overall discipline
applicable to the banking sector, as a whole. Thus, the Banking Regulation Act, 1949 was extended to cooperative banks from March
1966. The role of the Reserve Bank in the sphere of rural credit was to perform three main functions, viz., promotional, financing and
regulatory functions. As a result of the concerted efforts and policies of the Reserve Bank, a well-differentiated strut credit
institutions has been built up. The structure of credit institutions, purveying agricultural c primary level, included short-term and
long-term cooperative credit structure, commercial banks Regional Rural Banks.
Apart from furthering the development of cooperative to provide short-term credit, the Bank establis a separate institution called
the Agricultural Refinance Corporation (later renamed Agricultural Refin and Development Corporation) for the provision of medium
and long-term refinance.
A new apex bank, viz., National Bank for Agriculture and Rural Development was established on 12 1982. The NABARD took over
from the Reserve Bank, the overseeing of the entire rural credit g'Ys including credit for rural artisans and village industries, and the
statutory inspection of coopera banks and Regional Rural Banks on an agency basis.
NABARD has been statutorily constituted as a separate entity under NABARD Act, 1981. Howevei Act provides for organic link
between NABARD and RBI; NABARD would work under the Rese Bank's general guidance and would receive support from it.
Consequent upon the establishment o NABARD, the obligation of RBI in the sphere of agricultural credit has been considerably
modified Reserve Bank continues to retain its essential regulatory controls.
Integrated Scheme of Rural Credit: The recommendations of All India Rural Credit Survey Comm are collectively known as the
Integrated Scheme of Rural Credit.
Crop Loan System: Introduced by RBI. The system envisages a set of procedures to be adopted banks in determining and disbursing
crop loans to borrowers.
Scales of Finance: Quantum of loan determined under crop loan system for raising crops over a un area.
The CRAFICARD Report recommended the formation of NABARD for agriculture and rural development. The objective of this national level
organization was to provide undivided attention, forceful direction and pointed focus to the credit problems arising out of integrated
approach to rural development. Following the acceptance of this recommendation by GOI and RBI, NABARD Act, 1981 was passed by the
Parliament. In accordance with this Act, National Bank for Agriculture and Rural Development was established by merging the Agriculture
Credit Department and Rural Planning and Credit Cell of RBI and the ARDC.
The capital of the Bank is equally contributed by GOl and RBI. The Bank operates through its Office at Mumbai, 28 Regional Office
and two Sub-offices. The main sources of funds of the Ba include capital and own funds, domestic borrowing and international
borrowings. The major puipo of deployment of funds are loans and advances and investments.
Functions of NABARD primarily include credit function and non-credit functions. The latter cove developmental and regulatory
functions.
The Bank provides refinance facilities to eligible institutions in terms of provisions contained in NAB Act, 1981. During the year 2008-
09, the Bank provided Rs. 50,577 crore of refinance/loan suppo cooperative banks, commercial banks, RRBs and State Governments.
As part of developmental role, the Bank has initiated several measures to promote credit flow under fa and non - farm sector.
Important promotional and developmental measures relate to credit plannin development of rural non - farm sector; reduction in
regional imbalances; support to special developme programmes; monitoring, evaluation and research studies; research and
development fund and improv. banking access to the rural poor.
The Bank's non-credit function also covers institutional development of Cooperative and Regional Rura Banks. Besides undertaking
inspection of cooperative banks and RRBs, the Bank also helps in their re organization, restructuring or rehabilitation according to
needs.
Rural Non-Farm Sector: Covers off-farrn and non-farm activities (outside agriculture and allied activitie in secondary and tertiary
sectors of the economy carried out in or primarily benefiting rural areas.
Project Monitoring: Defined as a continuous review of project implementation to ensure that inpu deliveries, work schedules,
targeted outputs and other required actions are proceeding according to plan.
Project Evaluation: Defined as a process for determining systematically and objectively the reievanc efficiency, effectiveness and
impact of project activities in the light of their stated objectives.
'Imbalances: A term generally used in cooperative credit structure where the primaries undertake lendin by availing borrowings from
higher cooperative tiers. The imbalance arise when the loan outstanding o higher tier cooperative are not covered by the loan
outstanding of primaries against the ultimate borrowers
Lead Bank Scheme was introduced in 1969 for adopting an area approach in evolving credit plans programmes for development of
banking and the credit structure. The scheme was introduced,4 districts of the country. Each district was allotted to a commercial
bank the bank was to take initiat the economic development of the district. The basic objective of this programnie was to orient'ha
activities towards an 'area approach' and ensuring that the development needs of all regions an section of the community were
served by the banks.
Three committees, Block Level Bankers' Committee, District Consultative Committee and state .le
co-ordination Committee were set up to implement the lead bank scheme.By June 1974, the lead banks have carried out surveys in
virtually all districts and bank branches
been opened in the identified unbanked centres possessing minimum infrastructural facilities. The Bank. Scheme was successful in
branch expansion and in providing access to credit to farmers'zw small enterprises.
In 1989, service area approach was introduced with the aim of planning from the bottom, i.e. fr village level and going up to block
and district level.
After implementation of the scheme for nearly four decades, Lead Bank Scheme was reviewed Committee, which recommended
directing the focus of the scheme to financial inclusion.
Lead Bank Scheme: A system of credit planning by a lead bank at district level introduced by RB 1969.
Area Approach: Introduced by RBI in 1970 as a sequel to Lead Bank Scheme.
DRI Scheme: Introduced by RBI in 1972. Under the Scheme, public sector banks are to lend a concessional rate of interest of 4% to
selected low income groups.
Priority Sector Lending: Priority Sector Lending was introduced by RBI in 1967.
Lead Bank: Bank designated under the Lead Bank Scheme for coordinating the efforts of all cre institutions in the district.
District Credit and Annual Action Plans: are documents prepared by Lead Bank showing sector - wis credit plan of all banks in the
district.
Potential Linked District Credit Plan: Plan document prepared at district level by NABARD showin sector-wise resource potential and
credit requirement for exploiting the resource potential over a specific time-frame.
Service Area Approach (SAA): A system of micro - level credit planning introduced by RBI with effe, from 01 April 1989. Under this
approach, each branch will have to meet the credit needs of villag assigned to them.
Service Area Plans (SAPs): The annual credit plan prepared by a bank branch under SAA is referre as Service Area Plan.
State Credit Plans (SCPs): SCPs are aggregation of district level PLPs.
Regional Rural Banks were set up in 1975 with the expectation that they would combine the local feel and familiarity of rural problems
characteristic of cooperatives with the professionalism and large resource base of commercial banks and become a specialized rural
financial institutions for developing the rural economy by providing credit to small and marginal farmers, agricultural labourers, artisans and
small entrepreneurs. Over the
years, RRBs expanded their network: in 2004, there were 196 RRBs" with 14,446 branches working 518 districts. After bank-wise
amalgamation, the number came down to 86 (45 amalgamated an d41 stand alone, including the new RRB set up in Puducherry during
2007-08) with 15,235 branches in 200%
Over the years, several attempts were made to improve the functioning of RRBs. In December 2005, special package was announced by
RBI. A number of policies were initiated to facilitate the diversificatiC of RRBs business operation into new areas. All these efforts yielded
results by improving the performan.c of RRB s.
RRBs were considered a strong intermediary for financial inclusion in rural areas. As per RBI guidelii RRB started financing under
General Credit Card (GCC) and opening 'No Frills' deposit accounts. RI were brought under ICT solutions.
All these efforts yielded results. During 2008-09, 81 RRB improved their performance and repo gross profit of Rs.1,745.84 crore, an
increase of 26 per cent over 2007-08.
Commercial banks: The nationalization of major commercial banks in 1969 (and another 6 in 1980) gay. a boost to rural lending as these
banks expanded their operations in rural areas. The number of branchds of commercial banks increased from 1833 in 1969 to 31,204 in
2008, with rural branches having a share of 40%. Total disbursal of agricultural credit reached Rs.6,85, I46 crore during 10th five year plan.
To increase their involvement during 11th Plan, GOI and RBI introduced newer innovation.
To strengthen rural credit delivery system, Special Agricultural Credit Plans (SACP) was introduced 1994-95. Other important change
was introduction of Kisan Credit Card and 'no-frills' accounts. these efforts are helping increasing rural credit delivery by commercial
banks.
FITF: Financial Inclusion Technology Fund FTTF: Farmers Technology Transfer Fund . ICT: Information Communication Technology
Gramtellers: Rural ATMs developed at IIT Madras GPRS: General Packet Radio Services GSM: Global System for Mobile
Communications CDMA: Code Division Multiple Access
This section covered: 1) rural insurance and micro-insurance, and 2) Business Facilitators and BusineSs Correspondents in rural
financing.
Insurance: Critical agro-climatic variations cause uncertainty and risk in agricultural sector. To provid a comprehensive insurance
solution to the farmers in the event of failure of crops as a result of natura calamities, pests and diseases, the National Agricultural
Insurance Scheme (NAIS) for crops wa implemented from rabi 1999-2000 season. The scheme at present is being implemented by 24
states arid 2 UTs. But the result is not very encouraging. Another scheme, the Weather Based Crop Insuranc Scheme (WBCIS) was
introduced in kharif 2007, on a pilot basis.
Micro-insurance is a different insurance with premium based on community risk taking as agains individual risk taking. It is
considered beneficial to the poor. Most of the schemes are concentrated in th southern region of the country, as the northern region
is bereft of such mobilization as the nodal agencies are either non-existent or dysfunctional. Micro-finance activity in the country is
leading to the spread of micro-insurance among its members/clients. During 2008-09, several initiatives have been taken in this
regard.
BF/BC: With the objective of ensuring greater financial inclusion'and increasing outreach of the banking sector, RBI permitted banks
-
to use intermediaries as Business Facilitators (BFs) or Business Correspondents (BCs) for providing financial and banking services in
2006. Specified organizations and individuals can work as BCs. The BCs are alloWed to conduct banking business as agents of the
banks at places other than the bank premises. A working group has recently reviewed the model and suggested new entities for
appointment of BCs.
NAIS: National Agricultural Insurance Scheme
WBCIS: Weather Based Crop Insurance Scheme
AIC: Agriculture Insurance Company of India Ltd
NGO: Nongovernmental organizations
MFIs: Micro-finance institutions
IRDA: Insurance Regulatory and Development Authority
BCs: Business Correspondents
NBFC: Non-banking finance company
CSCs: Common Service Centres
PRIORITY SECTOR ADVANCES

Evolution : In July 1968 banks were advised to increase lending to priority sectors. Description of priority sector was formalized in
1972. Banks were advised in Nov 1974, to achieve a lending target of 33-1(3 % by March 1979 which was increased to 40% in 1980
(to be achieved by 1985). Sub-targets for lending to agriculture and weaker sections were specified in 1980. The guidelines were
revised on recommendations Of M V Nair Committee on 20.07.12 .RBI revised the priority sector lending guidelines with effect from April
rd
23 2015 on the basis of recommendations of an Internal Working Group (IWG) headed by Ms Lily Vadera. The salient features of the guidelines
are as under:-
Categories / Activities under priority sector
1. Agriculture
2. Micro, Small and Medium Enterprises
3. Export Credit
4. Education
5. Housing
6. Social Infrastructure
7. Renewable Energy
8. Others
Targets /Sub-targets for Priority sector
Domestic scheduled commercial banks and Foreign banks with 20 branches and above
Total Priority Sector:
40% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE), whichever is higher.
Sub-Targets:
1. Agriculture : 18% of ANBC or CEOBE, whichever is higher. A sub-target of 8% is prescribed for Small and Marginal Farmers,
to be achieved in a phased manner i.e., 7% by March 2016 and 8% by March 2017. (Banks should reach the level of 13.5%
direct lending to beneficiaries who earlier constituted the direct agriculture sector).
2. Micro Enterprises: 7.5% of ANBC or CEOBE, whichever is higher (7% by March 2016 and 7.5% by March 2017).
3. Weaker Sections : 10% of ANBC or CEOBE, whichever is higher.
Important : Foreign banks with 20 branches and above ' are to achieve the total priority sector target of 40%, agriculture advances
target of 18% and Weaker Sections Target within a maximum period of 5 years starting from April 1, 2013 and ending on March 31,
2018. The sub-target for Small and Marginal farmers and for Micro Enterprises would be made applicable post 2018 after a review in
2017.
Foreign banks with less than 20 branches Total priority sector target : 40% of ANBC or CEOBE, whichever is higher to be achieved in
a phased manner between 2016-2020. (Additional 2% each year to be achieved by lending to sectors other than exports. The sub
targets would be decided in due course).
Computation of priority sector targets
The computation targets/sub-targets is based on ANBC or CEOBE, whichever is higher, as on the corresponding date of the preceding
year.
Description of the eligible categories
1. Agriculture: There is no distinction between direct & indirect agriculture loans. The lending shall include (i) Farm Credit (short-
term crop loans and- medium/long-term credit to farmers) (ii) Agriculture Infrastructure and (iii) Ancillary Activities.
(1) Farm credit
A) Loans to individual farmers [including Self Help Groups (SHGs) or Joint Liability Groups (JLGs), i.e. groups of individual farmers,
provided banks maintain disaggregated data of such loans], directly engaged in Agriculture and Allied Activities, viz., dairy, fishery,
animal husbandry, poultry, bee-keeping and sericulture. This will include:
(1) Crop loans to farmers, including traditional/non-traditional plantations & and horticulture and loans for allied activities.
(ii) Medium and long-term loans to farmers for agriculture and allied activities (e.g. purchase of agricultural implements and
machinery, loans for irrigation and other developmental activities undertaken in the farm, and developmental loans for allied
activities)
(iii) Loans to farmers for pre and post-harvest activities, viz., spraying, weeding, harvesting, sorting, grading and transporting of
their produce.
(iv) Loans up to Rs.50 lakh against pledge/hypothecation of agricultural produce (including warehouse receipts) for a period not
exceeding 12 months.
(v) Loans to distressed farmers indebted to non-institutional lenders.
(vi) Loans under Kisan Credit Card Scheme.
(vii) Loans to small and marginal fanners for purchase of land for agricultural purposes.
B) Loans to corporate farmers, farmers' producer organizations/companies of individual farmers, partnership firms and co-operatives
of farmers directly engaged in Agriculture and Allied Activities, up to an aggregate limit of Rs. 2 crore per borrower. This will include
the loans as per categories A (i, ii, iii, iv) above:
(ii) Agriculture infrastructure:
i) Construction of storage facilities (warehouses, market yards, godowns and silos) including cold storage units/ chains to
store agriculture produce/products, irrespective of location.
ii) Soil conservation and watershed development. iii). Plant tissue culture and agri-biotechnology, seed production, production
of bio-pesticides, bio-fertilizer, and vermi composting.
An aggregate sanctioned limit of Rs.100 crore per borrower from the banking system, will apply. (iii) Ancillary activities
(i) Loans up to Rs. 5 crore to co-operative societies of farmers for disposing of produce.
(ii) Loans for Agriclinics & Agribusiness Centres.
(iii) Loans for Food and Agro-processing up to an aggregate sanctioned limit of Rs.100 crore per borrower from the banking
system.
(iv) Custom Service Units by individuals, institutions or organizations who maintain a fleet of tractors, bulldozers, well-boring
equipment, threshers, combines, etc., and undertake farm work for farmers on contract basis.
(v) Loans to Primary Agricultural Credit Societies (PACS), Farmers' Service Societies (FSS) and Large-sized Adivasi Multi-Purpose
Societies (LAMPS) for on-lending to agriculture.
(vi) Loans to MFIs for on-lending to agriculture sector fulfilling the specified conditions.
(vii) Outstanding deposits under RIDF and other
eligible funds with NABARD on account of priority sector shortfall.
To compute 8% target, the Small and Marginal Farmers will include the following:-
• Farmers with landholding of up to 1 hectare considered as Marginal Farmers and farmers with a landholding of more than 1
hectare and upto 2 hectares considered as Small Farmers.
• Landless agricultural labourers, tenant farmers, oral lessees and share-croppers.
• Loans to SHGs or 31.Gs, i.e. groups of individual Small and Marginal farmers directly engaged in Agriculture and Allied
Activities, provided banks maintain disaggregated data of such loans.
Loans to farmers' producer companies of individual farmers, and co-operatives of farmers directly engaged in agriculture and allied
activities, where the membership of small and marginal farmers is not less than 75% by number and whose land-holding share is also
not less than 75% of the total land-holding.
2. Micro, Small & Medium Enterprises
I. Bank loans to MSMEs in manufacturing and production.
2. Loans up to Rs. 5 crore to Micro & Small Enterprises and Rs.10 crore to Medium Enterprises providing or rendering of
services.
3. Loans to units in the Khadi and Village Industries (KVI) sector which will be eligible for classification under the sub-target of
7.5% prescribed for Micro Enterprises.
Other Finance to MSMEs
(i) Loans to entities involved in assisting the decentralized sector in the supply of inputs to and marketing of outputs of
artisans, village and cottage industries.
(ii) Loans to co-operatives of producers in the decentralized sector viz. artisans, village and cottage industries.
(iii) Loans to MFIs for on-lending to MSME sector fulfilling the specified conditions.
(iv) Loans outstanding under General Credit Cards (including Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card,
and Weaver's Card etc. meeting non-farm entrepreneurial credit needs)
(v) overdraft up to Rs.5000 under PM Jan Dhan accounts (where borrowers household annual income does not exceed
Rs.100,000 for rural areas and Rs.1,60,000 for non-rural areas).
(vi) Factoring transactions on 'without recourse' basis with MSMEs.
(vii) Outstanding deposits with SIDBI or MUDRA on account of priority sector shortfall.
Important : MSME units will continue to enjoy the priority sector lending status up to 3 years after they grow out of the MSME
category concerned.
3. Export Credit.
Incremental export credit over corresponding date of the preceding year, up to 2% of ANBC or CEOBE, whichever is higher, effective
from April 1, 2015 for domestic banks, subject to a sanctioned limit of Rs.25 crore per borrower to units having turnover of up to
Rs.100 crore. For foreign banks with 20 branches and above this to become effective from April 1, 2017.
4. Education:
Loans to individuals for educational purposes including vocational courses up to Rs. 10 Iakh irrespective of the sanctioned amount
will be considered as eligible for priority sector.
5. Housing
(i) Loans for purchase/construction of a dwelling unit per family : Up to Rs. 28 Iakh (overall cost of house maximum Rs.35 lac)
in metropolitan centres (with population of 10 latch and above) and loans up to Rs. 20 lakh (overall cost of house maximum
Rs.25 lac) in other centres.
Note (1) The housing loans to banks' own employees will be excluded. (ii) The housing loans backed by long term bonds (which are
exempted from ANBC), should either be included under loans to individuals or banks may take benefit of exemption from ANBC, but
not both.
(ii) Loans for repairs to damaged dwelling units of families up to Rs. 5 lakh in metropolitan centres and up to Rs.2 lakh in other
centres.
(iii) Bank loans to any governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum
dwellers. (Ceiling - Rs.10 lakh per dwelling unit).
(iv) The loans for housing projects exclusively for construction of houses for economically weaker sections and low income
groups, the total cost of which does not exceed Rs. 10 lakh per dwelling unit. For identifying the economically weaker
sections and low income groups, the family income limit of Rs. 2 lakh per annum, irrespective of the location, is prescribed.
(v) Bank loans to Housing Finance Companies (HFCs), approved by NHB for their refinance, for on-lending for the purpose of
purchase/ construction/reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers,
subject to an aggregate loan limit of Rs. 10 lakh per borrower. These loans are restricted to 5% of the individual bank's total
priority sector lending. The maturity of bank loans should be co-terminus with average maturity of loans by HFCs.
(vi) Outstanding deposits with NI1B on account of priority sector shortfall.
6. Social infrastructure
Loans up to a limit of Rs. 5 crore per borrower for building social infrastructure namely schools, health care facilities, drinking water
facilities and sanitation facilities in Tier H to Tier VI centres.
7. Renewable Energy
Bank loans up to a limit of Rs. 15 crore to borrowers for solar and biomass based power generators, wind mills, micro-hydel plants
and for non-conventional energy based public utilities viz. street lighting systems, and remote village electrification. For individual
households, the loan limit will be Rs. 10 lakh per borrower.
8. Others
I. Loans not exceeding Rs. 50,000/- per borrower to individuals and their SHG/ILG (household annual income in rural areas
does not exceed Rs. 100,000 and for non-rural areas Rs.1,60,000).
2. Loans to distressed persons (other than farmers) not exceeding Rs.100,000 per borrower to prepay their debt to non-
institutional lenders.
3. Loans to State Sponsored Organisations for Scheduled Castes/ Scheduled Tribes for specific purpose of purchase and supply
of inputs and/or the marketing of the outputs of the beneficiaries of these organisations.
Investments eligible for classification as Priority Sector lending
In all the following cases, the assets in which the investment is made, should be originated by banks as eligible priority sector
advances except òther priority sector' loans.
1. Investments in securitised assets originated by banks and financial institutions. The all inclusive interest charged to the
ultimate borrower by the originating entity should not exceed the Base Rate of the investing bank plus 8% per annum.
Investments in securitised assets originated by NBFCs, where the underlying assets are loans against gold jewellery, are not
eligible for priority sector status.
2. Transfer of Assets through Direct Assignment /Outright purchases
(i) Assignments/Outright purchases of pool of assets by banks originated by banks & FIs.
(ii) Eligible Loan assets purchased, should not be disposed of other than by way of repayment.
(iii) All inclusive interest charged to the ultimate borrower by the originating entity should not exceed Base Rate of purchasing
bank plus 8%%.
(iv) When banks undertake outright purchase, they must report the nominal amount actually disbursed to end priority sector
borrowers and not premium embedded amount paid to the sellers. Purchase/ assignment/investment transactions
undertaken by banks with NBFCs, where the underlying assets are loans against gold jewellery, are not eligible for priority
sector status.
3. Inter Bank Participation Certificates: IBPCs bought by banks, on a risk sharing basis.
4. Priority Sector Lending Certificates: The outstanding priority sector lending certificates bought by the banks.
Priority Sector Lending Certificates Through PSLC, the seller sells the fulfillment of priority sector obligation and the buyer
buys the same. There will be no transfer of risks or loan assets. Sellers/Buyers: Commercial Banks, RRBs, Local Area Banks,
Small Finance Banks & Urban Co-op Banks. The PSLCs are traded and settled through the CBS portal (e-Kuber) of RBI.
Types of PSLCs: There would be 4 kinds of PSLCs :
1. PSLC - Agriculture : Eligible Agriculture loans except SF/MF, for achievement of agriculture target and overall PSL target.
2. PSLC - SF/MF : Eligible loans to small/marginal 'farmers for achievement of SF/MF sub-target, agriculture target and overall
PSL target.
3. PSLC - Micro Enterprises : All PSL Loans to Micro Enterprises for achievement of micro-enterprise sub-target and overall PSL
target.
4. PSLC - General : The residual priority sector loans i.e. other than loans to agriculture and micro enterprises for for
achievement of overall PSL target
Amount for issue: Normally PSLCs will be Issued against the underlying assets. A bank can issue PSLCs upto 5G% of previous year's
PSL achievement without having the underlying in its books.
Expiry date : All PSLCs will expire by March 31st irrespective of the date it was first sold.
Value and Fee: The nominal value of PSLC would represent the equivalent of the PSL that would get deducted from the PSL portfolio
of the seller and added to the PSL portfolio of the buyer. The buyer would pay a fee to the seller which will be market determined.
Lot Size: The PSLCs would have a standard lot size of Rs.25 lakh and multiples thereof.
COMPUTATION OF PRIORITY SECTOR ADVANCES FOR TARGET PURPOSE
Targets : The targets to be computed based on ANBC / CEOBE, whichever higher, of preceding March 31/.
Computation of Adjusted Net Bank Credit (ANBC )
Bank Credit in India [Item No.VI of Form ‘A’ under Section 42 (2) of the RBI Act, 1934]. I
Bills Rediscounted with RBI and other approved Financial Institutions II
Net Bank Credit (NBC) - For the purpose of priority sector computation only III (I-II)
Bonds/debentures in Non-SLR categories under HTM category+ other investments eligible to be treated as
priority sector +Outstanding Deposits under RIDF and other eligible funds with NABARD, NHB and SIDBI on IV
account of priority sector shortfall + outstanding PSLCs
Eligible amount for exemptions on issuance of long-term bonds for infrastructure and affordable housing V
Eligible advances extended in India against the incremental FCNR (B)/NRE deposits, qualifying for exemption from
VI
CRR/SLR requirements.
ANBC III+IV-V-VI
For calculation of Credit Equivalent Amount of Off-Balance Sheet Exposures, banks to follow Master Circular on Exposure Norms* For priority
sector computation. Banks should not deduct / net any amount like provisions, accrued Interest, etc. from NBC.
Where banks subtract prudential write off at
Corporate/Head Of level while reporting Bank Credit,
the bank are to ensure to credit to priority sector and all other sub-sectors so written off should also be subtracted category wise
from priority sector and sub-target achievement. All types of loans, investments or any other items which are treated as eligible for
classification under priority sector target/sub-target achievement should also form part of Adjusted Net Bank Credit.
Data / Report on PS Lending to RBI
Banks are to report priority sector lending, to RBI on quarterly (within 15 days) and annual basis (within 1 month) on prescribed
format.
Non-achievement of priority sector targets and sub-targets
A simple average of all quarters will be arrived at and considered for computation of shortfall / excess at end of the year for overall
and sub-targets.
DOMESTIC BANKS and FOREIGN BANKS with 20 or more brandies
The amount of shortfall in lending to priority sector or agriculture or weaker section, to be deposited in RIDF, Warehouse
Infrastructure Fund, Short Term Co-operative Rural Credit Refinance Fund and Short Term RRB Fund with NABARD or other funds
with NITB/SIDBI. This amount is shown in Schedule 11 (other assets) of bank balance sheet.
FOREIGN BANKS with less than 20 branches Amount of shortfall in PS target, will be placed with SIDBI or other financial institution.
This amount is shown in Schedule 11 (other assets) of bank balance sheet.
Rate of interest on amount deposited
1- For shortfall less than 5%age points : Bank Rate minus 2%age points
2- For shortfall 5 and above, but less than 10%age points : Bank Rate minus 3 percentage points
3- Shortfall 10 percentage points and above : Bank Rate minus 4 percentage points
ROI on loans disbursed from RIDF /SEDF = Bank Rate minus 1.5%.
Misclassification : The misclassifications reported by RBI's Department of Banking Supervision would be adjusted/ reduced from the
achievement of that year, to which the amount of declassification/ misclassification pertains, for allocation to various funds in
subsequent years.
WEAKER SECTION IN PRIORITY SECTOR
1. Small and Marginal Farmers
2. Artisans, village and cottage industries where individual credit limits do not exceed Rs.1 lakh
3. Beneficiaries under National Rural Livelihoods Mission (NRLM), National Urban Livelihood Mission (NULM), Differential Rate
of Interest (DRI) and Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS)
4. Scheduled Castes and Scheduled Tribes
5. Beneficiaries of Differential Rate of Interest (DRI) scheme
6. Self Help Groups
7. Distressed farmers indebted to non-institutional lenders _
8. Distressed persons other than-farmers, with loan amount not exceeding Rs.1 lakh per borrower to prepay their debt to non-
institutional lenders
9. Individual women beneficiaries up to Rs. 1 lakh per borrower
10. Persons with disabilities
11. Overdrafts upto Rs.5,000/- under PM Jan-Dhan Yojana a/c (provided household annual income does not exceed Rs, 100,000
for rural areas and Rs. 1,60,000 for non-rural areas)
12. Minority communities notified by Govt. of India.
Common guidelines for priority sector loans
1. Time limit for disposal of loan applications At discretion of the bank concerned (instead of the earlier time limit prescribed
by R131).
2. Rejection of Loan Proposals
Reasons to be given for rejection, in writing. Branch Managers can reject applications and cases of rejection are to be verified
subsequently by Divisional/Regional Managers. For SC/ST, rejection should be at a level higher than that of Branch Manager.
Rates of Interest
Banks have full discretion to fix interest rates which must not be less than the MCLR.
In case of agriculture advances, interest to be compounded annually as per Supreme Court judgement dated June 20, 1994.
No dues certificate
Banks have been advised by RBI (Jan 28, 2015) to dispense with obtaining 'No Due Certificate' from the individual borrowers
(including SHGs & JLGs) in rural and semi-urban areas for all types of loans including loans under Government Sponsored Schemes,
irrespective of the amount involved unless the Government Sponsored Scheme itself provides for obtaining 'No Dues Certificate'.
SUMMARY OF COLLATERAL SECURITY NORMS
Common guidelines for priority sector loans
1. Loans up to Rs 25,000 in PS there is no margin, no collateral security, no penal interest on advance, no processing fees
and no inspection charge.
2. Loan more than Rs 25,000, the margin will be from 15% to 25%. For Loans beyond Rs 25,000, bank can ask for
TPG/collateral security or both.
3. Loan application disposal norms : As decided by Bank's Board of Directors
4. COLLATERAL SECURITY :
For agriculture: NIL In case of: Up to Rs.100000.
Up to Rs.3 lac in case of recovery tie-up
Other priority sector Up to Rs.25000 nil
Micro & Small Enterprises: Not to be insisted upon: Up to Rs.10 lac
-normal accounts -good track record a/c -accounts guaranteed Up to Rs.25 lac
under CGF guarantee up to Rs.100 lac Up to Rs.5 lac — nil
Agro clinics & business centres
SGSY:
-Individual up to Rs.100000 Not to be obtained up to this amount
-Group up to Rs. 10 lac
SISRY Not to be obtained
Education loan up to Rs.7.50 lac Not to be obtained up to this amount.
1. Rate of interest: As per directives issued by RBI.
2. Service charges: No loan related and adhoc service charges/inspection charges on priority sector loans up to Rs 25,000.
3. Receipt, Sanction/Rejection/Disbursement Register: A register/ electronic record should be maintained by the bank, wherein
the date of receipt,
sanction/rejection/disbursement with reasons thereof, etc., should be recorded.
4. 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.
PROCESSING/INSPECTION FEE, SERVICE CHARGE, PENAL INTT IN PRIORITY SECTOR ADVANCES
For loans up to Rs.25000 No charges
For loans above Rs.25000 Bank discretion
Priority Sector Lending Targets for RRBs
RBI fixed the following targets for Regional Rural Banks w.e.f. 1.1.2016 :
1. PS Lending Targets: 75% of total outstanding.
2. Agriculture: 18%% of total outstanding.
3. Small and Marginal Farmers: 8% of total outstanding*
4. Micro Enterprises: 7.5% of total outstanding**
5. Weaker Sectors: 15% of total outstanding. (* 7% by March 2016 and 8% by March 2017.) (**7% by March 2016 and `
7.5% by March 2017.)
AGRICULTURAL ADVANCES
1. No Margin and No Collateral security for agricultural advances up to Rs 100,000
2. No no dues certificate for loans up to Rs 50,000.
3. Committee on flow of credit to agriculture was headed by: Prof Vyas
4. Crops divided into short duration and long duration. Short duration crop where crop season upto: 12 months. Long
Duration crop where crop season more than 12 months. 5_ The decision regarding duration of crop by SLBC_
6. Service Area approach discontinued except for Government sponsored schemes.
7. Rashtriya Krishi Birna Yojna (RKBY) is operated by : Agri Insurance company Limited.
8. Risks covered by RKBY: damage to crops by natural calamities like flood, draught, pest attack etc
9. Risks not covered under RKBY : War and Nuclear risk
10. Members of Joint Liability Group can be: 4 to 10
11. Maximum advance to Joint Liability Group: Rs 50,000 per member and Rs 5 lac for the group.
12. The scale of finance per acre for crop loans is to be decided by District Technical Committee.
13. If crop is damaged, crop loan has to be converted to medium term loan repayable in 3 to 5 years.
14. Annewari refers to damage to crop due to natural calamities like draught, flood, hailstorm etc.
There are mainly two types of crops Le. Rabi and Khalif. Rabi is generally sown in Oct/Nov and harvested in April and Kharif is generally sown in July
and harvested in Sept/Oct. Main Rabi crops are wheat and gram and main Kharif crops are paddy, jwar, bajra.
Various types of cultures and revolutions :
1. Sericulture: Silk production. 2. Apiculture: Honey Bee keeping
3. Aquaculture: Shrimp farming, fishes 4. Pisciculture: Breeding of fishes in pond
5. Floriculture: Flower production 6. Apriculture: Mushroom production
7. Silviculture: Forestry 8. Horticulture: Fruits production
9. White revolution: milk production 10_ Green revolution: increase in foodgrain production
11. Blue revolution: fish production 12_ Yellow revolution: increase in oilseeds and pulses
13. Olericulture : Vegetable Cultivation 14. Tissue culture: Improvement of plant varieties
15. Vermiculture - Rearing of earth worm 16. Mulberry Associated with - Sericulture 17. Rainbow
revolution- connected with flowers
Interest Subvention for Agricultural Loans
1. Available for short term production loans in agriculture up to : Rs 3 lakh
2. Available only to public sector banks
3. Subvention provided by Central Govt
4. Rate of subvention: 2% p.a.
5. Interest charged by banks: 7% per annum.
6. Submission of claims: Half-yearly as at September 30, and March 31,
7. Additional subvention for prompt repayment: 3% if repayment within one year.
8. Effective rate to farmer: 4%
Kisan Credit Card
1. Scheme prepared by Nabard and changes also by Nabard.
2. Revised on recommendations of Committee headed by Shri T.M.Bhasin.
3. Kisan Credit Card Scheme can be used for (a) meeting the short term credit requirements for cultivation of crops (b) Post
harvest expenses (c) Produce Marketing loan (d) Consumption requirements of farmer household (e) Working capital for
maintenance of farm assets and activities allied to agriculture, like dairy animals, inland fishery etc. (f) Investment credit
requirement for agriculture and allied activities like pump sets, sprayers, dairy animals etc
4. Fixation of limits: The short credit limit for farmers other than marginal farmers for first year will be calculated as under -
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, PAIS & asset insurance_ For subsequent years, limit will be increased each year by 10%
towards cost escalation increase in scale of finance for every successive year and estimated Term loan component for the
tenure of Kisan Credit Card, i.e., five years
5. Validity Period of KCC: Banks may determine the validity period of KCC and its periodic review.
6. If there is a credit balance in the account it will earn interest at Saving Fund rate as per rules applicable in SF account.
7. Personal Accident Insurance for KCC holders: KCC holders are covered against death or permanent disability due to
accident for Rs 50,000. For partial disability due to accident the cover is available for Rs 25,000. The cover is available only
to KCC holders up to 70 years of age at the time of entry to the Scheme. The insurance premium is competitive but not
more than Rs 15 per annum to be shared by the bank and the borrower in the ratio of 2:1.
Farmers' Club Programme (FCP)
1. Features of the Club:
 Size of the Club:No restriction on the upper limit but the minimum size should be 10 members Membership: Both farmers as
well as non farmers can become the members of the club.
 Office bearers: Each Club will have two office bearers, viz, Chief Co-ordinator and Associate Coordinator.
 Operational area: Preferably one village or a group of 2-3 villages on contiguous basis.
 Registration: Not required.
 Bank Linkage: All the Clubs should have savings bank accounts with the bank in the joint name of the office bearers.
2. NABARD assistance: Rs.10000/- per club per annum for a period of three years as per following details: Formation and
maintenance expenses:Rs.2000; Awareness / orientation meet at base level:Rs.5000; Meet with experts programme (2
programmes in a year) : Rs.3000
3. Assistance exceeding Rs.10,000/- may be met by the bank with maximum of Rs 50001- per annum during the first three
years and
th th
Rs.10000/- per year during 4 & 5 year of formation of the club.
AGRI CLINIC & AGRI BUSINESS CENTRE
1. Eligibility: (i) The applicant should be Agricultural Graduates/Graduates in subjects allied to agriculture. (ii)Diploma in agriculture
and allied subjects from State Agricultural Universities. (iii)Science graduates with post graduation in agriculture and allied
subjects (iv) Individuals or in group of not exceeding 5 persons; of which one could be a Management Graduate with
qualification or experience in business development and management.
2. Maximum Project cost: (a) Project by individual: Rs 20 lakh; (b) Project by a Group: Rs 100 lakh.
Margin: (a) Upto Rs 5 Lakh: Nil; (b) Above Rs 5lakh: 25%.
4. Security: (i)Upto Rs. 5 Lakh: No collateral security (ii) Above Rs.5 Lakh: Hypothecation of assets created out of bank loan
and Collateral security or Third Party Guarantee.
5. NABARD Refinance: 100 per cent of bank loan.
6. Automatic Refinance Scheme of NABARD: Maximum loan - Rs.30 lakh, and the ceiling for refinance would be Rs.20 lakh. Projects with
outlay over Rs 30 lakh require NABARD approval.
7. Depending on the type of venture, the loan can be repaid within 5-10 years (with moratorium upto 2 years), in easy
installment.
8. Credit linked capital subsidy by Govt of India: (a) 36% of the capital cost of the project. It would be 44% for SC, ST, Women and other
disadvantaged sections and those from North-Eastern and Hilly States. Lock in period for subsidy is 3 years
IBA MODEL EDUCATION LOAN SCHEME It was prepared on Kamath Committee recommendations & approved by RBI in April 2001:
Eligibility : Student secured • admission to professional/ technical courses through Entrance Test/ Selection process or
Secured admission to foreign university/ Institutions after 10+2. Expenses considered for loan : Fee and all other expense required to
complete the course. Amount of loan for PS classification: Out of sanctioned loans, the amount up to Rs. 10 lakh will be classified as
priority sector.
Margin: Upto Rs.4 Lacs : Nil (India/abroad). Above Rs. 4 lacs : India : 5% Abroad : 15% (Margin can be on year-to-year basis as and
when disbursements are made on a pro-rata basis). Collateral Security: Parents would be co-borrowers (in case of married, the
spouse or parents in law). For loans above Rs.4 lac and up to Rs.7.50 lac, 31.4 party guarantee may be obtained. For loans above
Rs.7.50 lakh, collateral security can be obtained.
Rate of interest : Base rate or above. The accrued interest during moratorium period, to be added to the principal and repayment to
be fixed in Equated Monthly Instalments. 1% interest concession is to be provided if the interest is serviced during the moratorium
period.
Moratorium : Course,period + 1 year. (extension of completion of course up to 2 years can be allowed if student could not complete
the course)
Repayment — up to 15 year, after commencement of repayment.
Other conditions: 1. Existence of an education loan to brother/sister does not affect eligibility of another student from same family
to obtain education loan. If student is minor, the loan documents signed by parents to be got rectified on his attaining the majority.
2. Service Area not applicable. Bank branch to be near place of parent residence or educational institution.
Credit Guarantee Fund Scheme for Education Loans (CGFSEL)
The guarantee is provided by National Credit Guarantee Trust Company for loan up to Rs 7.5 lakh, given under IBA Education Loan
Scheme, without any collateral security and third party guarantee, on which the Interest Rate charged by Member Lending
Institution (MLI) can be max up to 2% p.a. over the Base Rate. MLI applies for guarantee cover for loans disbursed in a quarter prior
to expiry of the following quarter.
Annual Guarantee Fee: 0.50% p.a. of the outstanding amount to be paid upfront within 30 days i.e. before April 30.
Guarantee cover : 75% of the amount in default. Invocation of guarantee : MLI may invoke the guarantee within one year from date
of NPA, if NPA is after lock-in period or within one year of lock-in period, if NPA is within lock-in period
Payment : NCGTC shall pay 75% of the guaranteed amount on preferring of eligible claim by the lending institution, within 30 days.
For delay period, interest would paid at bank rate. The balance 25% will be paid after conclusion of recovery proceedings.
Credit Facilities to Minority Communities
Govt. of India revised the Prime Minister's New 15-Point Program for the Welfare of Minorities.
Minority Communities : The communities notified as minority include (a) Sikhs (b) Muslims (c) Christians (d) Zoroastrians (e)
Buddhists and (f) Jains
Minority concentration districts : 121 minority concentration districts having at least 25% minority population, excluding those
States/UTs where minorities are in majority (3 & K, Punjab, Meghalaya, Mizoram, Nagaland & Lakshdweep).
National Minorities Development and Finance Corporation (NMDFC)
NMDFC was established in Sept 1994 for the backward sections amongst the minorities. It works as an apex body and channenses its
funds to the beneficiaries through the State Minority Finance Corporation of the respective State/Union Territory Governments. It Is
operating, the Margin Money Scheme. Bank finance under the scheme will be up to 60% of the project cost. The remaining amount
of the project cost is shared by NMDFC, the State channelising agency and the beneficiary in the ratio of 25%, 10%, and 5%,
respectively. Banks may implement the Margin Money scheme evolved by NMDFC. Where recoveries have been made by the banks,
it would be in order if the amounts are appropriated first towards bank dues.
Role of banks
• Banks to set up a Special Cell (head Nodal Officer - AGM/DGM) for flow of credit to minority communities.
• The Lead Bank in minority concentration districts, to have an officer to look after the problems regarding the credit flow to
minority communities.
Monitoring
• Data on credit assistance provided to members of minority communities should be furnished to RBI and Govt. of India on
half yearly basis (last Friday of Mar and Sept) to reach within one month.
• The Lead Banks to furnish relevant extracts of the agenda notes and minutes of the meetings to Ministry of Finance and
Ministry of Welfare on a quarterly basis.
Finance to Micro, Small & Medium Enterprises (MSMEs)
Govt. of India enacted MSMED Act, 2006 on June 16, 2006 (notified on Oct 2, 2006). Consistent with the notification of the MSMED
Act 2006, the definition of micro, small and medium enterprises engaged in manufacturing or production and providing or rendering
of services (earlier known as SSI, Tiny or SSSBE) has been modified as under:
Investment Criteria for MSME
Enterprises engaged in Micro Small Medium
Manufacturing, production, Upto Rs.25 lac > 25 lac up to Rs.5 cr > 5 cr up to Rs.10 cr
preservationor processing (Investment
in Plant & Machinery) .
Rendering services (investment in Upto Rs.10 lac - > 10 lac upto Rs.2 cr > 2 cr upto Rs.5 cr
equipment excluding Land & building,
fixture and furniture etc.)
Eligibility of enterprises for PS classification:
Manufacturing Enterprises: Bank loan to Micro, Small and Medium Enterprises irrespective of amount of loan. Service Enterprises: Bank loans up to
Rs 5 crore per unit to Micro and Small Enterprises and Rs 10 crore to Medium Enterprises engaged in providing or rendering of services.
Khadi and Village Industries Sector (KVI): All loans to units in the KVI sector will be eligible for classification as Micro enterprise under the sub-target of
7 percent /7.5 percent prescribed for Micro Enterprises under priority sector.
Other Finance to MSMEs
1. Loans to entities involved in assisting the decentralized sector in the supply of inputs to and marketing of outputs of artisans, village and cottage
industries.
2. Loans to co-operatives of producers in the decentralized sector viz. artisans, village and cottage industries.
3. Loans sanctioned by banks to MFIs for on-lending to MSME sector
4. Credit outstanding under General Credit Cards (including Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card, and Weaver’s Card etc.
catering to the non-farm entrepreneurial credit needs of individuals).
5. Outstanding deposits with SIDBI on account of priority sector shortfall.
Sub categorization of Micro enterprises: The earlier sub-categorization within the definition of micro enterprises (i.e. investment up to Rs 10 lac in
plant and machinery and up to Rs 4 lakh in equipment) has been dispensed with. Continuation of MSME status: The MSME units will continue to
enjoy the priority sector lending status up to three years after they grow out of the MSME category concerned.
Important : For investment purpose, purchase value (and not book value) to be taken. Cost of land & building and items specified by
Ministry of MSME Development, are to be excluded from original cost. Documents that can be relied upon are (a) invoice (2) copy of
audited balance sheet (c) CA certificate.
The services enterprises broadly include (a) small road & water transport operators (b) small business and (c) professional & self
employed persons (d) retail trade.
Additional Activities included in MSE (Govt. of India -June 12, 2009) where such enterprises satisfy the definition of Micro and Small
(Service) Enterprises in respect of investment in equipment are (a) Consultancy Services including Management Services; (b)
Composite Broker Services in Risk and Insurance Management; (c) Third Party Administration (TPA) Services for Medical Insurance
Claims of Policy Holders; (d) Seed Grading Services; (e) Training-cum-Incubator Centre; (f) Educational Institutions; (g) Training
InStitutes; (h) Retail Trade; (I) Practice of Law, I.e. legal services; (j) Trading In medical instruments (brand new); (k) Placement and
Management Consultancy Services; and (I) Advertising agency and Training centres.
Ownership of units — 2 or more undertakings The MSMED Act, 2006 does not provide for clubbing of investments of different
enterprises set up by the same person / company for the purpose of classification as micro, small and medium enterprises (Gov.
clarification by RBI Dec 06, 2010)
Loans to MSMEs
The amount of loan to MSMEs in the form of term loans, working capital and non-fund based lbans is need based.
But for servicing enterprises, the amount is restricted to Rs.5 cr for micro and small enterprises and Rs.10 cr for medium enterprises.
Further, composite loan under single window is restricted to Rs. I cr.
Registration
For all micro or small enterprises and for medium enterprise engaged in providing or rendering of services, registration is optional.
But for a medium enterprise engaged in manufacture or production of goods registration is compulsory, with such authority as
specified by the State Govt. or Central Govt.
Delayed payment to MSEs
The existing provisions of the Interest on Delayed Payment Act, 1998 to Small Scale and Ancillary Industrial Undertakings, have been
strengthened under the MSMED Act as under:
(I) The buyer to make payment on or before the date agreed on between him and the supplier in writing or, in case of no agreement
before the appointed day. The agreement between seller and buyer shall not exceed more than 45 days.
(ii) If the buyer fails to make payment of the amount to the supplier, he shall be liable to pay compounded interest with monthly
rests to the supplier on the amount from appointed day or, on the date agreed on, at 3 times of the Bank Rate notified by Reserve
Bank.
Decentralised Sector
Such units include artisans, Khadi & Village Industries, handlooms, sericulture, handicrafts, coir etc. which have been categorised as
Village Industries under Govt.'s SSI policy (Aug 1991).
Artisans, Village And Cottage Industry
It is defined as Artisans (irrespective of location) or small industrial activities in villages and small towns with a population not
exceeding 50000, involving utilisation of locally available natural resources and / or human skills where individual credit
requirements do not exceed Rs.50000.
Cottage industry is run by family members on full or part time basis. It possesses negligible capital investment. There is handmade
production and no wage earning person is employed in cottage industry.
Village industries is established in rural areas with population below 10000 and with less than Rs.50000 as fixed capital investment
per worker.
Ancillary Units
An undertaking which is engaged in the manufacturing or production of parts, components, sub-assemblies, tooling or intermediates
or the rendering of services and undertaking supplies or proposes to supply or renders, at least 50% of its production or services, to
one or more other industrial undertakings. Investment criteria in plant and machinery, is same as in case of MSEs.
Women Enterprises For MSEs
An MSE unit related service or business enterprise, managed by one or more women-entrepreneurs in the proprietary concerns or in
which she/they individually or jointly have a share capital of not less than 51% as partners/shareholders/directors of private limited
Company/Members of Co-operative society is known as Women Entrepreneurs' Enterprise.
OPERATIONAL GUIDELINES on MSEs
Collateral security
General exemption from collateral is up to an amount of Rs.10 lac. For units having good track record, the exemption limit is Rs.25
lac. As per RBI directions, the proposals, otherwise viable, should not be turned down merely for want of such collateral security or
3rd party guarantees.
Rejection of loan applications in MSE sector As per RBI, a reference to higher authorities of loan proposals of MSE units being
rejected/curtailed should be made before the decision is conveyed to the applicant.
Banks' Code for MSEs
Banking Codes and Standards Board of India prepared voluntary code put in place in 2008 and revised in 2015. It sets minimum
standards of banking practices for banks to follow, while dealing with MSEs.
Code and Regulatory guidelines: Where code sets higher standards than indicated in the RBI instructions, such higher standards will
prevail. Changes in interest rates: Banks will inform the change within a fortnight.
Changes in Fees & Charges : Notify change 30 days_ prior to revised charges becoming effective. Changes to Terms & Conditions:
Banks will convey the change 30 days prior to these becoming effective. If it is to MSE's disadvantage, MSE may within 60 days and
without notice, close /switch the account without paying extra charges or interest.
Additional information : MSE to be contract for additional information within 7 working days from receipt of loan application.
Processing fee : No fee will be recovered for loans up to Rs.5 lakh if the loan is not sanctioned. Loan application disposal period : 2
weeks up to Rs.5 lac, 3 weeks above Rs.5 lac to Rs.25 lac and 6 weeks above Rs.25 lac.
Amount of bank limit: The banks will provide working capital limits computed at minimum of 20 % of projected annual turnover.
Sanction: Banks will supply authenticated copies of alI the loan documents executed with. The banks will permit pre-payment of
loans up to Rs.5 lakh without levying any prepayment penalty. Prepayment of fixed rate loans : No penalty up to Rs.50 lac.
Disbursement : Within 2 working days from the date of compliance with all terms and conditions. Drawing power: Banks will grant
increase in the DP within 24 hours of lodgment of security. Transfer of accounts and release of securities: Banks will convey their
consent or otherwise, within 2 weeks. Release all securities on receiving repayment of loan within 15 days. Recovery: Bank
representatives will contact MSEs between 0700 hrs and 1900 hrs.
Complaint: The banks will send final response within 6 weeks of receipt of complaint.
Banking Ombudsman Scheme: Within 30 days of lodging a complaint with the bank, if MSEs do not get a satisfactory response from
a bank and MSEs wish to pursue other avenues it may approach Banking Ombudsman.
High Level Task Force on MSMEs (Jun 2010) In terms of recommendations of the Prime Minister's Task Force on MSMEs (Chairman:
Shri T K A Nair) constituted by the Govt. of India, RBI advised banks as under:
i. Achieve a 20% year-on-year growth in credit to MSEs to ensure enhanced credit flow;
ii. Achieve a 10% annual growth in number of micro enterprise accounts.
iii. 60% of loans to MSEs should be to micro units.
iv. CREDIT GUARANTEE FUND TRUST FOR MICRO & SMALL ENTERPRISES (CGTMSE) CGTMSE was set up by Govt. of India and
SIDBI in August 2000.
v. Eligible institutions: All scheduled commercial banks and specified RRBs, NSIC, NEDFI, SIDBI (called Member Lending Institutions
(MLIs).
vi. Eligible borrowers: New & existing MSE units as per MSME Dev Act 2006 (except Retail Trade) OR in IT and software
industry services or credit facilities to select activities under Agri-Clinics and Agri-Business Centres.
vii. Rehabilitation cases : For the unit covered under CGTSI and becoming sick due to factors beyond the control of
management, assistance for rehabilitation extended by the lender could also be covered within the overall cap of Rs.200 lac. Extant
of guarantee cover : (wef Dec 08, 2008):
CGTMSE Guarantee - Modifications CGTMSE made the following changes in the Credit Guarantee Scheme w.e.f. 01.01.2017, as
per their circular dated Jan 09, 2017. ‘Guarantee Cover’ means maximum cover available per eligible borrower of the amount in
default in respect of the credit facility extended by the lending institution.
Credit facility eligible under the Scheme: CGTMSE shall cover credit facilities (Fund based and / or Non fund based) extended by
Member Lending Institutions (MLIs) to a single eligible borrower in the Micro and Small Enterprise’s Sector (i) not exceeding Rs.50
lakh (Regional Rural Banks / Financial Institutions) and (ii) not exceeding Rs.200 lakh (Scheduled Commercial Banks and select
Financial Institutions) by way of term loan and / or working capital facilities, without any collateral security and / or third party
guarantee. Iii) The enhancements in existing guarantee cover beyond Rs.100 lakh in respect of working capital facilities, where such
enhancements are approved on or after January 01, 2017 would also be eligible for the enhanced coverage up to Rs.200 lakh provided
the proposal meets the guidelines of CGS.
Credit facilities not eligible under the Scheme: Any credit facility which has been sanctioned by the lending institution with the
maximum interest rate not more than 14% p.a. (including cost of guarantee cover) would be eligible for coverage under CGS. The
revised guidelines on ceiling on Interest Rate that could be charged for the guarantee covered credit facilities would be applicable, also
to those MLIs who would not be eligible for enhanced credit guarantee coverage from Rs.100 lakh to Rs.200 lakh.
Modifications in the Interest Rate Cap under Credit Guarantee Scheme (CGS) of CGTMSE On 30.09.15, CGTMSE had placed
the interest cap up to 2% and 3% over the Base Rate for loans up to 50 lakh and loans above 50 lakh respectively on loans eligible for
guarantee cover. CGTMSE decided (Nov 16, 2015) to restore the earlier Interest Rate Cap of 4% over the Base Rate i.e. any credit
facility which has been sanctioned by MLI, under Credit Guarantee Scheme (CGS), to an eligible borrower, with interest rate more
than 4% over its Base Rate (BR) will not be eligible for coverage under the CGS.
Extent of guarantee cover wef 01.01.2017 :
Women enterprises ,North Eastern States & Sikkim Amt. Rs. in lakhs
Loan up to Rs.5 lac : 85%* 4.25
Loan up to Rs.50 lac: 80%* 40.00
Loan above Rs.50 lac & up to Rs. 200 lac: 50%* 75.00
Total amount restricted to 100.00
Micro Enterprises
Loan up to Rs.5 lac : 85%* 4.25
Loan up to Rs.50 lac: 75%* 37.50
Other Category of borrowers loans
Loan up to Rs.50 lac : 75%* 37.50
*as %age of principal outstanding on date of NPA/ amount in default or on date of filing the claim, whichever is lower.
Exclusion from risk cover : Other charges such as penal interest, commitment charge, service charge, or any other levies/ expenses
shall not quay for the guarantee cover.
All proposals for sanction of guarantee approvals for credit facilities above Rs.50 lakh upto Rs.200 lakh will have to be rated internally
by the MLI and should be of investment grade.
Conditions for Guarantee Cover Loans (fund and non-fund) extended by banks and/or financial institutions jointly and/or separately
to eligible borrower up to a maximum of Rs.200 lakh (Rs.50 lac for RRBs and select FIs) per borrower subject to ceiling amount of
individual MU are elgible. Rate of interest should not be more than 14%pa.
Collateral security: Loans sanctioned with collateral and/or third party guarantee or against guarantee of Govt. or DICGC, are not
eligible. Time limit for obtaining guarantee cover: Within a quarter, next to the quarter, during which the loans are sanctioned.
Standard Rate SR for Com osite Guarantee Fee
Fee as % of sanctioned loan w.e.f. 1.1.13 Women, NE
States, MSEs Others
For loan up to Rs.5 lac 0.75% p.a. 1% p.a.
Above Rs.5 lac up to Rs.100 lac 0.85% p.a. 1% p.a.
If fee is not paid on time, CGTMSE may allow payment "nterest at bank rate + 4%.
W e f 1A.2016 the premium on SR will be as under:
1.Risk premium on NPA in
guaranteed portfolio 2. Risk prem'um on claim
payment ratio
NPA %age Risk Premium Claim payout Risk premium
0-5% SR 0-5% SR
>5% to 10% 10% of SR >5% to 10% 10% of SR
>10 to 15% 15% of SR >10 to 15% 15% of SR
>15 to 20% 2070 of SR >15 to 20% 20% of SR
>20% 25% of SR >20% 25% of SR
NPA level shall be calculated as a % of guarantees Issued on and up to 31st Mar, every year
Invocation of guarantee
Guarantee can be invoked if
(a) account is classified as NPA as per,RBI guidelines
(b) suit has been filed and (c) guarantee is in force Time limit for invocation:
(a) within 2 years from date of NPA If NPA is after lack in period or (b) within 2 years from date of completion of 18 month lock in
period.
Lock-in period of 18 months Is from the date of last disbursement of the loan or the date of payment of the guarantee fee whichever
is later.
Payment of the claim amount : The trust shall pay 75 % of the guaranteed amount on preferring of eligible claim by the lending
institution, within 30 days. For delay beyond 30 days, trust shall pay interest on the eligible claim amount at the prevailing bank rate.
The balance 25 % will be paid on conclusion of recovery proceedings by the lending institution or within 3 years from date of decree,
whichever is earlier.
Sharing of recovery: Recovery shall be first appropriated towards cost of recovery, balance amount for recovery of fee and other
charges of CGTMSE and balance amount on prorate basis i.e. 85:15, 80:20 or 75:25.
Delay in sharing the amount recovered : If any amount due to .the trust remains unpaid beyond a period of 30 days from the date
on which it was first recovered, interest shall be payable to the trust at the rate which is 4% above bank rate for the period for which
payment remains outstanding after the expiry of the said period of 30 days.
DRI for MSEs with guarantee cover of CGTMSE As per RBI guidelines dated Apr 15, 2014, banks can provide differential interest rate
for MSE borrowers, having guarantee cover from CGTMSE. But such rate of interest should not be below the Base Rate.
Micro Units Development and Refinance Agency (MUDRA) Bank
MUDRA Bank launched on 08.04.15, is a public sector institution for loans to small entrepreneurs.
Role : (1) Regulate the lenders and the borrowers of microfinance. (2) Extend finance and credit support to MR (3) Register all Ills (4)
Offer a Credit Guarantee scheme for providing guarantees to loans being offered to micro businesses.
Corpus: The bank will have a corpus of Rs. 20,000 crore and a credit guarantee fund of Rs. 3,000 crore.
Organisation : It will function as a non-banking financial company and a subsidiary of SIDBI.
Targets group : Mainstream young, educated or skilled workers and entrepreneurs including women entrepreneurs, which currently
find it difficult to access credit from the regular banking system.
Segments : Bank has classified the borrowers into 3 segments: the starters, the mid-stage finance seekers and the next level growth
seekers. To address these segments, Bank has launched 3 loan instruments:
1. Shishu: Upto Rs 50,000/
2. Kishor: Above Rs 50,000 & upto Rs 5 lakh
3. Tarun: Above Rs 5 lakh & upto Rs 10 lakh
Credit Guarantee Fund for Micro Units
(CGFMU) for Loans under MUDRA Scheme Under the scheme was notified on 18.04.16, guarantee is offered by National Credit
Guarantee Trust Company. Eligible Loans : Loans sanctioned under PM Mudra Yojna (PMMY) since 08.04.2015 by Commercial banks,
MFIs and NBFCs (called Member Lending Institution ¬MU) named as Shishu, Kishor & Tarun and overdraft up to Rs.5000 under PM
Jan Dhan Yojna. In these loans, the MU should not obtain any collateral security or 3rd party guarantee.
Procedure to obtain guarantee : MU shall collate all eligible disbursed loans as at end of the quarter and submit information on
quarterly basis before end of next quarter to NCGTC for guarantee cover.
Guarantee Fee Rate: It has 3 components namely, standard basic rate (SBR) of 1% of sanctioned amount + Risk premium on NPAs in
the guaranteed portfolio + Risk premium on claim payout ratio. The risk premium is in the range of 0% to 25% of SBR for commercial
banks which changes annually.
The fee is paid on the sanctioned amount corresponding to the outstanding balance of quarterly build up of balance for full year or
broken period which is valid up to end of the financial year. Fee in case of NPA accounts will be payable till lodgement of claim. MU
shall pay the fee within 16 days from end of the quarter, in which the credit facility was sanctioned / renewed. If due fee is not paid
on time, the guarantee cover shall not be available.
Guarantee cover : (1) Guarantee is in the nature of 'First Loss Portfolio Guarantee' where first loss of 5% of the crystallized portfolio
is borne by MU.
(2) For the remaining amount, the extent of cover is 50% of amount in default (amount in default means NPA for more than 6
months).
Lock-in period : It is one year from date of crystallization of the portfolio (which is March 31 of the year in which the portfolio was
built).
Claim : It can be lodged in respect of amount in default. The Trust shall pay the amount within 60 days. In case of delay it will pay
interest at Bank Rate.
Recovery after; payment of claim : MU shall pay amount to the Trust within 30 days.
Start Up India Scheme
The Start-up India initiative was launched on Jan 16, 2016 as an action plan for developing an ecosystem to promote and nurture
entrepreneurship in India. Start up entity : To be categorized such Entity, following requirements need to be fulfilled:
1.. The entity should be a company, partnership or limited liability partnership.
2. It should be
(a) in existence at least for 5 years,
(b) its turnover should not be above Rs.25 cr and it should not be formed by splitting up or reconstruction of existing entities.
(c) The entity should aim to develop and commercialise, a new product or service or process or a significantly improved existing
product or service or process, that will create or add value for customers. Products, services or process, which do not have potential for
commercialisation or is undifferentiated or have no or limited incremental value are not elinible.
Certification : It should be supported by a recommendation with regard to innovative nature of business from an Incubator
recognized by Govt. Funding :
1. Rs 10,000 crore fund: Govt. set-up a fund with an initial corpus of Rs 2,500 crore (total corpus of Rs 10,000 crore over 4 years).
2. National Credit Guarantee Trust Company : NCGTC will provide guarantee for loans to start ups.
3. The loans are available from Rs.10 lac to Rs.1 cr under the scheme.
Advantages :
1. Income Tax exemption is available for 3 years.
2, Start-ups will adopt self-certification to reduce regulatory liabilities.
3. In patent costs, it can claim an 80% rebate.
Stand Up India Scheme
Govt. approved the Scheme on January 06, 2016. Objective : To promote entrepreneurship among SC/ST and Women
entrepreneurs for benefiting atleast 2.5 lakh borrowers within 36 months from the launch of the Scheme.
Methodology : To facilitate at least two such projects per bank branch, on an average.
Important provisions of the scheme :
1. Refinance window through SIDBI with an Initial amount of Rs. 10,000 crore.
2. Handholding support at the pre-loan stage and during operations.
3. To facilitate bank loans repayable up to 7 years and between Rs.10 lakh to Rs.100 lakh for greenfield enterprises in the non-
farm sector.
4. The loans would be backed by a credit guarantee from National Credit Guarantee Trustee Company Ltd.
Corporate Social Responsibility (CSR)
CSR represents the activities of a company for its sustainability in the long run, that benefit the community around the company in
terms of employment, development of infrastructure, care for the environment, educational institutions and other developmental
activities.
Objective is to produce an overall positive impact by contributing for the economic development/betterment of quality of life of
stakeholders.
The advantage to the company is that the beneficiaries develop a positive attitude and help in promoting goodwill of the
philanthropic companies.
Provisions of Companies Act, 2013: Section 135 of the Companies Act 2013, which came into effect w.e.f. 01.04.14, made
compliance of CSR mandatory, if a company meets any one of the following criteria:
(a) Net worth of Rs.500 crore or more, or
(b) Turnover of Rs.1000 crore or more or
Net profit of Rs.5 crore or more during any FY. Board to approve the policy and ensure that the company spends at least 2%' of
average net profits of 3 financial years immediately preceding and disclose the amount spent by way of note in the profit and loss
NATIONAL EQUITY FUND
Objective : To provide equity type support to MSEs National Equity Fund is administered by SIDBI in participation with Govt.
Eligible concerns
• New as well as existing entrepreneurs in the MSE sector are eligible for assistance.
• Sanction of refinance in respect of term loan for the projects by SIDBI is a pre-requisite for equity type assistance under the
scheme.
• The complete requirement of the projects in the form of equity assistance, the term loan and working capital will be
provided by one agency i.e. the nationalised bank/SFCs.
Project cost : Up to Rs. 50 lac (inclusive of working capital margin) MSE Sector
Amount of assistance
Equity type assistance under 25% of the project cost subject to a maximum of Rs.10 lac.
Debt equity ratio Minimum promoters' contribution 10% of project cost. DER will be 1.875:1 (excluding State subsidy for meeting
working capital)
Type of assistance Equity type assistance in the form of Soft Loan.
Interest The service charges are payable at the rate of 5% per annum on soft loan.
Repayment period 7 years inclusive of moratorium up to 3 years.
Security
The primary lending institutions are to provide equity type soft loan under the scheme to eligible units as agents of SIDBI. The credit
risk in respect of soft loan is borne by SIDBI. Hence no security/collateral for the soft loan nor coverage under DICGC guarantee
scheme is needed.
Framework for Revival & Rehabilitation of Micro, Small & Medium Enterprises Ministry of MSEs Government of India, on May 29,
2015 notified the framework which RBI circulated on March 17, 2016.
Eligible amount ceiling : MSMEs having loan up to Rs.25 crore (including accounts under consortium or multiple banking
arrangement). Restructuring above Rs.25 crore will be as per Corporate Debt Restructuring (CDR) / Joint Lenders' Forum (JLF)
mechanism.
2. Identification of incipient stress :
Banks should identify incipient stress by creating 3 sub¬categories based on early warning signals, i.e.: SMA-0 : Payment overdue for
>30 days
SMA-1: Payment overdue between 31-60 days
SMA-2 : Payment overdue between 61-90 days Reference : The branch should forward the stressed a/c above Rs.10 lakh to
Committee within 5 working days for Corrective Action Plan (CAP). It will be mandatory for accounts reported as SMA-2.
Accounts up to R5.10 identified as SMA-2 should be examined for CAP by branch itself. The cases of recovery under CAP, should be
referred to the Committee for their concurrence.
Identification by Borrower - A borrower may Initiate proceedings, if it apprehends failure to pay debts 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, by application to the
bank. The Committee should convene its meeting at the earliest but not later than 5 working days to examine the account for a
suitable CAP. The accounts with aggregate loan up to Rs.10 lakh may be dealt with by the branch for a suitable CAP.
Committees for Stressed MSM Enterprises
1. Banks shall have a Standing Committee at District / Division / Regional Office level to resolve the reported stress of MSME
accounts of the branches under them.
2. For borrowers under a consortium or multiple banking arrangement (MBA), the consortium leader, or the bank with largest
exposure shall refer the case to its Committee, if the account is reported as stressed either by the borrower or any of the
lenders.
3. Composition of the Committee:
(a) The Regional or Zonal Had of the Convener Bank, shall be the Chairperson of the Committee;
(b) Officer-in-charge of MSME Credit Department of the convener bank at Regional/Zonal office level, shall be member and
convener of the Committee;
(c) One independent external expert with expertise in MSME related matters to be nominated by bank.
(d) One representative from State Govt. or a retired executive of another bank (AGM and above).
(e) In case of consortium or MBA, senior representatives of all banks / lenders.
4. Committee decision will be by simple majority (Chairperson shall have casting vote, in case of a tie).
5. All eligible stressed MSMEs shall have access to the Committee for resolving the stress.
4. Application to Committee for CAP:
1. The lender shall forward the cases above Rs.10 lakh to the Committee for convening of meeting for CAP. Such borrowers
can also file an application to the Committee or to the largest lender.
2. Where an application is admitted by the Committee, it shall notify the borrower within 5 working days to respond to the
application.
3. On receipt of information of liabilities, Committee may send notice to statutory creditors disclosed by borrower and permit
them to make a representation within 15 working days. The information is required for determining total liability and not
for payments.
4. Within 30 days of convening its first meeting, the Committee shall decide on the option and notify the enterprise about
decision, within 5 working days.
5. If the CAP envisages restructuring, the Committee shall conduct the detailed Techno-Economic Viability (TEV) study and
finalise the terms of restructuring within 20 working days (for accounts having aggregate exposure up to Rs.10 crore) and
within 30 working days (for accounts having aggregate exposure above Rs.10 crore) and notify the enterprise about such
terms, within 5 working days.
6. On finalisation of CAP, the implementation shall be completed by the bank within 30 days (if CAP is Rectification) and within
90 days (if CAP is restructuring). If recovery is considered as CAP, recovery measures should be initiated at the earliest.
Corrective Action Plan by the Committee
1. TEV of each account is to be dedded by the concerned lender/s. For accounts of Rs.10 crore and above, the Committee
should conduct a detailed TEV study before finalising the CAP.
2. The options under CAP may include:
(a) Rectification:— Obtaining a commitment from the borrower to regularise the account or providing need based additional
finance to be repaid or regularised within a maximum period of 6 months.
(b) Restructuring:— If it is prima facie viable and the borrower is not a wilful defaulter.
(c) Recovery:— If option (a) and (b) are not feasible. Majority criteria : The decisions agreed upon by a majority of creditors
(75% by value and 50% by number) would be considered as the basis for proceeding with the restructuring of the account
and will be binding on all lenders.
Time-lines : In case of non-availability of information on statutory dues, the Committee may take additional time up to 30 days for
deciding CAP and preparing the restructuring package.
Additional Finance: It should be matched by contribution by promoters equal to proportion of original sanction of loans.
Additional funding will have priority in repayment over repayment of existing debts. Failure to perform : If the account fails to
perform, the Committee shall initiate recovery.
Restructuring by the Committee
1. Eligibility : (a) Cases shall be taken up for Standard, Special Mention Account or Sub-Standard by one or more lenders of the
Committee.
(b) Committee may consider if account it is doubtful with one or two but Standard or Sub-Standard with majority of other lenders
(by value).
(c) Wilful defaulters, Frauds and Malfeasance cases are ineligible for restructuring.
2. Viability : The viability shall be determined based on Debt Equity Ratio, Debt Service Coverage Ratio, Liquidity or Current
Ratio, etc.
3. Conditions : The package shall stipulate the timeline during which certain viability milestones after a period of 6 months
may be achieved.
Prudential Norms on Asset Classification and Provitioning
The extant asset classification and provisioning norms will be applicable.
Review : If the Committee decides that recovery action is to be initiated, such enterprise may request for a review of the decision
within 10 working days from the date of receipt of the decision. A review application shall be decided by the Committee within 30
days from the date of filing and if as a consequence of such review, the Committee decides to pursue a fresh corrective action plan,
it may do so.
CREDIT CARD FOR MSEs
The outstanding balance in following credit cards is to be classified as part of MSE advances:
1. General Credit Card
2. Weaver's credit Card
3. Laghu Udhmy Credit Card
4. Swairozgar Credit Card.
GENERAL CREDIT CARD SCHEME 2013
RBI revised the scheme (Dec 02, 2013) to enhance the coverage to ensure greater credit linkage for all productive activities within
Priority sector guidelines and to capture all loan by banks to individuals for non-farm entrepreneurial activity.
1. Objectives : To increase flow of credit to individuals in the non-farm sector.
2. Eligibility: All non-farm entrepreneurial credit extended to individuals, which is eligible for classification under the priority
sector guidelines.
3. Coverage: Entire country.
4. Nature of financial accommodation: Credit facility extended would include working capital and term loan. The GCC may be
issued as a Smart card / Debit card (Biometric smart card compatible for use in the ATMs / Hand held Swipe Machines and
capable of storing adequate information on entrepreneur's identity, assets and credit profile etc.). Wherever the accounts
are not digitized, the GCC may be issued as a card/pass book or a credit card cum pass book incorporating the name,
address, photograph of the holder, particulars of borrowing limit, validity period etc. for the time being which will serve
both as an identity card as well as facilitate recording of the transactions on an ongoing basis.
5. Quantum of credit limit: Need based limits on the basis of risk assessment on a case to case basis.
6. Security: As per RBI guidelines on collateral free lending for MSE units.
7. Rate of Interest: To be decided by banks.
Any other Credit Card (e.g. Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card, and Weaver's Card etc.) in existence and
catering to the non-farm entrepreneurial credit needs of individuals should be included for reporting of credit extended through GCC
under Financial Inclusion Plans. The consumption credit extended to individuals should not be reported under GCC.
Banks can issue any other credit card for consumption needs which is to be reported separately as Overdraft (0D)/consumption
credit in the FIP reporting format prescribed by RBI.
LAGHU UDHAMI CREDIT CARD (LUCC) SCHEME
Govt. launched Laghu Udhyami Credit Card Scheme (Nov 12, 2001), with following features:
• The objective is to provide hassle-free credit facilities to small business, retail traders, artisans, professionals, self-employed
persons and small industrial units.
• Existing customers with a 3 year satisfactory track record with working capital limits upto Rs.10 lac are eligible for card.
• The credit card limits are fixed at 20% of the annual turnover declared for tax purposes in the case of artisans, businessmen,
traders and small entrepreneurs.
• In case of professionals, it is 50% of the gross annual income.
• Maximum per party credit limit is Rs.10 lac.
• The credit limit will be valid for 3 years and the bank will conduct internal reviews annually.
SWAROJGAR CREDIT CARD SCHEME
Scheme prepared by NABARD is implemented by commercial banks with following features:
Objectives : To provide adequate/timely credit, i.e., working capital or block capital or both (including a reasonable component for
consumption needs) to small artisans, handloom weavers, service sector, fishermen, self employed persons, rickshaw owners, other
micro-entrepreneurs, etc., in a flexible, hassle free and cost effective manner.
Nature of financial accommodation Composite loan including term loan (repayable 5 years) /revolving cash credit.
Ceiling : Rs.25,000 based on initial investment in fixed assets and/or working capital requirement/recurring expenditure. (banks have
discretion to enhance this limit beyond Rs.25000).
Validity and Issue :
• Valid for 5 years and to be renewed on a yearly basis.
• SHGs may also be issued cards in their name. They would be liable jointly and severally for repayment.
Renewal of working capital limits : Annual renewal based on the amount credited to the cash credit account/repayment
performance in term loan account.
• The revolving cash credit for working capital repaid.within 12 months may be renewed.
• No drawl should be permitted if revolving cash credit remains outstanding for more than 12 months.
Insurance : Beneficiaries would automatically be covered under the group insurance scheme and the premium would be shared by
the bank and the borrower equally.
Security/margin/interest/prudential norms : These norms would be applicable as per the Reserve Bank's norms.
WEAVERS' CREDIT CARD (WCC)
The scheme has been prepared by Ministry of Textiles, vetted by Ministry of Finance and circulated by IBA during Oct 2011.
Important features Include:
1. Type of loan — TL or Working capital in the form of simplified open cash credit.
2. Eligibility — All handloom. weavers (preference to identified weavers under 3'd Census of Handloom weavers).
3. Amount of loan — up to Rs.2 lac
4. Margin money of Rs.4200 available from Govt. of India.
5. Repayment — TL : max 36 months. WC valid up to 3 years subject to annual review. WC can be operated.
6. Security : CGTMSE guarantee available.
7. Interest subvention of 3% available for 3 years from 15t disbursement if account is not NPA.
KISSAN CREDIT CARD (KCC)
KCC scheme implemented during the year 1994 has been modified by RBI/Govt. on recommendations of a Working Group to review
the Scheme (Chairman Sh. TM Bhasin) w.e.f. May 12, 2012.
Applicability - Implementation by Commercial Banks, RRBs, and Cooperatives.
Activities covered - Short term credit requirements for cultivation of crops, post harvest expenses, produce marketing Ioan,
consumption requirements of farmer household, working capital for maintenance of farm assets and activities allied to agriculture,
like dairy animals, inland fishery etc. and investment credit requirement for agriculture and allied activities like pump sets, sprayers,
dairy animals etc.
Eligibility : i. Farmers — Individuals/Joint borrowers (owner cultivators) ii. Tenant Farmers, Oral Lessees & Share Croppers iii.
SHGs or Joint Liability Groups of Farmers including tenant farmers, share croppers etc.
Fixation of credit limit/Loan amount
A: Farmers other than Marginal farmers:
1. Short term limit for 1st year (in case of single crop in a year) : Scale of finance for the crop (as decided by Distt. 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, PAIS and asset
insurance.
2. Limit for second & subsequent year : First year limit as above plus 10% of the limit towards cost escalation / increase in
scale of finance for every successive year (2nd, 3rd, 4th and 5th year) and estimated Term loan component for the tenure of
Kisan Credit Card, i.e., 5 years.
More than one crop in a year: 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 I increase in scale of finance for every successive year
(2nd, 3rd, 4th and 5th year).
Term loans : TL is for investments towards land development, minor irrigation, purchase of farm equipments and allied agricultural
activities. The long term loan limit is based on the proposed investments during 5 year period and the bank's perception on the
repaying capacity of the farmer. Maximum total amount : The short term loan limit 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.
Fixation of Sub-limits :
i) The card limit is to be bifurcated into separate sub limits for short term cash credit limit cum savings account and term loans
because interest rates are different.
ii) Where revision of scale of finance for any year by District Level Committee exceeds the notional hike of 10%, contemplated
while fixing the 5 year limit, a revised drawable limit may be fixed. For Marginal Farmers: A flexible limit of Rs.10,000 to
50,000 (Flexi KCC) based on land holding and crops grown. The composite KCC limit is to be fixed for 5 years on this basis.
Disbursement : Short term component is a revolving cash credit facility without any restriction_in number of debits and
credits. Delivery channels - (a) Branch (b) cheque facility (c) ATM / Debit cards (d) Business Correspondents and ultra thin
branches (e) PoS available in Sugar Mills/ Contract farming companies, (0 PoS available with input dealers or (g) mobile
based transfer transactions at agricultural input dealers and mandies.
For CC-limit and the term loan limit two separate electronic_cards may be issue 1.
Validity / Renewal : Banks may determine the validity period of KCC and its periodic review. Repayment Period:
I. Repayment period may be fixed by banks as per anticipated harvesting and marketing period for crops for which loan is given (RBI
07.08.12). 2. TL : Normally 5 years. Banks may provide longer repayment period.
Margin: To be decided by banks.
Security:
i. Hypothecation of crops up to card limit of Rs. 1.00 lakh as per the extant RBI guidelines.
ii. With tie-up for recovery: Banks may consider sanctioning loans on hypothecation of crops up to card limit of Rs.3.00 lakh
without insisting on collateral security.
Classification of account as NPA:
1.' Account could be treated as "standard", when the balance outstanding is less than or equal to drawing limit [short term (crop)
loan] at any point of time during the preceding one year. Term loan under KCC has fixed repayment schedule and is to be governed
by extant prudential norms.
LEAD BANK SCHEME
The Lead Bank scheme administered by RBI, was introduced in Dec 1969 on the recommendations of Prof. Gadgil Committee and
FKP Nariman Committee. It covers all 671 districts including Metropolitans. The scheme was reviewed during 2010 by Usha Thorat
Committee.
Objective : Coordination of activities of banks and other developmental agencies to promote banks' role in overall development of
rural sector. Lead Bank : For coordinating the activities in the district, a particular bank is assigned the lead bank responsibility.
Lead District Manager : An Officer nominated by Lead Bank. Other banks appoint Lead Distt. Officers.
State Level Bankers' Committee (SLBC) is an apex level forum.
Implementation of Credit Plans:
Potential Linked Credit Plans (PLP) is a system of decentralized ci edit planning.
1) Pre-PLP to be convened by LDM during June every year.
2) Preparation of PLP for next year to be completed by August.
Preparation of District Credit Plan :
(a) Banks to circulate the accepted block-wise activity-wise potential to all branches for preparing Branch Credit Plans (BCPs).
(b) Block level Bankers' Committee meeting to be convened for each block to discuss BCPs.
(c) All BCPs aggregated by LDM to form District Credit Plan (DCP), which is approved by Distt. Consultative Committee.
(d) DCPs are aggregated by SLBC to be implemented from 1st April.
Monitoring of performance of Credit Plans : It is done at Block level by BLBC, at district level by DCC and Distt. Level Review
Committee and at State level by SLBC.
BLBC : LDM is the chairman and banks in the block, are members.
DCC : Distt. Collector is the chairman. RBI, NABARD and banks are members. Meeting is convened quarterly. Public representatives
such as MP, MLAs, Zila Prishad Chief, are invited. LDM is to prepare DCC and DLRC meeting schedule for the Calendar Year.
SLBC : Constituted w.e.f. April 1977, it is chaired by CMD or ED of convener bank.
Meetings are held at quarterly basis. For specific tasks, sub-committees are formed.
SLBC convener is to prepare annual calendar of meetings, on calendar year basis.
Quarterly public meeting : LDM to convene such meetings to get feed back and redress grievances.
CD Ratio : Credit deposit ratio should be 60% in branches in rural and semi-urban areas.
Conduct of SLBC/UT Level Bankers' Committee meetings
To improve the effectiveness and streamlining the functioning of SLBC/LFILBC meetings, beginning from January 1, 2011, convener
banks will follow the following calendar:
1. Preparation of calendar of SLBC/UTLBC meetings and intimation to all the concerned of the cut-off dates for submission of
data and dates of meetings as per the dateline given below. (15th Jan every year)
2. Reminder regarding the exact date of meeting and submission of data by banks to SLBC (15 days before end of the quarter)
3. Dead line for receipt of information/data by SLBC Convener Bank (15 days from the end of the quarter)
4. Distribution of agenda cum background papers (20 days from the end of the quarter).
5. Holding of the meeting (Within 45 days from the end of the quarter)
6. Forwarding the minutes of the meeting (Within 10 days from holding the meeting)
7. Follow-up of the action points emerged from the meeting (To be completed within 30 days of forwarding the minutes (for
review in the next meeting).
Monitoring through Lead Bank Statements
(RBI Mar 19, 2013)
• Annual Credit Plan (ACP) target : LBS-MIS-I
• Disbursement and outstanding : LBS-MIS
• ACP achievement vis-à-vis ACP target : LBS-MIS-M.
• The Lead Banks/SLBC Convener Banks are to prepare the statements LBS-MIS —I, II and III and place these statements for
review at all DCC and SLBC meetings.
• SLBC5. shall submit state-wise consolidated targets under ACP in LBS-MIS-I to RBI within 1 month of the year end.
• The progress data would be submitted quarterly to RBI on LBS-MIS II and LBS-MIS III within 15 days.
• SLBCs to consolidate State wise Financial Inclusion Plans for next 3 years in format LBS-MIS- IV.
• Progress under FIPs is to be reviewed by SLBC starting from the meeting relating to quarter ending June 2013 as per revised
format LBS-MIS-V.
• SLBCS are to submit the quarterly progress under FIPs to RBI in LBS-MIS V within 15 days.
SERVICE AREA APPROACH
The service area approach was implemented wef 1.4.1989 (recommendations - Ojha Committee), which was is applicable in rural
and semi-urban areas. Under SAA, each bank branch in rural and semi-urban area was designated to serve an area of 15 to 25
villages to meet the needs of bank credit of its service area.
Review : During Dec 2004, RBI dispenses with the restrictive provisions of SAA, but retained positive features such as credit planning
and monitoring. Accordingly decided that the allocation of villages shall not be applicable for lending, except under Government
sponsored schemes. Commercial banks and RRBs will be free to lend in any rural and semi-urban area and the borrowers will have
the choice of approaching any branch for their credit requirements.
Farmers' Club
NABARD encourages banks to promote Farmers' Clubs in rural areas under Farmers' Club Programme (earlier Vikas Volunteer Vahini
launched in Nov 1982).
Functions: To coordinate with banks for credit flow ' among its members. Forge better relationship & to organise min one meeting
per month.
Financial Support from NABARD/Banks
NABARD provides uniform assistance @ Rs.10000 per dub per annum for a period of 3 years. It is released in 2 instalments of 50%
each (first in advance and 2nd by way of reimbursement of expenses). The assistance is for the following minimum and mandatory
expenses:
1. Formation and maintenance expenses - Rs.2000
2. Awareness/orientation meet - Rs.5000
3. Meet with experts (2 in a year) - Rs.3000
Amount exceeding Rs.10000, to be met by bank (max Rs.5000 p.a.) during first 3 years. Banks to provide assistance up to Rs.10000
p.a. during 4th and 5th year.
Sustainability of clubs
It is to be ensured through creation of a corpus of the club over 3-5 years, when funding support by agendes will be withdrawn. It
can be by way of: (1) Token membership fee (2) Monthly savings (3) Service charges for SHG and JLG loans @ 0.5% and 1%
respectively (4) Commission for selling insurance products. (5) Incentive for acting as Business facilitators for banks. (6)Any other
charges.
Who can organise Farmers' Clubs
Bank operating in rural area or all grass root level organisations such as NGO, Post Offices etc. can form Farmers' Club. Clubs should
have savings bank account.
Set Up
Farmers' Club can be promoted in a village/ duster of villages, in the operational area of a Bank. It should have minimum of 10
members without any upper limit. Willful defaulters not eligible.Club will have 2 office bearers - One 'Chief Coordinator' and the
other 'Associate Coordinator'. The office bearers (resident of the area) would be elected by Club Members on a democratic basis for
a term of 2 years. No NGO representative can be office bearer of the club. Functions of office bearers indude to convene meetings,
to arrange meetings with experts, maintenance of Books of Accounts, coordination with Bank, Line Departments of State
Govemmentsfmaintaining proper liaison with Bank
AGRICLINICS Et AGRIBUSINESS CENTRES
Government revised this Central Sector Scheme on 23.7.2010. and allowed MANAGE and NABARD to implement the revised scheme
w.e.f. 04.08.2010.
Objectives : To supplement efforts of public extension by providing extension and other services to the farmers on payment basis or
free of cost as per business model of agricultural entrepreneur, local needs and affordability of target group of farmers.
Services : Paid services for enhancement of agricultural production and income of farmers such as advise the farmers on crop
selection, best farm practices, post-harvest value added options, crop insurance, credit and input access as well as critical sanitary
and phyto-sanitary considerations, which the farmers have to keep in mind.
Revised Eligibility Criteria for Candidates :
(i) Graduates in agriculture and allied subjects recognized by ICAR/ UGC or by other agencies subject to approval of
Department of Agriculture & Cooperation, Government of India on recommendation of the State Government.
(ii) Diploma (with at least 50% marks) / Post Graduate Diploma holders in Agriculture and allied subjects from State Agricultural
Universities, State Agriculture and Allied Departments and State Department of Technical Education. Diploma holders in
Agriculture and allied subjects offered by other agencies are also eligible subject to approval of Department of Agriculture &
Cooperation, Govt of India on recommendation of the State Govt.
(iii) Agriculture related courses at intermediate (i.e. plus two) level, with at least 55% marks.
Training: 2 months specialized training to be provided by select institutes across the country.
Training cost: The training cost per trainee has been raised to Rs.35000. (An additional amount of 10% on food, accommodation,
honorarium, training expenditure and handholding charges in Training Cost for North-East and Hill States of 3&K, Uttarakhand &
Himachal Pradesh).
Cut off date : The candidates who have been trained under the Scheme after April 1, 2004 are eligible. Summary of provisions for
Bank loans
• An individual or a group of individuals (min 5) is eligible for availing of these loans.
• Project cost: The outer ceiling for the cost of project by individuals is Rs.20 lac (Rs.25 in highly successful cases) and for joint/group
projects, the ceiling is Rs.100 lac, pro-rata.
• Margin — 10% of the project cost
• Repayment: The loan can be repaid within 5-10 years (with moratorium up to 2 years).
• Refinance 100% from NABARD.
• NABARD provides margin money up to 50% of margin requirement at NIL interest, under Soft Loan Assistance, for project cost
above Rs.5 lac where margin requirement is 25%.
• Collateral security and margin requirement has been waived for loans up to Rs.5 lac (RBI May 2004 credit policy). Margin above
Rs.5 lac is 25%.
• Composite subsidy at 36% of project cost (44% for SC/ST, women, NE States) on back ended basis with lock in 3 years.
• Interest Subvention Scheme — Crop Loans
• Govt. allowed interest subvention of 2% for FY 2016-17, to public sector & for loans in rural / semi-urban branches of private
sector banks, on their own funds used for short term crop loan to farriers up to Rs. 3 lac at 7% ROI. The amount is calculated
on the loan amount from the date of its disbursement/ drawal tai to the date of actual repayment or up to the due date of
the loan, whichever is earlier, subject to a maximum period of one year. Claim to be sent on HY basis I.e. September and
March.
3% additional subsidy to farmers is also given, for prompt payment of loan where farmer shall pay effective interest rate of
4% after repayment of loan up to Rs.3 lac. Repayment must be within one year. Claim for 2% subsidy to be sent to RBI on HY
basis and for 3% subvention on annual basis. Cfaim to be sent on annual basis i.e. March.
Subvention is allowed to small and marginal farmers having KCC for on same rate for a further period of 6 months at post-
harvest stage, against negotiable warehouse receipt of warehouses.
Further, to provide relief to farmers affected by natural calamities, the interest subvention of 2% will continue to be
available for the first year on the restructured amount.
Dr. Ambedkar Interest Subsidy on Educational Loans
Eligible borrowers : Students belonging to Other Backward Classes (OBC) and Economically Backward Classes (EBC) for higher
education (Masters, M.Phil, Ph.D) outside India, for loans taken as per IBA scheme.
Extent : Interest payable for the period of Moratorium shall be borne by Central Govt. Income Criteria : Total income of the
employed candidate or his/her parents/guardians in case of unemployed candidate shall not exceed (a) Rs.3 lac p.a. in case of OBC
students and (b) Rs.1.00 lakh p.a. in case of EBC students.
Out of the total annual outlay, a minimum of 50% amount will be earmarked for Interest Subsidy to the girl candidates. 2016-17, to
public sector & for loans in rural / semi-urban branches of private sector banks, on their own funds used for short term crop loan to
farriers up to Rs. 3 lac at 7% ROI. The amount is calculated on the loan amount from the date of its disbursement/ drawal tai to the
date of actual repayment or up to the due date of the loan, whichever is earlier, subject to a maximum period of one year. Claim to
be sent on HY basis I.e. September and March.
3% additional subsidy to farmers is also given, for prompt payment of loan where farmer shall pay effective interest rate of 4% after
repayment of loan up to Rs.3 lac. Repayment must be within one year. Claim for 2% subsidy to be sent to RBI on HY basis and for 3%
subvention on annual basis. Cfaim to be sent on annual basis i.e. March.
Subvention is allowed to small and marginal farmers having KCC for on same rate for a further period of 6 months at post-harvest
stage, against negotiable warehouse receipt of warehouses.
Further, to provide relief to farmers affected by natural calamities, the interest subvention of 2% will continue to be available for the
first year on the restructured amount.
Dr. Ambedkar Interest Subsidy on Educational Loans
Eligible borrowers : Students belonging to Other Backward Classes (OBC) and Economically Backward Classes (EBC) for higher
education (Masters, M.Phil, Ph.D) outside India, for loans taken as per IBA scheme.
Extent : Interest payable for the period of Moratorium shall be borne by Central Govt. Income Criteria : Total income of the
employed candidate or his/her parents/guardians in case of unemployed candidate shall not exceed (a) Rs.3 lac p.a. in case of OBC
students and (b) Rs.1.00 lakh p.a. in case of EBC students.
• Out of the total annual outlay, a minimum of 50% amount will be earmarked for Interest Subsidy to the girl candidates.
Agricultural labourer Is a person : who has no landholding, have a homestead, derive more than 50% of Income from
agricultural wages
PM Fasal Bima Yojna (PMFBY)
Govt. approved PMFBY to replace the existing schemes of National Agricultural Insurance Scheme (NAIS) & Modified National
Agricultural Insurance Scheme (MNAIS) from Kharif 2016. RBI advised banks to ensure compliance and coverage of 100% of defined
loanee farmers wef Apr 1, 2016.
The salient features are given as under:
Implementing agency : Ministry of Agiculture & Farmers Welfare (MoA&FW), Govt. in association with Banks and Insurance
Agencies.
Unit of insurance : The Scheme is implemented on an 'Area Approach bags' i.e., Defined Areas for each notified crop which is
Vilage/Vilage Panchayat level. Coverage : 1. All crops having past yield data and all farmers growing notified crops in a notified area.
RISKS TO BE COVERED :
I. Yield losses due to : Natural Fire & Lightning (Ii)Storm, Hailstorm, Cycbne, Typhoon, Tempek, Hurricane, Tornado etc.
(iii) Flood, Inundation and Landslide (iv) Drought, Dry spels (v) Pests/ Diseases.
2. Prevented sowing : If farmers are prevented from sowing the insured crop, they shat be eligble dams upto a maximum of
25% of the sum-insured.
3. Post-harvest losses : Cover is available upto 14 days from harvesting, for crops kept in 'cut & spread' condition to dry in the
field after harvesting.
4. Localized calamities : Hailstorm, laidside, and Inundation affecting isolated farms.
Risk excluded: War & kindred perils, nuclear risks, riots, malicious damage, theft, act of enmity, grazed and/or destroyed by
domestic and/or wild animals, in case of Past—Harvest Icsses the harvested ' crop bundled and heaped before threshing.
SUM INSURED / LIMIT OF COVERAGE: It would be equal to Scale of Finance (SoF) which may extend up to value of Threshold Yield
of at the option of insured farmer.
Where value of the threshdd yield is lower than SoF, higher amount shal be the Sum Insured. Multiplying the Notional TY wth the
Minimum St.pport Price (MSP) of the current year arrives at the value of sum insured. Wherever Current year's
MSP is not avalable, MSP of previous year shal be adopted. For the crops for which, MS P is not declared, farm gate price
established by the marketing department / board shall be adopted.
In case of Loanee farmers. the Insurance Charges will be treated as addtional component to the SoF.
For farmers covered on voluntary basis, the sum-insured is upto the value of
Threshold yield i.e threshold yield x (MSP or gate price) of the insured crop.
PREMIUM RATES: Actuarial Premium Rate (APR) would be charged. The rate will be:
1. Kharif : Food & Oilseeds crops (all cereals, millets, & oilseeds, pulses) - 2.0% of sum insured (SI) or Actuarial rate,
whichever is less
2. Rabi : Food & Oilseeds crops (all cereals, millets, & oilseeds, pulses) - 1.5% of SI or Actuarial rate, whichever is less
3. Kharif & Rabi : Annual Commercial / Annual Horticultural crops, 5% ofSI or Actuarial rate, whichever is less.
SHARING OF RISK: The liability of Insurance companies shal be upto 350% of total premium collected (farmer share plus Govt.
subsidy) or 35% of total Sum Insured (SI), cf all the Insurance Companies combined, whicheYer is higher.
The losses beyond this shall be met by equal contribution from Central and State Governments.
INDEMNITY LEVEL and THRESHOLD YIELD (TY) :
1. 3 levels of Indemnity, viz., 70%, 80% and 90% correspcnding to crop Risk in the areas shal be avaiable for
all crops.
2. Threshold Yield (7Y) shall be the benchmark yield level at which Insurance
protection shal be given to all the insured farmers in an Insurance Unit.
3. Threshold Yield for a crop in an Insurance Unit shall be based on average yield of last 7 years excludhg 2 years of declared
calamity, if any, multipled by the level of indemnity of the area.
TY = [Sum (last 7 years of yield minus 2 notified calamity years if any) / (5 - 7, as the case be)] x level of indemnity
Calculation payment = [Shortfall in yield / Threshold yield] / Sum Insured
(shortfall in yield = Threshold yield - actual yield)
Crop related terms
Agriculture year in India —July 01 —June 30 Food Crops — include food cereals such as paddy, wheat, pulses, vegetables (which are
consumed). Cash Crops — Ground nut, mustard, sunflower, sugar cane, cotton, coffee, tea (which are sold). Kharif season — June to
November
Rabi Season — December to May
Relief Measures in areas affected by Natural Calamities
Based on Govt. of India notification RBI on 21.08.15 allowed State Level Bankers' Committees/District Level Consultative
Committees/ banks to take a view on rescheduling of loans if the crop loss is 33% or more. Banks may allow a max period of
repayment of up to 2 years (including the moratorium of 1 year) if the loss is between 33% and 50%. If the crop loss is 50% or more,
the repayment period may be extended to a maximum of 5 years (including moratorium of 1 year).
National Credit Guarantee Trust Company Ltd NCGTC was set up by the Ministry of Finance, Government of India to act as a common
trustee company to manage and operate various credit guarantee trust funds. It was incorporated under the Companies Act on
March 28, 2014 with a paid-up capital of Rs.10 crore, with its registered office in New Delhi. Presently it provides following:
1) Credit Guarantee Fund for Skill Development : Guarantees for Skill Development Loans by the member banks of IBA up to
Rs.1.5 lakh extended without collateral or third-party guarantee.
2) Credit Guarantee Fund for Education loans for Education Loans under IBA up to Rs.7.5 lakh.
3) Credit Guarantee Fund for Factoring (CGFF) : Guarantees for domestic factored debts of MSMEs,
Credit Guarantee Scheme for Stand-up India
The scheme has been notified by Ministry of Finance, Govt. of India, on 19.05.16 to become effective from 05.04.2016. The
guarantee is offered by NCGTC Ltd.
Eligible borrowers : Individual SC/ST or Women Enterprises, setting up Green Field Enterprises. In case of non-individual cases, at
least 51% shareholding or controlling stake should be held by SC/ST or women.
Eligible Loans ; Loans by Member Lending Institution above Rs.10 lac to Rs.100 lac. Mil should not obtain any collateral security or
3rd party guarantee.
Interest rate by MLI : Maximum 3% p.a. over the base rate + tenor premium.
Procedure to obtain guarantee MLI shall collate all eligible disbursed loans under CGSSI as at end of the quarter into a batch and
submit information to NCGTC for giving guarantee cover before end of next quarter.
Guarantee fee : It will have 3 components namely, standard rate (SR) of 0.85% of sanctioned amount + Risk premium on NPAs in the
guaranteed portfolio + Risk premium on claim payout ratio. The risk premium will be in the range of 0% to 25% of standard rate.
MLI shall pay the guarantee fee within 16 days from end of the quarter in which the credit facility was sanctioned / renewed. Fee in
case of NPA accounts will be payable till lodgement of claim. If due fee is not paid on time, the guarantee cover shall not be
available. For delayed payment if permitted by NCGTC, the MLI shall pay interest @ bank rate + 4%.
Guarantee cover :
(1) For loans of above Rs.10 lac to Rs.50 lac : 80% of amount in default, maximum Rs.40 lac.
(2) For loans above Rs.50 lac up to Rs.100 lac : 50% of amount in default, maximum Rs.25 lac.
The overall ceiling of guarantee cover will be Rs.65 lac.
Claim : It can be lodged within 2 years from: (1) date of NPA where account becomes NPA after completion of lock in period or (2)
date of completion of lock-in period; if account becomes NPA before completion of lock-in period (it is 18 months from date of
commencement of guarantee cover or end of period of moratorium of interest, whichever is earlier).
Claim payment : Trust shall pay 75% of the amount within 30 days. For delay in payment beyond 30 days, it will pay interest at Bank
Rate. Balance 25% shall be paid on conclusion of recovery proceedings by MLI.
Recovery after payment of claim : MU shall pay the amount to the Trust within 30 days. For delay, MLI shall pay interest @ Bank
rate + 4%.
CRGFT for Low Income Housing
The Credit Risk Guarantee Fund Trust (CRGFT) for Low Income Housing has been set up (Govt. notification Jul 13, 2012) under the
Indian Trust Act, 1882. The Ministry of Housing & Urban Poverty Alleviation (HUPA) is the settler of the Trust. It is managed and
administered by a Board of Trustees and serviced by the National Housing Bank.
Eligible loans : Loans up to Rs.5 lac sanctioned to eligible borrowers by lending institutions without any collateral or 3rd party
guarantee. The loan can be extended by one or more lending institutions, singly or jointly. Rate of interest on the loan should not be
more than 2% above the MCLR of the bank.
Time to apply for guarantee cover : Before expiry of the quarter, next to the quarter, in which the loan is sanctioned.
Guarantee cover : For loans up to Rs.2 lac — 90% of the default amount.
For loans above Rs.2 lac up to Rs.5 lac — 85% of the default amount.
Guarantee fee : One time guarantee fee of 1% payable upfront within 30 days from date of first disbursement or 30 days from date
of demand of guarante-e-fee, by the Trust, whichever is later. Banks may recover 50% of guarantee fee by making appropriate
adjustment in the interest rate.
Invocation of guarantee: If account becomes NPA before expiry of lock in period, the guarantee can be invoked within one year after
expiry of the lock in period. If the account becomes NPA after lock in period, guarantee can be invoked within one year from date of
NPA. It is a mandatory requirement that legal proceedings are initiated.
Payment of claim : 75% of the eligible claim amount to be paid within 60 days. The balance 25% shall be paid on conclusion of
recovery proceedings. If serious deficiency are found, the lending bank to refund the amount with interest at 5% bank rate. Recovery
after claim settlement : Any amount recovered by the bank to be paid to the Trust within 30 days after adjusting the recovery cost.
Amount shall be shared in the ratio of claim payment. For delay interest to be paid at 4% plus bank rate.
GOVT. SPONSORED SCHEMES
PRIME MINISTER's EMPLOYMENT GENERATIONPROGRAME (PMEGP)
(Merged version of PMRY and KVIC-REGP Scheme)
Launched on : 1.4.2008.
Objective : To generate employment opportunities through new micro enterprises (existing not eligible). Activities: Manufacturing,
service & business. Applicable : Urban and rural areas (rural areas mean population up to 20000 and area classified as villages in
revenue record of the State Govt.).
Eligibility :
• Borrowers: Individuals, SHGs (of BPL), Charitable Trusts, Institutions under Societies Registration Act, Production Coop
Societies.
• Age : Individual above 18 years.
• Income ceiling There is no income ceiling
• Minimum qualification 8th pass is mandatory only for manufacturing projects costing above Rs.10 lac & service/business
projects above Rs.5 lac.
• Family : Beneficiary & spouse. Only one person from one family is eligible.
• Training; 2-3 weeks EDP essential. It is waived for those who have already undergone such training.
• Identification of beneficiary by Distt. Level Task Force (Head - DC/DM. Members KVIC/DIC/Banks Implementing Agency:
Ministry of MSE, Govt. of India. KVIC at National level. At State level by KVIC-Board, DIC and Banks. Scheme to
be,implemented through PSB5, RRBs, SIDBI and Coop Banks---& private banks approved by State level Task Force.
Project cost:
• Manufacturing sector : up to Rs.25 lac.
• Business and service sector: Rs.10 lac.
• Project cost includes capital expenditure (other than land) and one cycle of working capital. Projects without capital
expenditure, not eligible. Projects costing more than Rs.5 lac but not requiring working capital to be deared by Regional
Offices of the bank.
• Amount of loan: Composite loans induding capital subsidy up to 90% of project cost (95% in case of special category
borrowers - SC/ST, women, OBC, Physically handicapped, Ex-servicemen, minority, North East Region, Hill and border areas
etc.)
 Targets : To be allocated by KVIC and in the State, by SLBC. 50% cases should be for rural areas projects. Subsidy : (as percent
of project cost)
Category Rural areas Other areas
General 25% 15%
Special 35% 25%
No ceiling on amount of subsidy.
• Subsidy to be kept as Interest free FD. To be credited to loan account at end of 3"i year. If loan becomes NPA, subsidy can
be utilized before 3 years.
• Use of working capital component should touch 100% at one point of time, within 3 years and availment must not be less
than 75% of sanctioned limit. Else, pro-rata subsidy will be returned at end of 3rd year. Margin: 10% of project cost for
general category and 5% for special categories borrowers.
Rate of interest: Bank discretion
Collateral security exemption will be up to Rs.10 lac. Repayment: 3 to 7 years + moratorium as prescribed. Misc.
• Defaulters ofbanks not eligible.
• Village industry is where fixed capital investment per head of artisan/worker does not exceed Rs.1 lac (1.5 lac in hilly areas).
Deendayal Antyoilaya Yojana (DAY) National Rural Livelihood Mission (NRLM) Ministry of Rural Development, Govt. of India
launched NRLM (Aajeevika), by restructuring SGSY scheme, w.e.f. April 1, 2013.
Objective : To promote poverty reduction.
Eligible SHG : Affinity-based women SHGs of 10-15 persons (more than 70% should be BPL or rural poor). For difficult areas, groups
with disabled persons and groups formed in remote tribal areas, min 5 persons. Men can also be members only for groups of
persons with disabilities & other special categories like elders, trans-genders, men and women.
Registration : SHG is an informal group. The registration is not mandatory. Federations of SHGs formed at village level, duster level
or at higher levels are to be registered under appropriate Acts.
2 types Financial Assistance :
1. Revolving Fund (RP) To strengthen capacity and build a good credit history, RF is available if
(1) SHG is in existence for a min period of 3-6 months
(2) SHG follows `Panchasutra' — regular meetings, regular savings, regular internal lending, regular recoveries & maintenance
of proper books of accounts
(3) SHGs did not receive any RF earlier.
RF is available as corpus, with a min of Rs. 10,000 and max of Rs. 15,000 per SHG.
2. Community Investment support Fund (CIF): It is used to give loans to SHGs and/or to undertake common/collective socio-
economic activities. CIF is to be provided to SHGs in the intensive blocks and routed through the Village level/ Cluster level
Federations. CIF will be maintained in perpetuity by the Federations.
Interest subvention: It is available to cover difference between Weighted Average Interest Charged (WAIL as specified by Ministry
'of Finance) and 7% (max 5.5%), on loans to women SHGs, for a maximum of Rs 3 lac per SHG, in two ways:
• In 250 identified districts, banks will lend to all the women SHGs @7% upto an aggregated loan amount of Rs 3 lac. Claims to
be sent on HY basis accompanied by certificate from Statutory Auditors.
• The SHGs will get additional interest subvention of 3% on prompt payment reducing the effective rate of interest to 4%.
Claims are to be sent on yearly basis accompanied by certificate from Statutory Auditors. Canara Bank Is Nodal Bank for
operation of scheme and PSB & private banks with CBS are eligible. Claims are to be sent on quarterly basis.
• In the remaining districts, NRLM compliant women SHGs will be registered with StateRLMs. These are eligible for
subvention equal to difference between the lending rates and 7% for the loan upto Rs. 3 lakhs.
 Capital subsidy : No Capital Subsidy is available.
 Role of banks :
1. Banks to open saving bank a/c with proper KYC.
2. Lending Norms: a) the eligibility criteria :
• SHG should be in active existence for min 6 months as per the books of account of SHGs.
• SHG should be practicing 'Panchasutras'
• SHG should be qualified as per grading norms fixed by NABARD.
• Existing defunct SHGs are eligible if revived and continue to be active for a min period of 3 months. b) Loan amount: is
through repeat doses as under:
• 1st dose: 4-8 times of proposed corpus during the year or Rs. 50, 000 whichever is higher.
• 2nd dose: 5-10 times of existing corpus and proposed saving during the next 12 months or Rs. 1 laths, whichever is higher.
• 3rd dose: Min Rs. 2 lakhs, based on Micro credit plan prepared by SHGs & appraised by Federations/ Support agency and
the previous credit history.
• 4th dose onwards: Between Rs. 5-10 lakhs or higher In subsequent doses.
Purpose of loans : For meeting social needs, high cost debt swapping and taking up sustainable livelihoods by members or any viable
common activity started by the SHGs. Additional loan can be sanctioned even if the previous loan is outstanding.
Repayment schedule:
• 15 dose : 6-12 instalments
• 2nd does : 12-24 months.
• 3rd dose : Monthly/quarterly /half yearly, between 2 to 5 Years.
• 4th dose : Monthly/quarterly /half yearly, between 3 to 6 Years
Security and Margin: Not to be taken for loan upto Rs. 10 lakhs..No lien should be marked against savings bank account of SHGs and
no deposits should be insisted while sanctioning loans.
Defaulters: Willful defaulters should not be financed. Post credit follow-up
Bank branches may observe one fixed day in a fortnight so that staff can go to field and attend meetings of SHGs and Federations.
Sub-committee : SLBCs shall constitute a sub-committee on SHG-bank linkage to meet once a month. Reporting
1. Brandies to furnish report to LDM every month.
2. Banks to provide a State-wise consolidated monthly report on progress made on NRLM to RBI/NABARD.
3. NABARD to submit monthly report to NRLM.
4. LBR returns: Existing procedure of submitting to be continued duly-furnishing correct code.
5. State-wise consolidated report on the progress on NRLM to RBI at quarterly intervals within 15 days.
Community based recovery mechanism: One sub¬committee may be formed at village/cluster/ block , level, to provide
support to banks to ensure proper utilization of loan. recovery etc. Its members from each village level federation and
project staff, to meet once in a month (Chairman -Branch Manager).
Deendayal Antyodaya Yojana (DAY)
National Urban Livelihood Mission (NULM) The scheme launched by Ministry of Housing & Urban Poverty Alleviation replaced SJSRY
w.e.f. 24.09.13 at all district HQs and cities with population of 1 lac or more. Component 4 (Self-employment program), is relevant
for banks,
COMPONENT 4: SELF-EMPLOYMENT PROGRAM Target Group : Underemployed/unemployed urban poor for setting up
manufacturing, servicing and petty business units.
Target : (i) Women beneficiaries minimum 30%, (ii) SCs and STs in rata of their % in city/town population, (iii)differently-abled-3%,(iv)
minority communities 15%. Selection of Beneficiary : By ULB, SHGs, Area Level Federations (ALFs) or beneficiaries directly or Banks.
Education and Training : No minimum educational qualification. Appropriate training must before loans for special skill activities. ULB
to arrange Entrepreneurship Development Program for 3-7 days.
Procedure for interest subsidy : After disbursement, the bank branch will send details to ULB on a monthly basis, to be settled
quarterly. SLBCs can evolve alternative procedure. If claims are not settled up to 6 months, SLBC can stop the scheme temporarily
and give claim settlement to Lead District Bank.
Sub-Component 4.1-Individual Enterprises (SEP-I)-Loan & Subsidy
• Age: Minimum 18 Years.
• Project Cost (PC): Maximum Rs 2 lac,
• Collateral security : Nil. Banks can seek CGTMSE.
• Repayment period : 5 to 7 Years after initial moratorium of 6-18 months.
Sub-Component 4.2-Group Enterprises (SEP-G) ¬Loan & Subsidy
• An 51-IG or members of an SHG or a group of urban poor can avail the subsidised loans.
• Eligibility : Group should have min 5 members with a minimum of 70% members from urban poor families.
• Age: All members min 18 years.
• Project Cost (PC): Maximum Rs.10 lac.
• Loan : Project cost less margin of beneficiary.
• Margin : Bank has discretion to decide the margin %.
• Collateral security : Nil. The banks can seek CGTMSE.
• Repayment: 5 to 7 Years after initial moratorium of 6-18 months as per norms of the banks. Procedure for Sponsoring of
Applications:
• Beneficiary can submit applications to sponsoring agency (ULB) any time.
• ULB will generate a waiting list and issue an acknowledgement to the beneficiary.
• TASK force at ULB level, will conduct interview of beneficiaries & recommended cases to banks for further processing. Time
frame for processing of 15 days.
• Chief Executive Officer (CEO)/ Municipal Commissioner of ULB will be Chairman of the Task force. Members
will include LDM and representative from bank, district industry centre.
Sub-Component 4.3- Interest Subsidy on SHG Loans (SHG-Bank Linkage)
No capital subsidy is available. Banks (with CBS platform) can get interest subvention. Interest subsidy is available for all loans to
SHGs @ difference between interest rate charged by bank and 7% p.a. which will be reimbursed to banks.
• Additional 3% subvention is provided to all Women SHGs (WSHGs), that repay their loan promptly. The banks can credit the
subvention amount to eligible accounts and seek reimbursement.
• For SHG bank Linkage, banks are to open Savings Bank Account of registered or unregistered SHGs (promoting habit of
savings among members). These SHGs may be sanctioned Savings Linked Loans (saving to loan ratio of 1:1 to 1:4) In case of
matured SHGs, loans may be given beyond the limit of 4 times the savings, as per the discretion of the bank,
Scheme Funding : Centre and States in the ratio of 75:25. For Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim, Tripura, Jammu & Kashmir, Himachal Pradesh and Uttarakhand, this ratio will be 90:10.
DIFFERENTIAL RATE OF INTEREST (DRI)
Eligibility:
• Individuals whose family income does not exceed Rs. 18000/- p.a. in Rural Areas and Rs. 24000/- p.a. in Urban & Semi Urban
areas,
• Individual whose land holding does not exceed 1 acre of irrigated and 2.5 acres of un-irrigated land.
• No ceiling for SC/ST engaged in agr & allied activities.
• People engaged in Cottage and Rural industries.
• Physically Handicapped pursuing gainful occupation.
• Orphanages and women's home.
• State owned corporations /cooperative societies including State corporations for Supreme Court / ST's / Co-operative_
societies, Large sized Adivasi Multipurpose Co-Operative Societies for Tribal areas. • Purpose of lOan: For productive
Activities, pursuing higher, education by indigent students, Purchase of artificial limbs, hearing aids, Wheel chair by
Physically Handicapped.
Amount : Max Rs. 15000. For physically handicapped additional loan Rs. 5,000 for artificial limbs / braille typewriter: Loan up to
Rs.20000 for housing to SC/ST and under Indira Awas Yojna.
Target : 1. Min 40% to SC/ST beneficiaries, 2. 2/3rd to be routed through rural & semi - urban branches
Classification : Weaker section advances Subsidy/Margin : No subsidy. No margin Interest : 4% p.a., simple interest
Security : Hypothecation of assets created out of bank loan. No collateral security.
Repayment: Depending upon income generated Max. 5 years including grace period up to 2 years depending upon the type of
activity & income generation.
SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS) 2013
The Objective of the revised SRMS Scheme aims at assisting the manual scavengers, identified during various surveys, for their
rehabilitation in alternative occupations. Manual Scavengers and their dependents, irrespective of their income, will be eligible for
assistance. This scheme replaced SLRS scheme
Quantum :
 Term Loan- Up to a maximum project cost of Rs.15.00 lakhs for sanitation related projects and up to Rs.10.00 lakhs
for other activities.
 Micro Financing – Up to a maximum project cost of Rs.25, 000/- per scavenger. Micro financing will be done through
SHGs & NGOs
 Capital Subsidy :
 For Project cost upto Rs.200000/- : 50% of project cost
 For Project cost above Rs.200000/- upto Rs.5 lakhs: Rs 1 lac plus 33.3% of PC between 2-5 lacs
 For Project Cost from Rs 5 lac to 10 lac: Rs 2 lac + 25% of PC between 5-10 lac
 For Project Cost from 10 lacs to 15 lacs : 325000/-
 Interest Subsidy: To the extent of the difference in rate of interest will be reimbursed to the bank by the
Government / other agencies identified by Government.
 Interest: 5% upto Rs.25, 000/- proj. cost for others & 4% & for women beneficiaries 6% for project cost above
Rs.25,000/-
NPA & RECOVERY MANAGEMENT

The prudent guidelines were first issued by RBI in the year 1991 implemented wef 01.04.1992 on recommendations of
Narasimham committee covering, income recognition, asset classification and provisioning. Prudential norms prescribed by RBI
include norms relating to Accounting, Exposure, and Capital Adequacy. Prudential accounting norms are income recognition, asset
classification and provisioning.
CLASSIFICATION AS NPA
Term Loan If Interest and/ or instalment of principal remain overdue for aperiod of more than 90 days
CC/ if the account remains 'out of order or the limit is not renewed/reviewed within180 days from
Credit/overdraft the due date of renewal. Out of order means an account where (i) the balance is continuously
more than the sanctioned limit or drawing power OR (ii) where as on the date of Balance Sheet,
there is no credit in the account continuously for 90 days or credit is less than interest debited OR
Bills (iii) where stock statement not received for 3 months or more. if the bill remains overdue for a
Agricultural accounts period
(I) of more
if loan has than
been90 days from
granted for due date
short .
duration crop: interest and/or instalment of principal
remains overdue for two crop seasons beyond the due date.
(ii) if loan has been granted for long duration crop: interest and/or instalment of principal
remains overdue for one crop season beyond due date.
(iii)Decision about crop duration to be taken by SLBC.
Loan against FD, NSC, Advances against term deposits, NSCs eligible for surrender, IVPs, KVPs and life policies not
KVP, LIP treated as NPAs provided sufficient margin is available. Advances against gold
ornaments, govt securities and all other securities are not covered by this exemption
Loan guaranteed by Loan guaranteed by Central Govt not treated as NPA for asset classification and provisioning till
Government the Government repudiates its guarantee when invoked. Treated as NPA for income recognition.
Advances guaranteed by the State Government classified as NPA as in other cases
Consortium advances Asset classification of accounts under consortium should be based on the record of recovery of
the individual member banks.
DISTRESSED ASSETS: Identify incipient stress by creating a sub-category viz., Special mention accounts (SMA) before a loan
Account turns into an NPA.Early formation of lender’s committee with timeline to agree a plan of resolution.Incentives for
lenders to agree collectively and quickly to plan.Improvement in current restructuring process.More expensive future borrowing
for borrowers who do not co-operate with lenders. More liberal regulatory treatment of asset sales. SPECIAL MENTION
ACCOUNTS:
SMA SUB CATEGORY BASIS FOR CLASSIFICATION
SMA 0 Principal or interest payment not overdue for more than 30 days but account showing
signs of incipient stress.
SMA 1 Principal or interest payment overdue between 31 – 60 days.
SMA 2 Principal or interest payment overdue between 61 – 90 days.
SMA-0: IDENTIFIED AREAS
 Delay of 90 days or more in
 Submission of stock statement/ other statements such as QOS, HOS and ABS.
 Credit monitoring or financial statements or
 Non renewal of facilities based on audited financials.
 Actual sales/operating profits falling short of projections accepted by 40% or more.
 A single event of non co-operation /prevention from conduct of stock audits.
 Reduction of Drawing Power (DP) by 20% or more after a stock audit.
 Evidence of diversion of funds for unapproved purpose.
 Drop in internal risk rating by 2 or more notches in a single review.
 Return of 3 or more cheques (or electronic debit instructions ) issued by borrowers in 30 days, on grounds of non
availability of balance / DP.
 Return of 3 or more bills/cheques discounted or sent under collection.
 Devolvement of Deferred Payment Guarantee (DPG) installments or LCs or invocation of BGs and its non payment
within 30 days.
 Third request for extension of time either for creation or perfection of securities or for compliance with any other
terms and conditions of sanction.
 Increase in frequency of overdrafts in current accounts.
 The borrower reporting stress in the business and financials.
Promoter(s) pledging/ selling their shares in the borrower Company due to financial stress.
Asset Classification :Assets can be categorized into four categories namely (i) Standard (ii) Sub Standard (iii) Doubtful (iv)Loss
The last three categories are classified as NPAs based on the period for which the asset has remained nonperforming and the
realisability of the dues.
(i) Standard Assets: The loan accounts which are regular and do not carry more than normal risk. Within Standard assets, there
could be accounts which though have not become NPA but are irregular. Such accounts are called as Special Mention accounts.
(ii) Sub-standard Assets: With effect from 31.3.2005, a sub-standard asset is one, which is classified as NPA for a period not
exceeding 12 Months.
(iii) Doubtful Assets: With effect from 31 March 2005, an asset is to be classified as doubtful, if it has remained NPA or sub
standard for a period exceeding 12 months.
Doubtful accounts are further classified in three categories namely Doubtful 1 (D1), .Doubtful 2 (D2) and Doubtful 3 (D3).
Doubtful 1 or D1: It is that account which is doubtful up to one year.
Doubtful 2 or D2: It is that account which is doubtful for more than one year but up to 3 year.
Doubtful 3 or D3: It is that account which is doubtful for more than 3 year.
Thus an account remains D1 for 12 months and D2 for 24 months.
(iv) Loss Assets: A loss asset is one where loss has been identified by the bank or internal or external auditors or the RBI
inspection but the amount has not been written off wholly. In other words, such an asset is considered uncollectible and of such
little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery value.
When an account is classified as Doubtful or Loss without waiting for 12 months: If the realizable value of tangible security in an
account which was secured in the beginning falls below 10% of the outstanding, it should be classified loss asset without waiting
for 12 months and if the realizable value of security is 10% or above but below 50% of the outstanding, it should be classified as
doubtful irrespective of the period for which it has remained NPA.
What is to be done when account becomes NPA?
1. If one account of the borrower in the bank becomes NPA in one branch, then all accounts of that borrower in other branches
of the same bank also are classified as NPA. Thus classification as NPA is done borrowerwise and not accountwise. Only
exception to this rule is loan granted to Primary Agricultural Credit Societies.
2. In NPA account, interest or any other charge can be debited to the account only when it is recovered.
3. In all NPA accounts, provision is to be made on the basis of asset classification.
Income recognition — Policy: Income from non-performing assets (NPA) to be booked as income only when it is actually received.
The bank should reverse the interest already charged during previous periods and not collected by debiting Profit and Loss account
PROVISIONING NORMS: Provisioning is made on all types of assets i.e. Standard, Sub standard, Doubtful and loss assets.
ADVANCES UNDER CONSORTIUM : Assets 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. Where the remittances by
the borrower under consortium lending arrangements are pooled with one bank and/or where the bank receiving remittances does
not part with the share of other member banks, the account will be treated as not serviced in the books of the other banks and
therefore be treated as NPA.
In cases where banks fail to report Special Mention Accounts (SMA) status of the accounts :to Central Repository for Information
on Large Credit (CRILC) , the accelerated provisioning in respect of such non performing accounts are as under:Asset Classification
Period as NPA Accelerated provisioning
Sub standard (secured) - Up to 6 months - 15%,- 6 Months to 1Year - 25%
Sub standard (Un secured abinitio) - Up to 6 months - 25%
- 6 Months to 1Year - 40% Doubtful I 2nd Year - 40% (of Secured portion)
- 100% (of unsecured portion)
Doubtful II 3rd & 4th Year - 100% for both secured and unsecured portion Doubtful III 5th Year onwards - 100%
PROVISIONING GUIDELINES OF RESERVE BANK OF INDIA :
STANDARD ASSETS : Farm Credit to agricultural activities and Small and Micro Enterprises (SMEs) sectors - 0.25% ,Advances to
Commercial Real Estate –Residential housing sector - 0.75% Advances to Commercial Real Estate - 1.00% ,Provision for restructured
accounts classified as standard advances - New restructured standard accounts (flow) with effect from June 1, 2013 - 5.00%
Housing loans at teaser rates –till 1 year from the date on which the rates are reset at higher rates if the accounts remain standard -
2.00%.All other Loans and Advances - 0.40 .The provision for Standard Assets including the above will be done at Head Office.
Provision for NPAs:
Sub Standard Assets - 15% OR 25% of liability .However the 'unsecured exposures' which are identified as 'Sub Standard ' would
attract additional provision of 10%, i.e., total of 25% on the outstanding balance.
Doubtful Assets - up to one Year - 100% of Deficit* portion /Unsecured portion + 25% of Secured Portion
Doubtful Assets – More than one year & upto 3 Years - 100% of Deficit* portion /Unsecured portion +40% of Secured Portion
Doubtful Assets - More than 3 years and Loss Assets -100%
*Deficit portion means to the extent of the advance which is not covered by the realizable value of the
security/ECGC/CGTMSE/CRGFTLILH cover etc., to which the bank has a valid recourse and the realizable value is estimated on a
realistic basis.
Advances covered by ECGC &other guarantees :In the case of advances classified as doubtful and guaranteed by
ECGC/CGTMSE/CRGFTLILH, provision should be made only for the balance in excess of the amount guaranteed by the Corporation.
Further, while arriving at the provision required to be made for doubtful assets, realizable value of the securities should first be
deducted from the outstanding balance in respect of the amount guaranteed by the Corporation and then provision made.
4. PROVISION NORMS FOR FRAUD ACCOUNTS: All fraud cases reported under Loans and advances should be classified as
Doubtful or Loss assets depending on the availability and enforceability of securities without fail. All fraud marked accounts are to
be provided fully irrespective of Asset Classificationcategory: 5% for first two years.
Suspense Interest: While making provisions on NPAs, amount lying in Suspense interest account and derecognized interest should be
deducted from gross advance and provisions be made on the balance amount.
5. Overall provisions: Total provisioning coverage ratio, should be minimum 70%. Banks should achieve this norm not later than
end-September 2010. Provisioning coverage ratio is the ratio of provisioning to gross NPAs.
6. Floating Provisions: Banks can deduct floating provisions from gross NPAs or *reckon it as part of Tier II capital subject to the
overall ceiling of 1.25% of total Risk Weighted Assets.
Gross and Net Advances.and Gross and Net NPA:
(i) Gross Advance = Standard Assets + Gross NPA. (For the purpose of computing Gross Advances, interest recorded in the
Memorandum account should not be taken into account.
(ii) Net NPA = Gross NPA minus provisioning for NPAs
(iii) Net advances = Gross advances minus provisioning for NPAs
(iv) Net NPA ratio = Net NPA/Net advances*100
Other features:
1. Asset classification of accounts under consortium should be based on the record of recovery of the individual member banks.
2. Advances a ainst term de osits NSCs eligible for surrender IVPs KVPs and life policies need not be treated as NPAs provided
sufficient margin is available. Advances against gold ornaments, government securities and all other securities are not covered
by this exemption.
3. Government guaranteed advances: The credit facilities backed by guarantee of the Central Government will be treated as
NPA for income recognition. However, asset classification and provisioning would be made only when the Government
repudiates its guarantee when invoked.
4. Availability of security or net worth of borrower/guarantor should not be taken into account for the purpose of treating an
advance as NPA. It should be on the basis of record of recovery.
Provisioning Coverage Ratio & CCPB in terms of Circular dated Dec 01, 2009, a Provisioning Coverage Ratio (PCR) of 70% of gross
NPAs was prescribed by RBI, as a macro-prudential measure, to augmenting provisioning buffer in a counter-cyclical manner
when the banks were making good profits. Banks have been advised (Apr 21, 2011) by RBI that :
the PCR of 70% may be with reference to the gross NPA position in banks as on September 30, 2010;
ii. the surplus of the provision under PCR vis-a-vis as required, should be segregated into an account styled as countercyclical
provisioning buffer (CCPB)
iii. This buffer will be allowed to be used by banks for making specific provisions for NPAs during periods of system wide downturn,
with the prior approval of RBI. (On March 31, 2015, RBI allowed banks to use 50% of CCPB as on Dec 31, 2014).
Further, PCR is to be disdosed in Notes to Accounts to the Balance Sheet
Appropriation of recovery
Banks should adopt an accounting principle and exercise the right of appropriation of recoveries (towards principal and interest) in a
uniform and consistent manner.
Rehabilitation cases
As regards the advances granted under rehabilitation packages finalised by BIFR and/or term lending institutions, banks should not
make any provision on the additional facility for a period of one year from date of disbursement. However, for original advance,
provision be made according to the classification viz. substandard or doubtful, as the ease may be.
Security/means of the borrower/guarantors
a) Availability of security or net worth of borrower/guarantor should not be taken into account for the purpose of treating an
advance as NPA or otherwise, as income recognition is based on record of recovery.
b) The net means of the borrowers and guarantors are not to be included as security for the purpose of calculating shortfall in
doubtful category.
c) Pari-passu / second charge on all block assets should be treated as security.
d) Surplus security available in one loan be considered in another loan of the same borrower where there is a shortfall.
Treatment of NPA Provisions

RBI as per circular of Mar 24, 2009 has decided as under, in regard to the prudential treatment of different types of provisions
in respect of loans portfolios. RBI has clarified that the relative provisions can only be reckoned for the purpose listed there
against.
(i) Additional Provisions for NPAs at higher than prescribed rates:
The regulatory norms for provisioning represent the minimum requirement. Therefore, banks may voluntarily make specific
provisions for NPAs at rates which are higher than the rates prescribed under existing regulations if such higher rates are
based on a policy approved by the Board of Directors to provide for estimated actual loss in collectible amount and the
policy is consistently adopted from year to year. The additional provisions for NPAs, like the minimum regulatory provision
on NPAs, may be netted off from gross NPAs to arrive at the net NPAs
(ii) Excess Provisions on sale of Standard Asset/NPAs :
(a) If sale consideration is higher than the book value in respect of Standard Asset, the excess provisions may be credited to
Profit & Loss Account.
(b) Excess provisions which arise on sale of NPAs can be admitted as Tier II capital subject to the overall ceiling of 1.25% of
total Risk Weighted Assets.
(iii) Provisions
Provision for diminution
for Diminution of fair
in the Fair value:
Value Provisions forAdvances
of Restructured diminution of fair value of restructured advances, both in respect
Computation of erosion of fair value : It is computed as the difference between the fair value before and after restructuring.
Fair value before restructuring is computed as the present value of cash flows of interest (at the existing rate on the loan before
restructuring) and the principal, discounted at a rate equal to the bank's base rate (applicable to borrower) as on the date of
restructuring plus appropriate term premium and credit risk premium for the borrower category on the date of restructuring. Fair
value of the loan after restructuring :
RBI, decided (02.07.15) that a rate equal to the actual interest rate charged to the borrower before restructuring may be used to
discount the future cash flows for the purpose of determining the diminution in fair value of loans on restructuring. If existing
credit facilities carry different rates of interest, the weighted average interest rate (with share of each credit facility in the total
outstanding of the borrower as on the date of restructuring being used as weights) may be used as the discounting rate. This rate
may be used to discount pre-restructuring cash flows & post-restructuring cash flows.
This methodology is to be consistently used wherever banks are required to compute fair/present value of loans under RBI
guidelines, including for the purpose of computing net present value of project loans.
WILFUL LOAN DEFAULTERS - REVISED RBI GUIDELINES
RBI implemented the recommendations of (Kohli Working Group) wef May 31, 2002.
What is Wilful Default ?
A wilful default would be deemed to have occurred if any of the following events is noted :The unit has defaulted in meeting its
payment / repayment obligations to the lender :
(i) even when it has the capacity to honour the obligations OR
(ii) and has not utilised the finance from the lender for the purposes for which finance was availed of but has
diverted funds for other purposes OR
(iii) and has siphoned off the funds so that the funds have not been utilised for specific purpose for which finance was
availed of, nor are funds available with unit in the form of other assets OR andhasdisposedoforremovedthemovablefixed
assetsorimmovablepropertygivenbyitforthepurposeofsecuringatermloanwithout RBI clarifications
The term 'unit' means individuals, juristic persons and all other forms of business enterprises.
A guarantor who fails to repay bank loan on being called to pay when borrower defaults, will also be categorized willful defaulter, if he has
capacity to pay. Within a group, if a group company has given corporate guarantee for other company declared willful defaulter, the
guarantor company will also be considered willful defaulter, if it does not repay the loan, as guarantor.
(iv) Cut-off limits for Penal provisions Any wilful defaulter with an outstanding balance of Rs. 25 lakh or more,
would attract the penal measures. This limit of Rs. 25 lakh may also be applied for the purpose of taking
cognizance of the instances of 'siphoning' / 'diversion' of funds.
(v) Penal measures
(vi) a: In order to prevent the access to the capital markets by the wilful defaulters, a copy of the list of wilful defaulters
would henceforth be forwarded by RBI to SEBI as well.
b. No additional facilities should be granted by any bank / FI to the listed wilful defaulters. In addition, the entrepreneurs /
promoters of companies not to be allowed any financial support for floating new ventures for a period of 5 years from the date
the name of the wilful defaulter is published in the list of wilful defaulters by the RBI.
c. The legal process, wherever warranted, against the borrowers / guarantors and foreclosure of recovery of dues should be initiated
expeditiously. The lenders may initiate criminal proceedings against wilful defaulters.
(vii) Reporting of Willful Defaulters
(viii) I. Banks are to furnish data on willful defaulters (non-suit filed accounts) for Dec 31, 2014 onwards to Credit Information companies
and not to RBI. Thereafter, banks/FIs may continue to furnish data on a monthly or a more frequent basis, so that information is
available on a near real time basis.
(ix) if) Data on willful defaulters (suit filed accounts) of Rs.25 lac and above will continued to be submitted to CICs.
Grievance Redressal Mechanism: Decisions to classify the borrower as wilful defaulter is entrusted to a Committee headed by
the Executive Director and consisting of • two GMs/DGMs. Another committee headed by Chairman/CMD/CEO is to review the
decision taken by the above committee.
NON-COOPERATIVE BORROWERS (RBI Dec 22, 2014)
A non-cooperative borrower is one who does not engage constructively with his lender by .(i) defaulting in timely repayment of dues while
having ability to pay, (ii) thwarting lenders' efforts for recovery of their dues by not providing necessary information sought, (iii) denying access
to assets financed / collateral securities, (iv) obstructing sale of securities, etc.
(x) The cut off limit for classifying as non-cooperative would be aggregate fund-based and non-fund bas4d facilities of Rs.50
million from the concerned bank/FI.
(xi) The decision to classify as non-cooperative borrower is entrusted to a Committee headed by an Executive Director and
consisting of two other officers (General Managers/ Deputy General Managers) as decided by the Board of the concerned
bank/r1.
(xii) The Committee shall issue a Show Cause Notice to the borrower (promoter/whole-time directors in case of companies) and
call for his submission and after considering his submission issue an order recording the borrower to be non-cooperative
and reasons for same.
d) The order of this Committee should be reviewed by another Committee headed by the Chairman / CEO and MD and consisting two
independent directors. The order to be come final when confirmed by Review Committee.
e) Banks/Fls will report information on their non-cooperative borrowers to CRILC under CRILC-Main (Quarterly Submission) return within 21
days from the close of the relevant quarter.
f) Boards of banks/Fls should review on a half-yearly basis the status of non-cooperative borrowers for deciding whether their names can be
declassified as evidenced by their return to credit discipline and cooperative dealings. Removal of names from the list of non-cooperative
borrowers should be separately reported under CRILC with adequate reasoning/rationale for such removal.
g} Banks/Fis will make higher provisioning as applicable to substandard assets for new loans sanctioned to such borrowers as also new
loans sanctioned to any other company that has on its board of directors any of the whole time directors/promoters of a non-cooperative
borrowing company or any firm in which such a non-cooperative borrower is in charge of management of the affairs. However, for the
purpose of asset classification and income recognition, the new loans would be treated as standard assets.
Central Registry of Securitisation Assets Reconstruction & Security Interest of India
Govt. of India established the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), a
Govt. Company, U/S 25 of Companies Act, 1956 on Mar 31, 2011. It operates/maintains Central Registry functions as per
SARFAESI Act 2002 under the superintendence and direction of Central Registrar. The majority
shareholding (51%) is with Central Govt., Public Sector Banks and National Housing Bank.
Type of transactions - It registers transactions relating to security interest over property and transactions of securitization and asset
reconstruction. With registration of these transactions, a public data base is created about encumbrances created on properties to
secure loans and advances given by banks/FIs, as also transactions of securitization or asset reconstruction undertaken under
provisions of the SARFAESI Act. The following transactions are not covered : (1) Securitization or asset reconstruction done outside
the provisions of the SARFAESI Act ; or (2) Security interest created in favour of any lender not included in the definition,of bank or,
FI as per SARFAESI Act. Who is covered : The secured creditors notified under the SARFAESI Act . are to file the details
Roll over of Short-Term Loans: A roll-over of a short term loan, will be considered as 'restructuring'. If such accounts (other than
properly assessed regular Working Capital Loans like revolving Cash Credit or Working Capital Demand Loans), are rolled-over more
than 2 times, then on 3rd roll-over onwards, the account would be treated as a restructured account.
Conversion of Debt : The conversion into preference shares should be done only as a last resort maximum up to 10% of the restructured debt. The
conversion should be done only in the case of listed companies subject to statutory requirement u/s 19 of the BR Act 1949 and relevant SEBI
regulations.
Right of Recompense: All restructuring packages must incorporate 'Right to recompense' dause and it should be based on certain performance
criteria of the borrower. In any case minimum 75% of the recompense amount should be recovered by the lenders and in cases where some facility
under restructuring has been extended below base rate, 100% of the recompense amount should be recovered.
Repeatedly restructured accounts.The concession is not available if the account is restructured for the second or more times.
Benchmarks for Viability Parameters (RBI — May 31, 2013)
As per extant instruction account can be taken up for restructuring by the banks if the financial viability is established and there is a reasonable
certainty of repayment from the borrower. RBI decided that the viability should be determined based on the acceptable viability parameters
and benchmarks for each parameter as under:
i. Return on capital employed should be at least equivalent to 5 year Govt. security yield plus 2%.
ii. The debt service coverage ratio (DSCR) should be greater than 1.25 within the 5 years period in which the unit should become viable. On year to
yearbasis theratioshould beabove1. Thenormal DSCR for10years repayment,shouldbearound 1.33.
iii. The benchmark gap between. internal rate of return & cost of capital, should be minimum 1%.
iv. Operatingandcash break evenpoints should beworked outandthey should becomparablewith theindustry norms.
v. Trends of the company in relation to EBIDTA, based on historical data and future projections should be comparable with the industry average.
Strategic Debt Restructuring (SDR) Scheme RBI authorised banks {08.06.15) to undertake an SDR i.e. converting loan dues to equity
shares, with the following features:
i) JLF to incorporate, in the terms and conditions, an option to convert the loan (including unpaid interest) into shares in the
company. if the borrower fails to achieve the viability milestones
and/or adhere to the 'critical conditions', the JLF may decide on whether to invoke the SDR to acquire majority shareholding in the company,
which should be min 51% (compliance with Sec19(2) of Banking Regulation Act, 1949 to be ensured).
ii) The decision should be taken within 30 days and approved by majority of the JLF members (min 75% by value and 60% by number);
iii) Conversion package should be approved within 90 days from date of deciding to undertake SDR;
iv) The conversion should be completed within 90 days from the date of approval. SDR invocation will not be treated as
restructuring for asset classification and provisioning norms;
v) On completion of conversion, the existing asset classification, as on the reference date, will continue for a period of 18 months.
Thereafter, the classification will be as per IRAC norms.
viii. On divestment in favour of a 'new promoter', account will upgraded to 'Standard'. The provision shall be reversed when the loans
perform satisfactorily during the 'specified period'.
On divestment, banks may refinance the existing debt considering the changed risk profile without treating the exercise as
'restructuring'.
v). The asset classification benefit is subject to the following conditions:
a. The 'new promoter' should not be an associate from the existing promoter/promoter group; and
b. The new promoters acquired at least 51% of the paid up equity capital of the company. If
foreign investment ceiling is less than 51%, new
non-resident promoter should own min 26% of the paid up equity capital or up to applicable foreign
investment limit, whichever is higher and banks should be satisfied that the non-resident promoter controls the management.
Calculation of conversion price of the equity Conversion should at fair value decided by JLF on a reference date, not exceed lowest
of the following:
a) Market value i.e. average closing prices during 10 trading days preceding the 'reference date';
b) Break-up value i.e. book value per share calculated from latest audited balance sheet
(without considering 'revaluation reserves') not more than a year old. In case absence of the latest balance sheet the break-up value
shall be Re.1. Banks should adhere to all the prescribed conditions by SEBI in this regard.
Regulatory Ceiling : Acquisition of shares will be exempted from regulatory restrictions. Acquisition will require reporting to PBS, RBI,
CO every month)
Equity shares under SDR shall be assigned a 150% risk weight for 18 months from the 'reference date'. After 18 months
these shares shall be assigned risk weights as per the extant regulations.
Marking to market : Equity shares shall be exempt from periodic mark-to-market for 18 month period.
Central Repository of Information on Large Credit (CRILC)
U/s 27 (2) B R Act, RBI decided to use the information in Form-A (Return on Large borrowers of Rs.10 cr and above) for Central
repository. W.e.f. 1.4.14, RBI created CRILC (Central Repository of Information on Large Credit).
Banks are required to send on quarterly basis (within 21 days) the information relating to
(i) Fund and non-fund based loan account of Rs.5 cr and above (with PAN details). Loans extended by overseas branches are also to
be reported. (Exempted loans : Crop loans and inter-bank exposures including to NI-113, DIM, SIDBI, NABARD).
(ii) current account balance (debit or credit) of Rs.1 cr and above
(iii) SMA a ccounts with exposure of Rs.5 cr and above and all SMA-2. (banks can report on w eekly basi s as on
every Friday) .
Framework for Revitalising NPAs RBI' framework became effective from Apr 1, 2014. Early Recognition : Banks have 3 sub-
categories under special mention accounts (SMA) category: SMA-0 : Principal or interest payment overdue upto 30 days but account
-
showing signs of incipient stress. SMA 1 : Principal or interest payment overdue between 31-60 days.
SMA-2 : Principal or interest payment overdue between 61-90 days.
Stress Signs to classify as SMA
1. Delay of 90 days or more in stock statement / other financial statements, renewal of loan limits.
2. Actual sales /operating profits, falling short by 40% compared with projected sales OR reduction of DP by 20% due
to stock audit OR drop in credit rating by 2 or more notches.
3. Return of 3 or more cheques for insufficiency of funds or returns of 3 or more cheques sent for collection.
4. Non-payment of devolved LC or DPG payment for 30 days or more.
d
5. 3' request for time extension for compliance of conditions.
Mandatory formation of Joint Lenders' Forum: When an account is reported to CRILC as SMA-2, the banks, are to form a Joint
Lenders' Forum (JLF) and formulate a joint Corrective Action Plan (CAP).
 In existing consortium accounts leader bank will be convener and consortium will serve as ..11.F.
 For Multiple Banking Arrangements accounts, bank with the highest exposure will convene JLF.
 JLF formation is mandatory for all distressed borrowers with total fund and non-fund based exposure (AE) of Rs.1000 million and
above. For other SMA accounts also, lenders can form JLFs.
 If a borrower requests, for formation of a JLF, the account should be reported to CRILC as SMA-0. Options for Corrective Action
Plan (CAP) by ILF
(a) Rectification : Obtaining a commitment from the borrower with identifiable cash flows within the required time to
regularise the account without additional finance or involving any loss or sacrifice.
(b) Restructuring : if prima facie viable and the borrower is not a willful defaulter.
(c) Recovery : If above is not feasible, due recovery process may be resorted to, by the JLF with consent of minimum of 75% of
creditors by value and 60% by number, which will be binding on the lenders.
Time limits : 1) JLF is to decide on the option to be adopted within 30 days from (i) the date of reporting as SMA-2 by any lender, or
(ii) receipt of request from the borrower to form a JLF.
2) JLF should sign off final CAP within next 30 days.
Restructuring Process by JLF
Case can be referred to CDR Cell or JLF can restructure independent of CDR structure.
i) Restructuring package by JLF
1) JLF to carry out a Techno-Economic Viability study. If viable, the package to be finalized within 45 days.
2) For accounts up to Rs.5000 million, package to be approved and conveyed by banks to the borrower, within the next 15 days, for
implementation.
For accounts with AE above Rs.5000 million, the TEV study and restructuring package to be evaluated by an Independent Evaluation
Committee (TEC) for recommendation within 45 days. If agreed by JLF, the package is to be approved by all the lenders and
communicated to the borrower within next 15 days. General conditions : 1) Asset Classification benefit available as under CDR, will
be available to such accounts also. The Classification as on the date of formation of JLF will be taken into account.
2) The viability should be determined based on acceptable viability benchmarks (such as Debt Equity Ratio, Debt Service
Coverage Ratio, Liquidity/Current Ratio, amount of provision in lieu of the diminution in the fair value of the restructured
advance, etc).
3) The operational details, on CDR mechanism, including One Time Settlement, will be applicable. ii) Restructuring package under
CDR
1) As the preliminary viability of account has been decided by JLF, CDR Cell need not duplicate this process and directly prepare
the TEV study and restructuring plan within 30 days.
2) For accounts with exposure of less than Rs.5000 million, the package should be submitted to CDR Empowered Group (EG) for
approval for final decision within the next 30 days. Approved package should be approved by all lenders and conveyed to the
borrower within next 30 days.
3) For accounts with exposure of Rs.5000 million and above, the TEV study and restructuring package prepared by CDR Cell to
be evaluated by an Independent Evaluation Committee (IEC) of experts which will give recommendation within 30 days. If JLF
decides to go ahead with the restructuring, it should be communicated to CDR Cell. Thereafter, CDR EG should decide within the
next 30 days. CDR approved package should be approved by all lenders and conveyed to borrower within the next 30 days.
Other Conditions Relating to Restructuring
Shareholders bear first loss rather than the banks.
In case of listed companies, lenders may be ab-initio compensated for their loss/sacrifice by issue of equities of the company
upfront. If acquisition results in exceeding the regulatory Capital Market Exposure limit, it will not be treated a breach. It will be
reported to RBI and disclosed in the Balance Sheet.
Prudential Norms on Asset Classification and Provisioning : For proposal under consideration, the usual classification norm would
continue. As an incentive for implementation, the asset classification status as on the date of formation of JLF, would be the relevant
date to decide the asset classification status after implementation of restructuring package (this incentive will be withdrawn w.e.f.
April 1, 2015).
Penal Measures for non-adherence : If lenders fail to report SMA status to CRILC or resort to conceal the actual status or evergreen,
they will accelerate provisioning at provisioning rates mentioned above.
Backtracking : If a bank that agreed to the restructuring, backtracks it has to accelerate provisioning as above. If the account is
standard in those lenders' books, the provisioning requirement will b e 5%.
Failure to convene 3LF : If lenders fail to convene JLF or fail to agree upon a common CAP within the stipulated time frame, the
account will require accelerated provisioning as above.
If any of the banks reported the account as SMA2 to CRILC and 3LF convening bank fails to convene JLF, the convening bank will be
required to make accelerated provisions.
In case of consortium accounts, if lead bank fails to convene JLF within 15 days of reporting account as SMA2, the next largest
shareholder bank will assume the responsibility of lead bank.
If the escrow maintaining bank under JLF/CDR does not appropriate proceeds of repayment as per agreed terms, the account with
the escrow maintaining bank will attract the asset classification and provisioning for one year, which is lowest among the lending
member banks.
Willful Defaulters, Accountability of Promoters / Directors / Auditors
(a) The provisioning for existing loans to companies having director/s (other than nominee directors of govt./financial
institutions), whose names appear more than once in the fist of wilful defaulters, will be 5% in cases of standard accounts and
accelerated provisioning as above, if NPA.
(b) To discourage borrowers/defaulters from being unreasonable and non-cooperative, banks may classify such borrowers as non-
cooperative borrowers, after giving 30 days notice. Banks will make higher/accelerated provisioning for new loans to such
borrowers or company promoted by such promoters or to a company on whose board any of promoter / directors of this non-
cooperative borrower is a director.
(c) RBI will create a database of directors on the boards of companies classified as non-cooperative borrowers for dissemination
to lenders.
Sale and Purchase of NPAs by banks
1. The sale and purchase of NPAs can be made by banks, financial institutions and NBFCs
2. A bank can sell NPA provided it is held in its books as NPA for any period.
3. The sale will be on cash basis and without recourse basis. Purchasing bank can not resell the same to the selling bank.
4. The asset will be classified as Standard Asset in the books of the purchasing bank for 90 days and thereafter on the basis of its
record of recovery.
5. Purchasing bank can resell the same other than to the original bank after keeping the same in its books for 12 months
6. The purchasing bank should realize the assets within 3 years. Minimum 10% should be recovered in the first year and 5% in
the each following half year.
7 . In the books of the purchasing bank, this asset will carry a risk weight of 100% for capital adequacy purpose. Asset
Reconstruction Companies
1. ARCs have been set up for taking over NPAs from banks/Fls and reconstruct or re pack these for sale
2. First ARC is Asset Reconstruction Company of India Ltd (ARCIL)
3. ARC will be set up as a joint stock company. Registration with RBI is must before commencement of business as ARC.
4. ARC should start business within 6 months of registration with RBI. RBI can extend it by another six months.
5. Net owned funds of ARC should be 15% of the acquired assets or Rs 100 crore whichever is less.
6. Capital Adequacy Ratio at all times should be at least 15%
7. ARC should invest at least 15% in security receipts created out of each securitization.
Reporting to Credit Information Company:
(v) Both in respect of suit filed and non suit filed accounts, banks/Fis should furnish the data in respect of wilful defaulters of Rs.
25 lakhs and above for the quarter ending December 31, 2014 and the data on defaulters (other than willful) of Rs. 1 crore and
above for the half year ending December 31, 2014 to Credit Information Company and not to RI31. Thereafter, banks/Fls may
continue to furnish data in respect of defaulters/wilful defaulters to CICs on a monthly or a more frequent basis.
SUMMARYOFPROVISIONSPERCENTAGE
Standard - General accounts – 0.40 %
Direct Agriculture & SME – 0.25 %
Commercial Real Estate – 1.00%
Teaser Home Loans (provision will be 0.4% after one year of increase in interest rate) 2.00%
New restructured a/c w.e.f 01.06.2013 : 5%
Existing a/c Restructured upto 31.03.2013
wef 31.03.14 ( spread over four quarters ) : 3.5%
Sub-standard Secured 15%
Sub-standard Unsecured 25%
Sub-standard unsecured (infrastructure accounts) 20%
Doubtful - up to 12 months 25%
Doubtful - more than 12 months but up to 3 years 40%
Doubtful - more than 3 years (secured/unsecured): 100%
Loss account 100%
Provisioning coverage ratio is to be calculated w.r.t. gross NPAs as on Sept 2010 (ratio of provisions / gross 70%
NPAs). Excess amount (over and above account-wise provision) to be kept in Cyclical Provision Buffer Account
-70%
Important issues relating to provisions : Provision on Standard account to be kept as part of other Liabilities in Schedule-5 of bank's
balance sheet (it will be part of tier 2 capital fund for CAR purpose) Provision on Standard accounts to be done on Global Balance and
for NPA accounts on Gross Balance For Doubtful accounts provision to be done Separately for secured portion and unsecured
portion of total balance in the account.For sub-standard accounts, provision to be done by treating the account secured sub-
standard or unsecured sub-standard without bifurcating the balance into secured or unsecured.
Sub-standard unsecured account means an account where at the time of sanction no security obtained or security value was 10% or
less
Gross NPAs: It is the principal dues of NPAs plus Funded Interest Term Loan where the
corresponding contra credit is parked in sundry account (Interest Capitalization – Restructured
Accounts), in respect of NPAs
NET NPAs: Net NPAs is the amount of Gross NPAs minus
Provisions held in the case of NPA Accounts as per asset classification (including additional
provisions for NPAs at higher than prescribed rates)
 DICGC/ECGCclaimsreceivedandheldpendingadjustment
 Partpayment receivedandkeptinSuspenseA/coranyothersimilaraccounts
 BalanceinSundryAccounts(InterestCapitalization–RestructuredAccounts),inrespectof NPAs
 Floatingprovisions:ProvisionsinlieuofdiminutioninthefairvalueofrestructuredaccountsclassifiedasNPAs
 Provisionsinlieuofdiminutioninthefairvalueofrestructuredaccountsclassifiedasstandardassets
UPGRADATION OF LOAN ACCOUNTS CLASSIFIED AS NPAs

1. if arrears of interest and principal are paid by the borrower in the case of loan accounts classified as NPAs, the account may be classified as
'standard' accounts immediately.
2. Restructured accounts: After one year after the date when first payment of interest or of principal,
whichever is earlier, falls due, subject to satisfactory performance during 12 months period from the date of starting payment after moratorium
th st th
period. For example, an account was restructured on 5 Jan 2014, moratorium period 6 months, 1 instalment due on 5 July 2014 which was paid
s4 th st
on1 July 2014and thereafter accountwas regularfor12 months.Thisaccountwill beupgraded on 5 July2015and noton 1 July 2015.
ASSET RECONSTRUCTION COMPANIES
An Asset Reconstruction Company (ARC) is a company incorporated under Companies Act 1956 to engages itself in the activity of
financial asset reconstruction (such as securitisation, takeover of management, sale of assets charged). Financial asset: The term
financial asset means, the loans, advances and investments, made by the banks and financial institutions.
RBI registration : To undertake such activity, it is mandatory that the company gets itself registered with RBI under the provisions
of SARFAESI Act. The company should also commence its business within 6 months, of such registration (Oct 2006).
Owned Funds : Wef Mar 29, 2004, for commencement of business, the net worth should not less than 15% of assets acquired or
Rs.100 lac whichever is less. They should maintain capital adequacy ratio of minimum 15% of total risk weighted assets.
Functions of ARCs : ARCs acquire nonperforming loans (also called distressed assets) from banks and Pis at a discount and take
steps to recover these loans by way of securitisation, reconstruction or sale of the assets. In certain cases, they resort to
management take over also. Realisation plan and due diligence: Before bidding, SCs/RCs may conduct a proper due diligence within
minimum 2 weeks. The realization period can be max 5 years from date of acquisition (period can be extended to 8 years by Board April
2010). In case of BIFR/CDR/iLF cases, the period can be co-terminus with other lenders. (RBI 07.05.15)
[SC/RC will have planning period of max six months to formulate a plan for realization of NPA of the selling bank acquired for the
purpose of reconstruction]. Sale and purchase of NPAs between ARCs: As per RBI clarification (April 2009), it is not allowed.
Parking of bad loan after purchase: For the purpose of take over of the loan, the ARC creates a Trust called Special Purpose Vehicle and
ARC acts as Trustee' and managing agent for ultimate realization of the financial asset. Financing of purchase of loans : SPV holds the
financial asset on strength of the security available. It issues security receipts (SRs) to the investors, mainly the qualified institutional
buyers (QIBs). The investors get the cash on realization of the financial assets when the security receipts are redeemed. Security
receipt : SR represents undivided right / interest in favour of the investors in the financial assets held by SPV. The SRs are redeemed
out of realization from financial assets and do not carry fixed returns. These are only pass through certificates and not debt
instruments. SRs can also be sold in the secondary market. Presently the SRs are unlisted and there is no trading.
Valuation of SRs -The initial valuation should be done within a period of six months of acquiring the underlying asset to enable all the
stake holders to realistically assess the value of SRs at an earlier date. It is mandatory for SC/RCs to invest in and continue to hold a
minimum 15% stake of the outstanding amount of the security receipts issued by them under each scheme and each class tilt the
redemption of all the security receipts, under a particular scheme.
FDI /FIT investment
i. Combined limit of 74%. No sponsor may hold more than 50% of the shareholding in an ARC either by way of FDI or by
routing through an FII.
ii. The total shareholding of an individual Fil shall not exceed 10% of the total paid-up capital.
Hi. FII investment in SRs - 74% of the paid up value of each tranche of scheme of Security Receipts (without individual limit of 10%
for investment of a single Fit in each tranche of SRs issued)
Asset Classification
(1) Assets shall be classified as Standard and nonperforming assets. The NPAs to be classified further as:
(a) 'Sub-standard asset' for a period not exceeding 12 months from date it was classified as NPA;
(b) 'Doubtful asset' if the asset remains a substandard asset for a period exceeding 12 months;
(c) 'Loss asset' if the asset is non-performing for a period exceeding 5 years or 8 years or if the asset is adversely affected by a
potential threat of non-recoverability due to either erosion in the value of security or non-availability of security or if it has been .
identified as loss asset by the Company or its internal or external auditor.
Provisioning requirements Substandard Assets: 10% of the outstanding; Doubtful Assets (i) 100% provision for the asset not covered
by the estimated realisable value of security; (ii) In addition 50% of the remaining outstanding. Loss Assets: The entire asset shall be
written off. (If, for any reason, the asset is retained in the books, 100% thereof shall be provided for).
Investment: Surplus can be deployed with NABARD and SIDBI. An upper limit of 10% of the owned funds has been stipulated for the
investment in land and buildings for their own use.
Membership in Joint Lenders' Forum (JLF) SCs/RCs should be members of JLF and should be a part of the process involving the JLF
with reference to such stressed assets.
Relief Measures for Natural Calamities
To enable banks to take uniform action expeditiously, RBI issued guidelines (Mar 25, 2015) covering 4 aspects viz. Institutional
Framework, Restructuring of Existing Loans, Providing Fresh Loans and Other Ancillary Relief Measures.
1. Institutional Framework : The declaration of natural calamities is to be done by Central/State Govt., when crop loss is 50% or more
(called Annewari, Paisewari, Girdawari).The bank branches should have a set of standing instructions for action to be initiated in the
calamity affected areas after the declaration.Divisional/ Zonal Managers of commercial banks should be vested with discretionary powers
for the line of action agreed to by the District/ State Level Bankers' Committees covering adoption of scales of finance, extension of loan
periods, sanction of new loans.The meeting will be convened by (i) the convener of the SLBC if the calamity covered the entire State/ larger
part of a State (ii) the conveners of the District Consultative Committees if the calamity has affected only a small part of the State/few
districts.In case of very severe calamity, relief measures may be reviewed on weekly/fortnightly basis.
2. Restructuring/Rescheduling of Existing Loans
a) Short-term Crop Loans_: Other than overdue, all short-term loans can be restructured. The due amount in the year of occurrence may be
converted into term loan with repayment period of 3 to 5 years (for very severe damage up to 7 years and in extreme cases up to 10 years).
The moratorium period should be of min one year. The banks should not insist for additional collateral security for such restructured loans.
b) Long term (Investment) agriculture Credit
i) Natural Calamities where only crop for that year is damaged and productive assets are not damaged: The banks may reschedule the
payment of installment and extend the loan period by one year in non-willful default cases and postpone payment of interest.
ii) Natural Calamities where the productive assets are partially or totally damaged and borrowers are in need of a new loan: The rescheduling
by way of extension of loan period may be done and the total repayment period for the restructured/fresh term loan should not exceed 10
years.
Asset Classification
a) The restructured portion may be treated as current dues and need not be classified as NPA.
b) Banks are required to make higher provisions for such restructured standard advances as prescribed by RBI.
b) The classification of the remaining amount due (riot restructured), will continue to be as per original terms. The dues may be
classified under different categories viz. standard, sub-standard, doubtful and toss.d
c) Additional loan may be treated as "standard asset".
 The benefit of asset classification of the restructured accounts is available only if the restructuring is completed within 3 months.
 The accounts restructured for the second time or more on account of natural calamities, would retain the same asset classification
category on restructuring.
3. Sanctioning of Fresh Loans : After decision on the rescheduling of loans is taken by SLBC/DCC, banks may grant fresh crop loans to
the affected farmers and other affected borrowers. Consumption loans can be allowed up to Rs. 10,000 to existing borrowers
without any collateral (banks can enhance the limit beyond Rs. 10,000). Providing access to Bank Accounts: Where the bank branches are
affected, banks may operate from temporary premises. For continuing the temporary premises beyond 30 days, specific approval may be obtained
from RBI.
Wilful Defaulters
1. Wilful defaulters of Rs 25 lac & above to be reported to RBI
2. Reporting to RBI will be quarterly
3. Where suits have been filed, banks should submit the list of suit-filed accounts of wilful defaulters of Rs.25 lakh and above as at end-March,
June, September and December every year to Credit Information agency like CIBIL and not to RBI.
LOK ADALAT : Created under Legal Services Authority, Act 1983.Decisions are consent decrees. There is no appeal against such decree. Civil
Procedure Code is applicable. These Adalats are similar to civil courts.Banks can call Lok Adalat with application to High-court.Amount: General Lok
Adalat: Up to Rs 20 lacs (wef Aug 03, 2004) and above Rs 20 lacs DRT Lok Adalat.Eligible accounts: NPA (Loss and doubtful accounts).After full
payment discharge should be given.Repayment: Preferably down payment. Max in 1-3 years.
Central Registry of Securitization Assets Reconstruction and Security Interest of India (CERSAI) : Central Registry of Securitization Assets
Reconstruction and Security Interest of India (CERSAI) established as a Sec 25 Company to perform functions of Central Registry wef
31.03.2011.Objective: To prevent loan frauds relating to multiple mortgage of same property.Transaction of securitization and reconstruction of
financial assets and equitable mortgages to be registered.Time period for registration is 30 days, which can be increased by 30 days by Central
Registrar.Form I to IV for different transactions.
SARFAESI ACT 2002 ( SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS & ENFORCEMENT OFSECURITY INTEREST ACT 2002 ) :
Applicable wef Aug 23, 2002 in entire India, including J & K . Amendment: Act amended during 2004 on Supreme Court intervention in Mardia
Chemicals vs Union of India and others (provisions of deposit of 75% amount by borrower before approaching DRT were withdrawn). Banks can take
possession of the charged securities, take management of securities, can sell the charged securities, without court intervention. Designated officer to
initiate action under the Act: Scale IV and above in banks OR officers approved by BoD of the bank. Consortium/BIFR cases: In case of
joint/consortium financing consent of 75% (by value) creditors required for action. BIFR cases can be recalled back with consent of 75% of
creditors.Possession: 60 days notice before possession. Remedy to borrower: If borrower objects, bank to justify the possession within one week/ 15
days. If borrower not satisfied could approach DRT within 45 days (without depositing any amount). DRT's decision is appealable (within 30 days) to
DRAT after deposit of 50% of amount that could be reduced to 25% by DRAT.Sale: Before sale 30 days notice. Sale below reserve price (to be fixed by
bank) only with consent of the borrower. Sale can be by tenders or though public auction. For sale through auction, public notice in 2 news papers
(one. regional). Sale is confirmed on receipt of 25% amount immediately and balance is payable in 15 days. DRT pending case: Banks can make use of
SARFAESI Act for sale of security for such cases (Supreme Court - Transcore vs Union of India & others).
loans not eligible under SARFAESI Act : Loans with outstanding up to Rs.1 lac. Agriculture land cannot be Sold; Where the amount due is less than
20% of the principal and interest (i.e. 80% or more already recovered). Loans secured by pledge, lien & by security of bank deposits.Where limitation
has expired Where security is not charged to the Bank.
Summary of Time Limits in SARFAESI Act
Notice before possession 60 days
Reply to objection by borrower 15 days
Borrower can approach DRT against possession notice without deposit of any amount 45 days
Appeal to DRAT against decision of DRT by deposit of 50% amount which can be reduced to 25% by DRAT 30 days
Notice before sale 30 days

Period of balance payment 75% by the buyer of assets 15 days
Important Section in SARFAESI Act
60 days notice before possession Sec 13 (2)
Assistance by Chief Metropolitan Magistrate or Dist. Sec 14 Magistrate in taking possession Sec 14
Application to DRT against possession notice issued by the bank Sec 17
Appeal against DRT to DRAT by depositing 50% amount Sec 18
Debt Recovery Tribunal : Created under Recovery of Debt Due to Banks & FIs Act 1993 (except J&K). These are like other civil courts for a special
purpose of helping in quicker NPA recovery in large account. DRT headed by President (President assisted by Registrar and Recovery Officer) and
DRAT by Chairperson. Eligible account: Loans of banks and FIs with recoverable dues of Rs.10 lac or more. Jurisdiction: No other court has
jurisdiction over such cases.Time limit: On receipt of application, show cause notice to borrower to submit his defence within 30 days. Disposal is
expected in 180 days. Disposal of appeal by DRAT also maximum 180 days.Appeal: Order by DRT appealable to DRAT within 45 days from date of
receipt after deposit of 75% of due amount. DRAT may reduce or waive the amount.Order: After claim is upheld, Recovery certificate is issued.
Recovery officer has powers such as attachment etc. under Income Tax Act.Appeal to President of DRT against order of Recovery Officer within 30
days and appeal against Registrar within 15 days. Fee: Rs.12000. For each additional Rs.1 lac Rs.1000. Max 1.50 lacs. For appeal Rs.12000 for debt
less than Rs.10 lac, 20000 (10 lac to less than Rs.30 lac) and Rs.30000 (Rs.30 lac & above).
Asset Reconstruction Companies : Objective: For taking over distressed assets from banks/FIs at discount and reconstruct or re-pack for sale.
Recovery period maximum of 5 years (8 years with Board Approval).To be set up as a joint stock company. RBI registration must before
commencement for business as ARC.Business to be commenced within 6 months of registration with RBI. RBI can extend it by another 1 year in
aggregate.Net worth: not less Rs.100 cr or 15% of acquired assets, whichever lower. Capital adequacy ratio min 15% of Risk Weighted Assets.ARC
to invest at least 5% in security receipts created out of each securitization.
Corporate Debt Restructuring (CDR):
1. The borrower should be a corporate borrower i.e. Companies, Co-operative societies etc.
2. The loan should have been raised from more than one bank or financial institution. The scheme will not apply to accounts
involving only one financial institution or one bank
3. The outstanding fund based and non-fund based exposure should be Rs.10 crore and above by banks and institutions.
4. The CDR Mechanism is available to the corporates engaged in industrial as well as non-industrial activities. The account should
be standard, sub standard or Doubtful.
5. The account should be Standard, Sub Standarad or Doubtful. Loss accounts are not covered.
6. There would be no requirement of the account / company being sick, NPA or being in default for a specified period before
reference to the CDR system.
7. Corporates indulging in frauds and malfeasance even in a single bank will be ineligible for restructuring under CDR mechanism.
8. The accounts where recovery suits have been filed by the creditors against the company, may be eligible for consideration
under the CDR system provided, the initiative to resolve the case under the CDR system is taken by at least 75% of the creditors
(by value) and 60% of creditors (by number).
Types of CDR: CDR is of two types namely CDR I & CDR II. CDR I is applicable to Standard and Sub Standard accounts if at least 90%
of creditors by value have treated the account as standard/sub standard. It means that if in the books of creditors with exposure up
to 10% by value, the account is classified as Doubtful, it can be still covered under CDR 1. CDR Ii is applicable to Doubtful accounts.
Category I and Category II restructuring: For making reference under CDR I, consent of 20% of lenders by value is required whereas
for making reference of doubtful accounts under CDR II and suit filed accounts, consent of 75% lenders by value and 60% by number
is required.
Stand still clause: Debtors and creditors agree through an agreement called Debtor Creditor agreement that no party shall take
legal action during the standstill period i.e. 90 days (can be extended to 180 days).
Inter Creditor Agreement: The Inter-Creditor Agreement would be a legally binding agreement amongst the creditors, wherein they
will agree that if 75 per cent of creditors by value and 60 per cent of the creditors by number, agree to a restructuring package of an
existing debt (i.e., debt outstanding), the same would be binding on the remaining creditors. ICA will be initially valid for a period of
3 years and subject to renewal for further periods of 3 years thereafter.
Debt Restructuring Mechanism for SMEs
1. The guidelines are applicable to entities which are viable or potentially viable as follows : (i) All non-corporate SMEs irrespective
of the level of dues to banks. (ii) All corporate SMEs which are enjoying banking facilities from a single bank, irrespective of the
level of dues to the bank. (iii) All corporate SMEs which have funded and non-funded outstanding up to Rs.10 crore under
multiple/ consortium banking arrangement.
2. Accounts involving wilful default, fraud and malfeasance would not be eligible for restructuring.
3. Accounts classified by banks as Standard, Sub Standad and Doubtful only are covered. 'Loss assets' would not be eligible for
restructuring.
4. Viability: Banks should decide on the acceptable viability benchmark. it should be ensured that the unit becomes viable in 7 years and
the repayment period for restructured debt does not exceed 10 years.
5. Time period for restructuring: Restructuring package should be implemented within a maximum period of 60 days from the date
of receipt of request.
MODULE – D PROBLEMS & PROSPECTS IN RURAL BANKING

Importance of rural banking has been recognized by the country's planners and policy makers since independence. All India Rural Credit
Survey (1954) and All India Rural Credit Review (1969) paved the way for commercial banks entering into rural banking in a big way. We
have discussed institutional rural banking in the earlier chapters; here we have concentrated on the new emphasis given to rural bankin
in the last few years introducing the concept of inclusive banking.
Some of the issues emerging from several studies have also been presented. As it appears, demand for credit has increased in the
rural areas for production and also for consumption purposes. Rural banking is graduating to be an attractive proposition for
commercial banks.
Lending costs comprise transaction costs and risk costs. Transaction costs constitute a significant proportion of rural lending costs. These
costs include all the cost required for deposit mobilization, servicing advances, recovery and all other banking operations and they
aggregate to the cost of management.
One of the important impediments in rural credit is high overdues and attendant bad debts. Risk in the banking parlance connotes the
probability of loss of loans or investments. The methodology for determining risk costs is yet to be standardized, the age of overdues
heavily influences risk costs. The Agricultural Credit Review Committee (ACRC) has defined risk costs in terms of either loans written off
or provisions made by the banks towards bad debts.
The cost involved in transferring resources between markets or between participants in the same market can be defined as a
transaction cost. In financial markets, transaction costs refer to the resources required to transfer one unit of currency from the bank,
which collects deposits from the savers or borrowers or from other sources on agreed terms, to a borrower and to recover that unit of
currency at a later date with some agreed interest charge. Unlike transactions in other markets, financial transactions always involve
greater risk because the contract is incomplete till a future date when the loan is repaid.
The costs incurred by all the participants, i.e. banks, financial intermediaries and borrowers in a loan transaction constitute the total
costs. The level and distribution of these costs among the participants are affected by changes in technology, consumer preference,
financial regulation, internal efficiencies of banks and financial intermediaries and the interaction of demand and supply of credit.
Transaction Cost and Risk Cost comprise a major proportion of rural lending costs. But the concept of estimating the viability of an
institution direct by the Net Margin method based on Transaction Costs and Risk Costs has certain shortcomings. Unit Transaction Costs
are not static as they reduce with increase in the volume of business, further transaction costs of lending alone cannot be viewed
separately as the cost of management of the institution as whole has to be considered. The concept of lending transaction costs is useful
to assess the profitability of each type of lending activity so as to decide whether, the banks should take up that activity or not.
Risk Costs are related to the level of default in banking institutions. With the standardization ofprovisioning norms, they could be
considered for the estimation of default risk. Several methods are suggested tbr banks to reduce default rate and thereby risk cost.
Intermediation through SHGsINGOs could be an effective method of reducing risk costs and transaction costs in rural lending. Several
studies vouch for this fact and banks should increasingly view this as a method of reducing transaction costs and risk costs in rural
lending.
Transaction Costs: The organizational costs for carrying on the day-to-day operations of the institutions.
Risk Costs: The amounts which are lost to the institutions or which are written off as a proportion to a portfolio of assets are known as
risk costs.
Cost of Management: The total cost of carrying on the business of a banking institutions or unit.
Intermediation: The act of taking deposits and borrowing and then lending and investing in other institutions or individuals.
Borrower Transaction Costs: The costs incurred by the borrowers in carrying out a banking transaction.
Lending Transaction Costs: The costs of a banking institution on its lending operations or advances portfolio.
Gross Margin: The difference between interest income and financial cost. This is also known as interest spread or nominal interest
margin.
Net Margin: The difference between gross margin and transaction costs.
Risk Premium: The cost charged on all borrowers to compensate for possible default by some borrowers.
Default Risk: Possible non-payment or delayed payments by borrowers.
Micro finance is the provision of thrift, credit and other financial services and products of very small amount to the poor in rural,
semi urban and urban areas for enabling them to raise their income levels and improve their living standards. The beginning of the
micro finance movement in India could be traced to the self-help group (SHGs) bank linkage programme (SBLP) started as a pilot
project in 1992 by NABARD. This programme not only proved to be very successful but has also emerged as the most popular model
of micro finance in India. Other approaches like microfinance delivery through micro finance institutions (MFIs) also emerged
subsequently in the country. The MFIs in India are characterized by diverse institutional and legal forms.
Recognizing the potential of micro finance to positively influence the development of the poor, the RBI, NABARD and SIDBI have
taken several initiatives over the years to give a further fillip to the micro finance movement in India.
Micro finance was introduced in India in early 90s, mainly influenced by the experience of Grameen Bank in Bangladesh. This started
with self-help group bank linkage programme and subsequently micro finance institution emerged. RBI, NABARD_ and SIDBI are
actively engaged in this movement. In a SHG (formed by 15-20 persons), the members practice thrift and their pooled savings are used
to make interest bearing loans to the group members. As the figures show, its growth is impressive. The recovery of loan is 80 to 94 per
cent. The programme has covered more than 7.01 crore poor households (up to 2008-09), making it the largest micro-Finance
programme in the world. NABARD has been playing an important role in promoting SBLP.
Micro-credit programmes are run primarily by NABARD in the field of agriculture and SIDBI in the field of Industry, Service and
Business (ISB). The success of Micro=credit programme lies in diversification ... of services.
SIDBI Launched SIDBI Foundation for Micro Credit (SFMC) in January 1999 for channelizing funds to the poor in line with the success
of pilot phase of Micro Credit Scheme. Micro-credit Institutions are subject to rating by reputed agencies. Till March 31, 2009, 497
ratings have been commissioned to MCRIL/CRISIL/CARE/Acceis Development Services (ADS).
NABARD, on its part, extends Revolving Fund Assistance (RFA) to MFI. NABARD provides financial assistance to commercial banks
and RRB to avail the services of credit rating agencies for the purpose of rating of MFI and empowering them to intermediate
between the lending banks and the clients. NABARD has a number of schemes for MFI development.
SHG: Self-Help Groups
SBLP: SHG bank linkage programme
MFI: Micro finance institutions
MEDP: Micro-Enterprise Development Programme
MEPA: Micro-Enterprise Promotion Agency
RFA: Revolving Fund Assistance
RGCT Rajiv Gandhi Charitable Trust
RGMVP: Rajiv GAndhi Mahila Vikas Pariyojana
ABG: Activity Based Groups
MFDEF: Micro-Finance Development and Equity Fund
KYC: Kiiow Your Customer
SFMC: SIDBI Foundation for Micro Credit
CAR: Capacity Assessment Rating
MICRO FINANCE
The concept of micro finance, was launched in the year 1992. As per RBI, the micro finance is the provision of thrift, credit and other
financial services and products of very small amount to the poor in rural, semi-urban and urban areas for enabling them to raise their
income levels and improve living standard.
MICRO CREDIT
Micro credit has been defined by RBI as supply of credit to the poor. Loans of very small amount not exceeding Rs. 50,000 per
borrower provided by banks either directly or indirectly through a SEIG/JLG mechanism or to MFI are part of Micro Credit.
Loans through Micro Finance Institutions
(MFIs)
MFIs access financial resources from Banks to make individual micro-credit loans directly to villagers, micro-entrepreneurs,
impoverished women and poor families. RBI's revised guidelines (during 2015) are provided below:
(a) Bank credit to MFIs extended for on-lending to individuals or members of SHGs I JLGs is eligible for classification as priority sector
advance under respective categories viz., Agriculture, Micro, Small and Medium Enterprises, and 'Others', provided not less than 85%
of total assets of MFI (other than cash, balances with banks and FIs, govt. securities and money market instruments) are in the
nature of "qualifying assets". In addition, aggregate amount of loan, extended for income generating activity, should be not less than
50% of the total loans given by MFIs.
(b) A "qualifying asset" is a loan given by fv1FI, satisfying following criteria:
(i) The loan given to a borrower whose household annual income in rural areas does not exceed Rs.1,00,000 & non-rural areas
Rs.1,60,000.
(ii) Loan does not exceed Rs.60,000/- in the first cycle and Rs.100,000/- in the subsequent cycles.
(iii) Total indebtedness does not exceed Rs.1,00,000/-•
(iv) Tenure of loan minimum 24 months when loan amount exceeds Rs.30000 (before 07.07.16 Rs.15000) with right to
borrower of prepayment without penalty.
(v) The loan is without collateral.
(vi) Loan is repayable by weekly, fortnightly or monthly installments at the choice of the borrower.
(c) MFIs loan should comply with the following conditions:
(i) Margin cap: Max. 10% for MFIs having loan portfolio exceeding Rs.100 crore and 12% for others. The interest cost is to be
calculated on average fortnightly balances of outstanding borrowings and interest income Is to be calculated on average
fortnightly balances of outstanding loan portfolio of qualifying assets.
(ii) Interest cap on individual loans: W.e.f. April 1, 2014, interest rate will be the average Base Rate of 5 largest commercial
banks by assets multiplied by 2.75% or cost of funds plus margin cap, whichever is less. The average of Base Rate shall be
advised by RBI.
(iii) Only 3 components are to be induded in pricing of loans viz., (a) a processing fee not exceeding 1% of the gross loan
amount, (b) the interest charge and (c) the insurance premium.
(iv) The processing fee is not to be included in the margin cap or the interest cap.
(v) Only the actual cost of insurance can be recovered; administrative charges may be recovered as per IRDA guidelines.
(vi) There should not be penalty for delayed payment.
(vii) No Security Deposit/ Margin are to be taken.
(d) The banks should obtain from MFI, at the end of each quarter, a Chartered Accountant's Certificate stating, inter-alia, that the
criteria on (i) qualifying assets, (ii) the aggregate amount of loan, extended for income generation activity, and (iii) pricing guidelines
are followed.
SELF-HELP GROUPs
SHGs are registered or unregistered small economically_ homogeneous and affinity groups of rural poor, voluntarily coming together
for mutual benefits.
Stages in SHG running : The SHG completion involves 4 stages namely (a) group formation, (b) group stablisation (c) micro credit
stages (d) micro enterprise development stage.
Bank linkage program for SHGs
Kalia Committee had recommended financing SHGs. The scheme of linkage of SHGs with banks was launched in 1992 by NABARD.
Important features of SHG
• No. of members can be between 10-20 but for Irrigation projects, there is no ceiling on no. of members. For handicap
persons group 5-20 persons
• Members are generally the persons below poverty line. Members marginally above poverty line normally up to 20%
(exceptional 30%) can also be Included, but they will not be eligible for subsidy.
• there can be one person from one family in one SHG.
• A person cannot be member of more than one SHG.
• Regular weekly or fortnightly meetings mandatory.
• Members are to save regularly out of their earning.
• Saved funds are meant for lending to members on which decision is to be taken by all members.
• there should be proper record/book keeping.
• Bank linkage by way of saving account
Joint Liability Groups MG)
JLG is an informal group comprising of 4-10 individuals (engaged in a similar type of economic activity) coming together for availing
bank loan on individual basis or through group mechanism against mutual guarantee.
Criteria:
i) Members should belong to similar sodo economic status, background and environment. They reside in the same village/
area/ neighbourhood.
ii) Loan defaulters to cannot be Group Member.
iii) Only one person from a family can be member. If few members grow faster in economic activities and require larger loans,
a JLG of such members may be created to provide additional loans.
iv) JLG should hold regular meetings to be attended by all members to discuss issues of mutual interests.
Savings : Banks may open savings account by the JLG / individual members. The loan amount should be related to credit needs and
not to quantum of saving.
JLG Models : Loans can be given under Model A or B.
Model A — Financing Individuals: Each member can be provided an individual KCC / GCC or term loan (crop and off-farm activities
like dairy, poultry and non-farm activities). All members would jointly execute a loan document, making each one jointly and
severally liable for repayment of loans to individuals in the group.
Model B — Financing the JIG as a Group: JLG functions as one borrowing unit. All members would jointly execute the document and
own the debt liability jointly and severally. Any change in composition of group, will lead to a new document.
Credit Appraisal: Banks may conduct a thorough credit appraisal. Normal norms for interest rate, margin, documentation, may be
followed by the bank.
Classification : Under Priority Sector.
Refinance : NABARD will provide 100% refinance assistance under investment credit.
Incentive for promotion of 3LGs: NABARD provides grant assistance to Banks for formation, nurturing and financing of new JI_Gs @
Rs.2,000 per JLG, after approval from NABARD, in 3 instalments:
• First instalment (Rs.1,000) after disbursement of loan by the bank;
• 2nd instalment (Rs.500), after one year from loan disbursement provided the loan repayment is without default;
• 3rd instalment (Rs.500) after the end of second year from the date of loan disbursement.
Monitoring and Review : JLG financing may be reviewed on a quarterly basis. A progress report on JLG fmandng may be sent to
NABARD on a monthly basis
FINANCIAL INCLUSION
Financial inclusion or inclusive financing stands for delivery of financial products, at affordable costs to sections of disadvantaged and
low-income segments of society, to ensure continuity and certainty of investment.
RBI set up the Rangarajan Committee in 2004 to look into financial inclusion. Financial inclusion first featured in 2005 &
Mangalam became the first village in India where all households were provided banking facilities. •
RBI initiatives for financial inclusion:
I. -Opening of basic saving bank deposit a/c;
2. Relaxation in KYC norms for small accounts;
3. Allowing engaging business correspondents;
4. Effective use of informationand communications technology (ICT).
5. Implementation of electronic benefit transfer (EBT) by leveraging ICT-based banking
6. Issue of general credit cards
7. Simplified branch authorization for tier HI to tier VI centres (population of less than 50,000) under general permission
RBI Roadmap for Financial Inclusion Banks were advised to draw up FIT' for 2013-16. State Level Bankers' Committees prepared
a roadmap covering all unbanked villages of population less than 2000 and notionally allot these villages to banks for providing
banking services, in a time-bound manner (Aug 15, 2015) to provide with at least one banking outlet.
On Dec 31, 2015, SLBCs were advised by RBI to identify villages with population above 5000 without a bank branch of a scheduled
commercial bank in their State and allot these villages among scheduled commercial banks (including Regional Rural Banks) for
opening brick and mortar branches.
On Jun 08, 2017 SLBC Convenor banks have been advised by RBI to send confirmation by Dec 31, 2017, to the respective Regional
Office of Financial Inclusion and Development Department of RBI that all unbanked rural centres in villages with population above
5000 have been banked.
Financial Inclusion Fund
FIF has been created to support developmental and promotional activities (such as financial literacy), for greater financial inclusion.
It is not utilized for normal banking activities. Overall corpus : Rs. 2000 cr. Contribution are from the interest differential in excess of
0.5% on IMF and STCRC deposits on account of shortfall in priority sector lending kept with NABARD by banks. Operational period :
3 years.
Pradhan Mantri Jan-Dhan Yojana (PM]DY)
Pradhan Mantri Jan-Dhan Yojana (PMJDY) launched on 28.08.14, Is National Mission for Financial Inclusion to ensure access to
Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner. Account can be opened in
any bank branch or BusinesS Correspondent (Bank Mitr) outlet. PMJDY accounts are opened with Zero balance. If the account-
holder wishes to get cheque book, he/she will have to fulfill minimum balance criteria. Documents rewired to open an account
under Pradhan Mantri Jan-Dhan Yoiana Aadhaar Number. If Aadhaar Card is not available, any one of the Officially Valid
Documents (OVD). If a person does not have OVD and it is categorized as low risk' by the banks, then he/she can open a bank
account by submitting any one of the following dOcuments: Identity Card with applicant's photograph issued by
Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, scheduled
Commercial Banks and Public Financial Institutions; Letter issued by a gazette officer, with a duly attested photograph of the
person.
Special Benefits under PM3DY Scheme : 1. Interest on deposit.
2.AccidentalinsurancecoverofRs.1.00lac
3. No minimum balance required.
-
4. Life Insurance cover of Rs.30,000 (subject to conditions)
5. Easy Transfer of money across India
6. Beneficiaries of Government Schemes will get Direct Benefit Transfer in these accounts.
7. After satisfactory operation of the account for 6 months, an overdraft facility up to Rs.5000 can be permitted subject to
conditions
8. Access to Pension, insurance products.
Claim under Personal Accidental Insurance under PRIM : It is payable If the Rupay Card holder have performed minimum one successful
finandal or nonfinancial customer Induced transaction at any Bank Branch, Bank Mitra, ATM, P05, E-COM etc.
Conditions related to overdraft upto Rs 5,000 in PM3DY Accounts
a) BSBD accounts, which are operated satisfactorily for at least six months
b) OD to the earning member of family, preferably women of the house.
c) There should be regular credits under DBT/ DBTL scheme/other verifiable sources
d) Account should be seeded with Aadhaar for avoiding duplicate benefit
f) Age of applicant between 18 years to 60 years
Period of Sanction : 36 Months subject to annual review of account
Loan amount : a) 4 times of Average monthly balance
b) or, 50% of credit summations in account during the preceding 6 months
c) or, Rs 5000/- whichever Is lower (System will be enabled to provide report on eligible amount) Security : Nil
Interest rate : Not exceeding 2% above base rate Processing Fee : Nil, Loan accounts will besubject to 'RAC norms of RBI.
BUSINESS FACILITATOR/BUSINESS CORRESPONDENT MODEL
For greater financial indusion and increasing the outreach of the banking sector, scheduled commercial banks including RRBs and Local Area
Banks (LABs) can use the services of intermediaries in providing financial and banking services through the use of Business Fadlitator/
Business Correspondent Model.
Business Facilitator
Under this model, banks may use the services of intermediaries such as: a) NG0s/SHGs b) Farmers Clubs c) Cooperatives d) Community
based organizations e) IT enabled rural outlets of corporate entities f) Post Offices g) Insurance agents h) Well functioning Panchayats i)
Village Knowledge Centres j) Agri Clinics k) Agri Business Centres I) Krishi Vigyan Kendras m) KVIC/KVIB units.
Services may include (i) identification of borrowers and fitment of activities; (Ii) collection and preliminary processing of loan applications
induding verification of primary information/data; (iii) creating awareness about savings and other products and education and advice on
managing money and debt counselling; (iv) processing and submission of applications to banks; (v) promotion and nurturing Self Help
Groups/Joint Liability Groups; (vi) post-sanction monitoring; (vii) monitoring and handholding of Self Help Groups/Joint Liability Groups/Credit
Groups/others; (viii) recovery follow-up.
Business Correspondents (BCs)
The scheduled commercial banks including RRBs and Local Area Banks (LABs) may engage Business Correspondents (BCs) with the
approval of their Board of Directors and appropriate due diligence.
The due diligence should cover aspects such as (i) reputation/market standing, (ii) financial soundness, (iii) management and corporate
governance, (iv) cash handling ability and (v) ability to implement technology solutions in rendering financial services.
Eligible individuals/entities: The banks may engage the following individuals/entities as BC:
i) Individuals like retired bank employees, retired teachers, retired government employees and ex-servicemen, individual owners of
kirana/medical / Fair Price shops, individual Public Call Office (PCO) operators, agents of Small Savings sdiemes of Government of
India/Insurance Companies, Individuals who own Petrol Pumps, authorized functionaries of well run Self Help Groups (S1-1Gs) which are
linked to banks, any other individual induding those operating Common Service Centres (CSCs);
ii) NGOs/ MF7s set up under Societies/ Trust Acts and Section 25 Companies ;
iii) Cooperative Societies registered under Mutually Aided Cooperative Societies Acts/ Cooperative Societies Acts of States/Multi State
Cooperative Sodeties Act;
iv) PostOffices; and
v) Companies registered under the Indian Companies Act, 1956 with large and widespread retail outlets, and non-deposit taking NBFCs (other
NBFCs cannot).
Interoperability under BC Model
A BC can be a BC for more than one bank. At the point of-customer interface, a retail outlet or a sub-agent of a BC shall represent the bank
which has appointed the BC. RBI has permitted interoperability at the retail outlets or sub-agents of BCs (i.e. at the point of customer
interface), provided :
I) the technology with the bank, supports interoperability,
ii) The transactions and authentications at such retail outlets or sub-agents of BCs are carried out on-line;
iii) The transactions are carried out on Core Banking Solution (CBS) platform; and Responsibility for actions oY BCs
The banks will be fully responsible for the actions of the BCs and their retail outlets/sub agents.
Scope of activities
The activities to be undertaken by the BCs would be within the normal course of banking business that may include (i) identification
of borrowers; (ii) collection and preliminary processing of loan applications including
verification of primary information/data; (iii) creating awareness about savings and other products and education and advice on
managing money and debt counselling; (iv) processing and submission of applications to banks; (v) promoting, nurturing and
monitoring of Self Help Groups/ Joint Liability Groups/Credit Groups/others; (vi) post-sanction monitoring; (vii) follow-up for
recovery, (Ali) disbursal of small value credit; (ix) recovery of principal/collection of interest; (x) collection of small value deposits; (xi)
sale of micro insurance/ mutual fund products/ pension products/ other third party products and (xii) receipt and delivery of small
value remittances/ other payment Instruments.
KYC Norms : Ensuring compliance with KYC and AML norms continues to be the responsibility of banks.
Distance Criterion: Every retail outlet/sub-agent of BC is required to be attached to a specific bank branch. The distance between the
place of business of a retail outlet/sub-agent of BC and the base branch, can be decided by banks themselves (earlier 5 kms in
metropolitan centres and 30 kms in other areas).
Payment of commission/fee
The banks may pay reasonable commission/fee to the BC, which may be reviewed periodically. The banks (and not BCs) can collect
reasonable service charges from the customers. '
Mode of transactions through BC
Services through Business Facilitators/ Correspondents involves significant reputational, legal and operational risks. The banks
should provide services through ICT devices (handheld device/mobile phone integrated to the Core Banking Solution (CBS) of the
bank. The arrangements with the BC shall specify:
i) suitable limits on cash holding by intermediaries and limits on individual customer payments and receipts;
ii) cash collected from customer to be acknowledged by issuing a receipt on behalf of the bank;
iii) all off-line transactions are accounted for and reflected in bank books by the end of the day.
Cash management of BCs : RBI advised (20.4.14), banks to review the cash pre-funding operations of BCs at least once every six
months. In normal cases, instead of full pre-funding, the pre-funding should be 15% of the limits fixed for each BC In case of deposits
and 30% in case of Bank Guarantees. Where it is more, it should be brought within these levels within 2 years from the time a BC
starts operations.
Internal Control & Monitoring
The banks should carry out a detailed review of the performance of various BCs at least once in a year.
Redressal of Grievances
If a complainant does not get satisfactory response from the bank within 60 days from the date of his lodging the compliant, the
customer will have the option to approach the Office of the Banking Ombudsman concerned for redressal of his grievance's.
ULTRA SMALL BRANCHES
It Is necessary to have an intermediate brick and mortar structure (Ultra Small Branch) between the present base branch and BC
locations, to provide support to a duster of BC units at a reasonable distance. These Branches may be set up between the base branch
and BC locations for about 8-10 BC Units at a reasonable distance of 3-4 kilometres. These could be either newly set up or by
conversion of the BC outlets. These Branches should have minimum infrastructure such as a Core Banking Solution (CBS) terminal
linked to a pass book printer and a safe for cash retention for operating large customer transactions and would have to be managed full
time by bank officers/ employees.
BCs can operate from such Branches as their association with the branch will increase their legitimacy and credibility in the area
and give people increased confidence to use their services. Banks should ensure that such an arrangement does not result in BCs
limiting operations to serving customers at such branches only.
FINANCIAL LITERACY
The financial literacy or financial education stands for ability to know and effectively use financial resources to enhance the well-
being and economic security of oneself, one's family and business. It enables individuals to take effective action to Improve overall
wellbeing & avoid financial distress.
Benefits: It promotes financial inclusion and ultimately financial stability.
RBI initiatives : In terms RBI circular dated 14.01.2016, FLCs and rural branches were advised to conduct two types of camps (1)
Spedal camps for people newly inducted into financial system -1 camp per month for one year i.e. upto January 2017, (2) target
group specific camps 1 each for 5 target groups (farmers, small entrepreneurs, school children, senior citizens and SHGs).
The policy was revised on 02.03.2017, as under:
Financial Literacy Centres (FLCs): FLCs will conduct special camps for a period of one year beginning April 1, 2017 on "Going
digital" through UPI and *99# (USSD)".
Besides the special camps on going digital, FLCs will continue to conduct the tailored camps for the different target groups as per
extant guidelines.
Rural branches of banks: These shall conduct only one camp per month (on the 3rd Friday of each month after branch hours). This camp will cover all
the messages that are part of the Financial Awareness Messages (FAME) booklet and the two digital platforms UPI and *99# (USSD). Where there are
two or morerural branches in a village, the LDM may ensure that the rural branches conduct the camps on rotation basis every month.
Funding support from FIF: FLCs and rural branches of banks are eligible for funding support for the financial literacy camps to the extent of 60% of
the expenditure of the camp subject to a maximum of 5,000/- per camp.
Reporting mechanism: W.e.f. 01.04.17,
the quarterly report on FLCs will be submitted by SLBCs/UTLIK.s to the respective Regional office of RBI within 20 days from the
end of the quarter. The quarterly report on rural branches to be submitted within 30 days from the end of the quarter.
4. MEMORY BASED RECALLED QUESTIONS
Companies
1. A bank cannot acquire either as owner or as pledgee shares in a company more than:. 10 % of paid capital of the company
or 10% of the•paid up capital and reserves of the bank, whichever is lower.
2. A limited company has registered office at Chennai whereas loan has been raised from bank branch at Mumbai. The charge
will be registered with the ROC at: Chennai
3. A private limited company with Registered office at Bangalore has raised loan from a branch located at Mumbai. For
creating equitable mortgage, title deeds can be deposited at: Mumbai, Kolkatta, Chennal or any other notified place.
4. Board of Directors want to borrow money in excess of paid up capital and reserves of the company: can be done through a
resolution passed by shareholders in the general meeting
5. CIN in case of a company indicates: Corporate Identity Number.
6. Company is in liquidation, funds are at the disposal of : Liquidator
7. For formation of a company, Registrar of Companies will issue : certificate of incorporation
8. In the case of IPO, the company is required to allot shares or make refund within: 30 days of the closure of the issue in case
of fixed price public issues; 15 days in case of book built issues and 15 days in case of right issues
9. Objectives for which a company has been formed are given in: Memorandum of Association
10. On repayment of_debt of a company, satisfaction of charge shbuld be filed with ROC within: 30 days
11. The Articles of Association mention that the minimum quorum for passing a resolution is 5 directors. However a
resolution is received which was signed by four directors only with a request to open the current account: All the 5 Directors
should sign the resolution for opening of the account
12. The legal liability to file charges with ROC in case of lending to a Company is that of ______: Borrowing Company
13. What is the Doctrine of Ultra Vires in the context of a limited company?: Any act by the directors beyond the object of the
company is considered ultra vires the company and company is not bound by such act.
14. When a company is financed against the security of hypothecation or mortgage of its movable property, the company is
required to file particulars of charge with: Registrar of Companies
KYC/AML
1. Cash receipt or cash payment of more than Rs 10 lakh are reported to FIU on CTR statement which should be sent to FIU
within _____ from the close of the month: 15 days.
2. Suspicious Transaction report is sent to FIU within: 7 days from confirmation of suspicion.
3. In case of transactions carried out by a non-account based customer, that is a walk-in customer, where the amount of transaction
is equal to or exceeds rupees whether conducted as a single transaction or several transactions that appear to be connected, the customer's
identity and address should be verified: fifty thousand
4. As per KYC norms, banks are required to periodical update data. In respect of High risk customers, full KYC exercise will be
required to be done at least every: two years
5. As per KYC norms, for how much period banks are required to preserve records in respect of photograph and proof of
address or identity?: 5 years from date of close of account
6. As per KYC norms, in the event of change in this address due to relocation or any other reason, customers may intimate the
new address for correspondence to the bank within: two weeks of such a change
7. As per KYC norms, risk classification of customers should be reviewed in every: 6 Months
8. Banks are required to FIU, cash transactions which are integrally connected to each other and total amount of receipt or
total amount of payment in a month is more than: Rs 10 lac
9. Cash Transaction Report (CTR) in respect of cash receipt or cash payment of more than Rs 10 lac is to be sent to Director –
FIU. What is the periodicity of the report – Fortnightly, Monthly, Quarterly, half yearly: Monthly, within 15 days of the close of the
month.
10. FIR to be filed if number of Counterfeit notes in a single deposit is: 5 or above
11. If a customer does not comply with KYC requirements despite repeated reminders by banks, banks should
impose ‘partial freezing’ by allowing all credits and disallowing all debits with the freedom to close the accounts after
____ months notice followed by a reminder for further period of ____months. If the accounts are still KYC non-
compliant after _____months of imposing initial ‘partial freezing’ banks may disallow all debits and credits from/to the
accounts, rendering them inoperative: 3, 3, 6 months.
12. In a cash deposit made by a customer, one piece of counterfeit note is detected. What should the bank do - (i) It should be
impounded and acknowledgement to be issued(ii) Should be destroyed (iii) Should be returned back: It should be impounded and
acknowledgement to be issued to depositor signed by cashier.
13. In case of counterfeit notes received in a deposit by a person with bank, FIR is not lodged and only a monthly
consolidated report is sent if counterfeit notes in one remittance is up to: 4
14. In case of Non-KYC compliant customer, after how much time notice, account should be freezed?: 3 months notice
15. In respect of Low Risk customers, KYC norms relating to obtaining photograph and proof of address and ID should be
applied once in: 10 Years
16. In respect of Medium Risk customers, KYC norms relating to obtaining photograph and proof of address and ID should be
applied once in: 8 Years
17. Process of making illegally-gained proceeds (i.e. "dirty money") appear legal (i.e. "clean") is called: Money Laundering
18. RBI has allowed banks to accept at least _____ of the documents prescribed by RBI as activity proof by a proprietary
concern, for opening a bank account in respect of a sole proprietary firm: One
19. What is the Risk category of Trust account High/Low/medium risk?: High Risk
20. When in case of deposit of cash over counter, two counterfeit notes are detected by bank, what should the bank do – (a) To
be returned to customer, (b) impounded immediately, (c) call the police, (d) destroy it: impound immediately and issue
acknowledgement to tender signed by the cashier
21. While opening bank account, as per KYC norms, what another document is taken by bank in addition to proof of ID?: proof
of address ( Both can be same also)
22. Relaxation in KYC norms is permitted if the depositor undertakes that the balance outstanding in his account will not be
more than and credits in a financial year will not exceed . Rs 50,000; Rs 100,000
23. Why KYC guidelines have been issued by RBI under section 35 A of the Banking Regulation Act: To prevent Money
Laundering -
24. The terms used for hiding money to avoid tax is : Money laundering
25. Money laundering: conversion of illegal money into legal through banking channels.
26. For the purpose of KYC rules any addition & modification on which recommendation: Financial Action Task Force
27. Risk type for customer having political exposed person: High Risk
28. As per KYC Guidelines, Records of transactions to be maintained for at least ten years from the dateof transaction, instead
of _________from the date of cessation of transactions, and records pertaining to identification of the customer and his address to be
preserved for at least ten years after the business relationship is ended: ten years
29. A customer who does not complete all KYC norms, what type of account is opened for him? No Frill account in which cannot
be more than Rs.50000 and credits in the Financial Year cannot be more than Rs.100000.
30. There were three cash withdrawals of Rs 5.80 lac ,Rs 4.90 lac & 0.25 lacs from an account in a month. Which of these
transactions is/are will be reported to Financial Intelligence Unit as part of CTR? Cash withdrawals of Rs 5.8 lac and Rs 4.9 lac.
31. Under Prevention of Money Laundering Act, banks are required to preserve records relating to opening the account for how
much period?: 10 years from date of closure of account.
32. Which of the following is not the key element of KYC policy a) Customer Acceptance Policy; b) Customer Identification
Procedures; c) Monitoring of Transactions; d) Risk Management e) Customer Awareness Policy: Ans is E i.e. Customer Awareness
Policy.
33. On whose recommendations, KYC norms came into force? (a) Goiporia Committee (b) Ghosh Committee (c) FATF: Ans is
FATF
34. Under KYC Norms, Documents relating to opening the account like proof of address and identity and photograph should be
taken again at what interval? (a) once in 10 years for low risk customer (b) once in 8 years for medium risk customers (c) once in 1
year for high risk customers (d) Both (a) and (b): Ans is (d)
35. Record of cash receipt and payment under KYC to be maintained if cash receipt or payment in a single day from one account
is more than Rs 10 lakh.
For Low Risk customers, periodical up-dation of KYC data: Once in 10 years
MSME
1. A Small Manufacturing Enterprise unit is considered as Sick Industrial Unit: when account remains sub standard for more
than six months or there is erosion in the net worth due to accumulated cash losses to the extent of 50% or more of its net worth
during the previous accounting year and the unit has been in commercial production for at least two years
2. A small scale unit (manufacturing) can be treated as micro unit if the original investment in plant and machinery does not
exceed : Rs.25 lac
3. A unit in service enterprise is considered as medium if the investment in equipment is: more than Rs 2 crore but up to Rs 5
crore.
4. A Unit will be called as Small Service Enterprise if investment in equipments is up to: Rs 2 crore.
5. Amount of maximum loan given to micro and small enterprises that is covered under-CGFTMSE-scheme : Rs.100 lac
6. As per Micro, small and medium enterprise development Act 2006, a small manufacturing enterprise is one in which original
investment in plant and machinery is: more than Rs 25 lakh and up to Rs 5 crore.
7. As per RBI guidelines, banks are required to provide__% of advance to small enterprises to units in which original
investment in plant & machinery does not exceed Rs 10 lac in the case of manufacturing units and does not exceed Rs 4 lac in
equipment in the case of service enterprises: 40%
8. As per RBI guidelines, Loans to Agro and food processing Units are eligible to be classified under Agriculture Ancillary
Activity under Agril. Finance Priority Per borrower Rs. 100.00 crores.
9. Bank limit for working capital based on turn over method: 20% of the projected sales turnover
10. Banks are required to make 40% of advance to Micro and Small enterprises to manufacturing units with investment up to Rs
10 lakhs and/or service enterprises with investment in equipment up to: No criteria (earlier Rs 4 lakh) and now Micro has to reach
7.00% by March 2016 & 7.5% by March 2017 of ANBC/ceobe which ever is higher.
11. Banks will not obtain collateral security in respect of loans to micro and small enterprises which are covered by Credit
Guarantee Scheme for Micro and Small enterprises?: Rs 1 crore
12. CGTMSE fee: For North East & women; Loan up to Rs 5 lakh – 0.75% p.a.; Loan more than Rs 5 lakh – 0.85% p.a.
13. Composite loan limit for Small Manufacturing enterprises: Rs.1.00 crore
14. For being defined as Medium enterprise, the original investment in plant & machinery should be: More than Rs 5 crore and
up to Rs 10 crore.
15. For being eligible to be classified as small (service) enterprise, the original investment in equipment should not exceed: Rs 2
crore.
16. Full form of CGTSME: Credit Guarantee Fund Trust for Micro & Small Enterprises.
17. If a small enterprise in manufacturing has a good track record, collateral security can be waived up to: 25.00 lacs
18. If an MSME units holds a margin of Rs.20 lac and its projected sales are Rs.400 lac, its working capital limit will be : Rs.80
lacs
19. In case of advance granted to Micro and small enterprises, banks will not obtain collateral security up to: Rs 10 lakh
20. In case of advance to Micro and Small manufacturing enterprises, working capital limit by a bank as per turnover method is
calculated as: 20% of projected annual turnover.
21. In case of loan guaranteed under CGTMSE, what is the extent of cover for loan upto 50 lac granted to a women?: 80% of
amount in default.
22. In case of loan to micro and small enterprises guaranteed by CGTMSE, no collateral security is required for loans up to: Rs
100 lac.
23. Khadi Village Industry part of MSE; irrespective of investment in P&M.
24. Maximum Guarantee coverage for loans guaranteed by CGTMSE if loan up to Rs 5 lakh: 85% of the amount in default with
a maximum of Rs 425000.
25. Micro, Small and Medium Enterprises is under which Ministry: Ministry of Micro Small & Medium Enterprises.
26. SMERA stands for: Small & Medium Enterprises Rating Agency.
27. The definition of Micro and Small enterprise in the manufacturing Sector is based on investment in : Plant and Machinery.
28. Under CGFT scheme for MSE, for loans up to Rs 50 lac, 80% coverage is not available for: SC/ST
29. What is the maximum amount of loan covered guarantee scheme of CGTMSE for loans made to micro and small enterprise:
Rs.100.00 Lac
30. What is the rate of guarantee fees charged under CGSMSE for loan of more than Rs 5 lac to a women?: 0.85% p.a. of limit
sanctioned.
31. Advantages of Cluster based finance to MSMEs: Risk mitigation.
AGRICULTURE, GOVT. SPONSORED SCHEMES & MISC.
1. __% outstanding under General Credit Card Scheme is to be treated as__ : 100 %, Other Priority Sector Advance
2. 100% of GCC accounts and up to 50000/- overdraft permitted in no frill accounts will be treated as: Other Priority Sector.
3. A crop will be called short duration crop if its crop season is up to : 12 months
4. A foreign bank with less than twenty branches in India which did not meet the targets under priority sector advances has to
deposit the amount of short-fall with : SIDBI
5. A 'house loan has been granted which falls in the risk weight category of 50%. If this loan has been made for Rs 100, how
much capital bank is required to bring for this housing loan? : Rs 4.5 (Banks are required to have capital adequacy ratio of 9%. It
means for risk weighted asset of Rs 100 bank is required to bring capital of Rs 9. Since the risk weight in this case is 50%, the risk
weighted assets for a loan of Rs 100 are Rs 50. Capital requirement is Rs 4.5 i.e. 9% of Rs 50.)
6. A housing loan in metro area will be classified as Priority Sector, provided maximum amount of loan is up to and
maximum cost of house is up to: Rs 28 lac; Rs 35 lac.
7. A loan granted for long duration crop will be classified as NPA if loan is overdue for: one crop season.
8. A loan has been sanctioned under NRLM scheme. Bank normally charges interest rate on such loans at 12.25%. As per
NRLM Subsidy scheme, how much reimbursement will be made to bank? 5.25%
9. Advance given for setting up Cold Storage for storing agricultural produce will be treated as part of priority sector provided
the unit is located: Anywhere in India
10. Advance granted for setting up Warehouse or Cold Storage anywhere in India will be considered as indirect advance to
agriculture provided the amount of advance does not exceed : Now It is under Agriculture Infra structure – Rs. 100.00 crores per
project.
11. Advances up to 50 lacs against pledge / Hypothecation of Agricultural produce for a period not exceeding 1.2 months -
treated as priority sector.
12. Agri clinic maximum loan limit for individual: 20 lac.
13. An advance to a farmer against warehouse receipt of his crop will be treated as direct agricultural advance provided:
amount of advance is up to Rs 50 Iakh and up to 12 months.
14. An agricultural advance will be classified as NPA if: it is overdue for 2 crop seasons in case of short duration crops and for 1
crop season in case of long duration crops.
15. Apiculture means : Bee Keeping
16. As per new PS guidelines Food & Agro processing will form part of: Ancillary activity under agriculture.
17. As per RBI Guidelines, no dues certificate is not required with respect to advance to farmers up to: Rs.50000/
18. As per the moratorium guidelines, the repayment of education loan should start from: 12 months on completion of course
or 6 months after getting job, whichever is earlier.
19. Blue Revolution is related to which of the following - poultry, aquaculture, agriculture: aquaculture
20. Blue revolution refers. Pisciculture – fisheries.
21. CGFTSI: 80% coverage not allowed to SC/ST (only to beneficiaries in North East states, women beneficiaries)
22. CGMSE - upto 5 lakhs cover in North East : 0.75% p.a. of limit sanctioned.
23. CGTMSE has been set up by: Govt of India and SIDBI
24. Cluster based approach is applicable for: a) Priority credit advance b) SME c) SHG.
25. Debt Swap meaning: To extend finance to farmers for repayment of loan taken from non-institution lenders
26. Discontinuation of Service Area Approach is as per recommendations of : Vyas committee report
27. Domestic Commercial Banks are required to finance at least 40% of ANBC to the priority sector. Of the priority sector
advances, how much should be given to weaker section: 10% of ANBC.
28. DRI - Family Income in Semi urban - Ceiling Rs. 24000/- & rural 18000/
29. Education loan for vocational purpose in India: Max 1.50 lac
30. Education Loan to an individual for studies abroad will be considered as part of priority sector provided the amount of loan
disbursed does not exceed: There is no limit on amount disbursed but only maximum Rs 10 lac out of the outstanding will be
treated as PS.
31. Exemption of Collateral Security in Agri-Business Clinics Centre: Up to Rs.5.00 lacs
32. FEATURES OF NATIONAL AGRICULTURAL INSURANCE? : CROP DAMAGE COVERAGE
33. Financial Inclusion aims at : The delivery of banking services at an affordable cost to the vast sections of
disadvantaged and low income group.
34. For a Loan more than Rs.1 crore to NGO-MFI /NBFC-MFI: 10% collateral in the form of Bank Deposits.
35. For Agri business centre, outer project cost limit for individual is: Rs.20 lacs.
36. For being eligible under Central Scheme of Interest subsidy on Educational Loans, the parental income ceiling is: Not more
than Rs. 4.5 lacs per annum.
37. For classification as indirect advance to agriculture, investment in Agro based industries in plant and machinery should not
be more than: None of these as advance to agro food processing industry is classified as Small Enterprise and not indirect advance to
agriculture.
38. For classification as priority sector maximum housing loan in metro area can be: Rs 28 lakh
39. For classification as priority sector maximum housing loan in Rural area can be: Rs 20 lakh
40. For coverage under Priority sector, the amount of advance for Retail Trade should not be more than: Rs.500 lacs
41. For foreign banks with less than 20 branches-in India, for which of the following segments, there is no target under priority
sector advances: Agriculture, Export Credit, Small enterprises
42. For MSE units, no collateral security / third party guarantee is to be taken for loans upto Rs. _____: Rs. 10 lakhs. (For Good
track record unit upto Rs 25 lacs).
43. For Ultra Small Branches a designated officer will visit the village on a prefixed date and time every ______with laptop and
will be connected to Bank’s central server (CBS): Weekly or bank discretion
44. Full form of CGTMSE: Credit Guarantee Fund Trust for Micro & Small Enterprises.
45. Full form of P in NRLP: Project (National Rural Livelihoods Project)
46. Housing loan under priority sector more than 10 lac population: Rs. 28 lacs with unit cost not exceeding Rs. 35 lacs.
47. How many members are there in a Joint Liability Group?: 4 to 10
48. How much amount of overdraft will be sanctioned under Prime Minister Jan Dhan Yojna if there are satisfactory
operations in the account for six months?: Rs 5000
49. How much Education loan is allowed for vocational purpose in India?: For course duration upto 3 months Rs. 20,000/-; for
3 to 6 months – Rs. 50,000; 6 months to 1 year – Rs. 75,000 & Above one year - Rs.1.5 lac.
50. How much maximum loan can be allowed to a farmer against ware house receipt for coverage under priority sector: Up to
Rs 50 lac for a maximum period of 12 month.
51. How much per cent of loans under MUDRA to be sanctioned to Shishu: 60%
52. How much Post Harvest Loan against Pledge or Hypothecation of crop produce can be provided for coverage under direct
agricultural advance and for what period?: Loan upto Rs.50.00 Lac for a period not extending 12 months.
53. If there is a shortfall in achieving priority sector target or weaker section target or agricultural advance target, the shortfall
should be deposited in: RIDF
54. In case of agricultural advance no margin or collateral security should be taken up to : Rs 100000/-
55. In case of agricultural advances no dues certificate is not required from small and marginal farmers as per RBI guidelines for
advances up to: Rs 50,000 and now it is waived for all loans irrespective of amounts.
56. In case of Education loan, no collateral security is to be obtained upto: Rs. 7.50 lacs.
57. In case of Educational loans, interest on loans for how much period, interest subvention is given by Government?: 100% of
interest charged during moratorium period will be given as subvention by Government.
58. In case of loans under SGSY, no collateral security is required for loans up to: Rs 100,000 to individuals and up to Rs 10 lac to
Self Help Group.
59. In case of PMEGP, maximum project cost under Manufacturing Sector is and Service Sector is : Rs 25 lakhs and
Rs 10 lakhs
60. In case of SGSY scheme, the number of members of the Self Help Group should be normally and in difficult areas
: 10 to 20; 5 to 20.
61. In JLG number of group members: 4 to 10
62. In Joint Liability Group (JLG), per member can be granted maximum amount upto _____ under priority sector: Rs. 50,000
per person and in case of Group, maximum upto 5 lacs.
63. IN KCC INSURANCE PREMIUM BORNE BY BANK AND CUST IN RATIO OF: 2:1 ( 10:5)
64. In Model Educational Loan Scheme (IBA) repayment of the loan starts after _______ from the date of completion of course:
24 months.
65. In short term agricultural advances, interest subvention is allowed. What is the rule in this regard? : Interest subvention at
the rate of 2% allowed up to Rs 3 lakh and bank will charge interest at the rate of 7%.
66. Insurance amt in KCC for partial disability: Rs.25000 ( death & permanent disability – Rs. 50,000).
67. Interest Subsidy Scheme for Housing the Urban Poor (ISHUP). The scheme will provide a subsidized loan for 15-20 years for
a maximum amount of _______ for a EWS individual for a house: 1 lakh.
68. Interest subvention for Agriculture: 2% and also additional 3% for prompt payment borrowers).
69. Interest subvention for exporter is upto: 3% subject to the condition that the floor rate is not less than 7%.
70. Interest subvention of 1% will be available on housing loans up to Rs.______ to individuals for construction/purchase of a
new house or extension of an existing house, provided the cost of construction / price of the new house / extension does not exceed
25 lakh: 15 lakh.
71. Internal Rate of Return is arrived at a point where future cash flows on Net Present Value basis should be: Zero.
72. Jandhan tag line? Mera Khata Mera Bhagya Vidatha
73. KCC accidental claim as per PAIS: Rs 50,000/- in case of accidental death and Rs. 25,000/- in case of partial disability.
74. KVIC loan irrespective of location /amount/ investment in plant & machinery is treated as SME - Micro Manufacturing
Sector with in Priority Sector.
75. Loan for setting up warehouse, godown will be part of priority sector, provided these are located: Anywhere
76. Loans for co-operative society under Priority Sector: 5 crore
77. Loans to co-operative society for coverage under agricultural advaces: Upto 5 cr.
78. Loans to farmers up to ______ against pledge / hypothecation of agriculture produce for a period not exceeding 12 months:
Rs 50 lac.
79. Loans to individuals for educational purpose India for how much amt will be under priority sector: Rs.10 lacs for inland
studies & abroad.
80. Long duration crop is one in which crop season is: more than 12 months
81. MAX PEOPLE IN SHG? : 20 ( 10-20 )
82. Maximum amount of education loan for studies in India that is covered under Priority sector where no collateral security
and no margin required at present is: Rs 4.00 lakh
83. Maximum amount of loan that can be sanctioned under SGSY is No ceiling
84. Maximum amount of loan to DRI beneficiary was revised as per Union Budget 2007-08. What is the maximum loan other
than the Housing Loan to SC/ST that can be granted to DRI beneficiary: Rs.20,000/-
85. Maximum Number of persons in JLG? : 10 ( 4-10 )
86. Maximum people in SHG? : 20 ( 10-20 ).
th
87. Minimum qualification for loan under PMEGP if project cost in manufacturing more than 10 lacs: 8 pass. If up to Rs 10 lakh
no min qualification
88. Minimum women Self Help Groups in SGSY? 50% of the total Self Help Groups
89. Mudra Bank full form: Micro Units Development Refinance Agency.
90. Mudra Card will be co branded with: MUDRA Ltd and will be Rupay Card
91. Mulbery Crop Loan without margin can be upto : Rs.1 lac.
92. No collateral up to the loan amt in NRLM- Aajivika: Upto 10 lacs.
93. No margin is required to bought in by the borrower for the education loans to special courses up to _____: Rs. 4 lac
94. Normally SGSY group shall contain members who are below poverty line only. In case of non availability of BPL members to
the fullest extent, the number of persons above poverty line can be and in exceptional cases up to :20% & 30%.
95. NREGP scheme (National Rural Employment Guarantee Programme) has been extended to entire country w.e.f. : 01.4.08
96. Organic farming: Farming without fertilizer / chemicals
97. PEMGP Subsidy to be kept as: 3 Years FDR without Interest

98. PMEGP - Margin / Promoter contribution : 10% Genera! & 50/s for Spi category borrowers
99. Prime Minister’s Task Force on loan to micro and small enterprises was headed by: T K A Nair
100. Rajeev Rin Yojana how much maximum loan without collateral security: EWS- 5 lacs; LIG- 8 lacs.
101. Reservation for women beneficiaries under SGSY is: 40%.
102. SGSY has been replaced by: NRLM
103. SGSY scheme which is applicable only in the rural areas has been implemented with what objective?: The objective of SGSY
is to bring the assisted poor families (Swarozgaris) above the poverty line by ensuring appreciable sustained income over period of
time.
104. Target for weaker section loan are ____% of ANBC:10%
105. Target for Weaker section under priority sector: 10% of ANBC or 25% of total PS advances.
106. The Committee which issued guidelines on P.S. advances in July 2012 was headed by: M.V.Nair
107. The extent of coverage under CGTMSE for Micro units upto Rs 5 lacs: 85% with maximum amount of claim upto Rs 4.25 lacs.
108. The maximum amount of guarantee cover for loans granted to small and micro enterprises other than beneficiaries in the
North Eastern Region and women entrepreneurs and guaranteed by CGFT is: 75% of the amount outstanding up to Rs 50 lakh and
50% thereafter as on the date of account becoming NPA with a maximum of Rs. 50 lacs (coverage upto 100 lac)
109. To be classified as Priority Sector, the limits on advance for repairs to dwelling unit located in Rural is __and for units
located in urban areas is Rs.__ : Rs.2 lakh rural, Rs.5 lakh urban
110. Under CGFT, for loans more than Rs 5 lac but upto Rs 50 lakh, 80 % guarantee cover is available for: Loan to Micro and Small
enterprises in NE States, Women.
111. Under CGTMSE liability upto 5 lac how much cover available to micro Enterprises: 85% ( 4.25 lacs )
112. Under MUDRA lending will be for: Non Farm sector
113. Under NULM, additional interest subvention of 3% will be given to women Self Help Groups up to a loan amount of: Rs 3
lakh
114. Under Rashtriya Krishi Bima Yojana which type of risk is not covered : War & Nuclear risk.
115. Under SGSY Scheme, how the instalment should be fixed?: Repayment instalments should not be more than 50 percent of
the incremental net income expected from.the project.
116. Under SHG all the members of the group must be from BPL, however, a maximum of: 20% in general and 30% in exception
can be from marginally above poverty line subject to the condition that APL members not eligible for subsidy.
117. Under SRMS scheme, loan application for projects up to Rs-25,000 should be disposed off within: fortnight
118. Up to what amt no collateral in National Urban Livelihood Mission: In NRLM no collateral up to Rs 10 lakh.
119. Up to what loan amount banks need to lend under Consortium finance? Rs.5 Cr/Rs.10 Cr/Rs.20 Cr / Rs.50 Cr/ No limit now.
120. What are the benefits of covering advances under CGSMSE: Bank can finance viable projects without insisting for collateral
security.
121. What can be the maximum project cost in case of Agri clinic: Rs 20 lac per individual (Highly successful case – max Rs 25
lac). For group it is max Rs 1 crore.
122. What does JAM represent?: Jandhan, Aadhar, Mobile
123. What is Composite fee payable to under CGFT for loans more than Rs 5 lac in North East and other areas: .85% p.a. of limit
sanctioned for loans in North East or to woman or to micro enterprise and 1% p.a. of limit sanctioned in other cases
124. What is financial inclusion: Providing banking services to poor sections at affordable cost.
125. What is full form of USB: Ultra Small branch
126. What is guarantee corpus in MUDRA bank or funds allocated for MUDRA: Rs.20,000 crore
127. What is Mixed Farming? Use of a single farm for multiple purposes, as the growing of cash crops or for the raising of
livestock.
128. What is the corpus of Guarantee fund under MUDRA?: Rs 3000 crore
129. What is the corpus of MUDRA as per budget of 2015-16: Rs 20000 crore
130. What is the cut-off date for RKBY during Khariff Season in case of Loanee Farmers: November.
131. What is the income criteria for classifying a person as economically weaker section for the purpose of housing loan under
Priority sector?: Annual income not more than Rs 200000 (earlier Rs120000)
132. What is the limit for classifying the loan sanctioned to Drip and Sprinker irrigation dealer, for including under Indirect
finance to Agriculture?: - Now in MSME Service irrespective of Amount.
133. What is the margin under MUDRA loans?: For Shishu — Nil; for others — 25%
134. What is the maximum amount of loan and what is the maximum period of loan that can be granted to farmer against
warehouse Receipt?: Rs.50 lakh for 12 months.
135. What is the maximum amount of loan that can be granted under DRI: Rs 15000
136. What is the maximum amount of loan under "Kishore" category under MUDRA: Rs 5 lac
137. What is the maximum amount of loan under "Shishu" category under MUDRA: Rs 50000
138. What is the maximum amount of loan under "Tarun" category under MUDRA: Rs 10 lac
139. What is the maximum amount of MUDRA card?: Rs 20000
140. What is the maximum amount of subsidy for Self Help Group in SGSY scheme?: Rs 125,000.
141. What is the maximum housing loan for a dwelling unit so that it is covered under priority sector: Rs 28 lakh in places with
population of 10 lakh and above and Rs 20 lakh for places with population below 10 lac (earlier Rs 25 lac and Rs 15 lakh)
142. What is the maximum Loan amount permitted under KCC?: No upper limit. It is at the discretion of the bank
143. What is the maximum loan that can be allowed to a dealer in cattle feed / poultry feed, for treating the same as indirect
agricultural advance within priority sector : Rs.500 lac
144. What is the maximum loan that can be allowed to a dealer in cattle feed / poultry feed, within priority sector : Rs.500 lac
145. What is the maximum percentage of finance to Agriculture under Priority Sector? 18% of ANBC or CEOBE which ever is
higher.
146. What is the meaning of Rural Debt Swap?: To extend finance to farmers for repayment of loan taken from non institution
lenders.
147. What is the minimum education qualification required for an entrepreneur for a manufacturing project of Rs.10 Lakhs to be
considered under PMEGP? No educational qualification required
148. What is the normal strength of SHG under NRLM: 10-15 persons
149. WHAT IS THE NORMAL STRENGTH OF SHG UNDER NRLM: 10-15 PERSONS
150. What is the priority sector target for small banks?: 75% of ANBC
151. What is the rate of guarantee fee on loans up to Rs 5 lakh made in North East or to a women in case of Credit Guarantee
Scheme for Micro and Small enterprises?: 0.75% per annum of the limit sanctioned.
152. What is the security under MUDRA?: No collateral security; No third party guarantee; No CGFT cover. Separate Guarantee
cover under MUDRA
153. What is the target for export credit within the priority sector target of 40% for domestic scheduled commercial banks in
India?: Nil.
154. What is the target for foreign banks with less than 20 branches in India for financing Priority sector: 32% by 2015-16 of the
adjusted net bank credit or credit equivalent of Off balance sheet exposure whichever is higher.
155. What is the target for SC/ST under DRI: 40%
156. What is the target in DRI scheme for women: No Target for women.
157. What is the target of lending to-Priority Sector for Domestic Commercial Banks other than RRB: 40% of Adjusted Not
Banking Credit or Off Balance Sheet Exposure whichever is higher.
158. What is the target of Priority sector for domestic commercial banks?: 40% of ANBC or CEOBE whichever is higher.
159. What is the tenure under MUDRA loans?: Shishu — 36 EMI; Others — 36 to 60 months
160. What is the validity period of KCC: five years
161. What is true about DRI target?: two third of DRI advances should be made through rural and semi urban branches.
162. What should be annual income of a BPL family to be eligible for getting interest subvention under educational loan? Rs 4.50
lac.
163. When a farmer in addition to agriculture is engaged in rearing of livestock, it is called: Mixed farming
164. When an MSE unit is showing signs of sickness, the unit is said to be in the ______: Handholding stage of MSEs.
165. Which among the Muslims, Christians, Budhists &iains is not a minority community for priority sector : No as recently Jain
has been Included under Minority Community in Jan. 2014.
166. Which is not a eatable crop: Jute
167. Which of the following Committees have advised that a full service approach to cater to the diverse needs of the MSE sector
may be achieved through extending banking services to recognized MSE clusters by adopting a 4 –C approach: Ganguly Committee
168. Which of the following is constituted for Rural Development: NABARD
169. Which of the following is not of minority community-Muslim, Sikh, Christian, Jain, None of these as all are minority?: jain
170. Which of the following is not the strength of Self Help Group - super profit orientation, saving, internal lending, mutual help,
none of these: Super profit orientation.
171. Which of the following is priority sector for foreign bank with less than 20 branches in India? :1)Export finance 2)MSE 3)Agri:
all of these
172. Which one does not match in respect of reservation to SC/STs : 40% in the case of SJSRY, as in the case of S3SRY, the target
for SC/ST is in the ratio of composition of population.
173. While extending finance to NBFC-MFIs, the percentage of Qualifying Assets should be: Minimum 85%.
174. Within priority sector target of 40% of Adjusted Net Bank Credit or Credit equivalent of Off Balance Sheet Exposure,
whichever is higher, the sub-target for weaker section is : 25% (of PS advances)
175. Within priority sector, for repair of house, how much loan can be allowed to an NRI in an urban area : 5 lakh
01. Ã Cash Credit account becomes NPA even if regular, when the credit limits have not been reviewed for more than ____
from due date: 6 months (180 days)
02. Ãgency which purchases NPA from banks is called: Assets Reconstruction Company.
03. A bank can sell its NPA account to another bank only after keeping the same as NPA in the books of selling book for at least:
Anytime
04. A bank who has purchased NPA from other bank can resell the same, after holding the same in its books for months
from the date of purchase: 12 months
05. A company which purchases NPAs from banks and reconstructs or securitises the same is called: Asset Reconstruction
Company (ARC)
06. A loan associated with a short duration crop, becomes sub-standard after remaining special mention account for a period of
: two crop seasons
07. A Sub standard account becomes doubtful after: 12 months from date of becoming NPA.
08. Account need not be classified as NPA as long as adequate margin available: Loan against FDR, Life Insurance Policy,Govt
securities.
09. An NPA has been purchased by a bank from another bank. What will be the risk weight for the purchasing bank for this
account? 100%
10. Bank can sell NPA after it has remained in its books for: No lock in period now.
11. Bank/Fls should submit the list of suit-filed accounts of wilful defaulters of Rs. as at end-March, June, September and
December every year to Credit Information Bureau (India) Ltd. (CIBIL) and submit the quarterly list of wilful defaulters where suits
have not been filed only to RBI: 25 lakh and above
12. CC account credit not enough to meet interest: Out of order.
13. CC/OD A/c out of order for a period of _____ to become NPA: 90 days.
14. Classification of NPA in consortium advances: Each bank will classify the account according to its own record of recovery.
15. Credit in 9 months in a cc account are not sufficient to recover the interest but outstanding is within DP. What will be the
position of account: It becomes NPA
16. Debt securitisation means: Conversion of receivables into debt instrument.
17. For purpose of classification of Wilful Defaulters for reporting to RBI, the outstanding should be: Rs.25 lakhs and above
18. Full form of CRILC: Central Repository of Information on Large Credits (CRILC)
19. If in a NPA account, the value of security both primary and collateral deteriorates so much that its realizable value is 10%
and above but less than 50% of the amount outstanding, then this account is directly classified as: Doubtful asset.
20. If Interest debited in an account is not recovered within _____ will be treated as NPA: 90 days from the end of the
quarter.
21. IF THE PRINCIPAL OR INT PAYMENT REMAINS OVERDUE BETWEEN 31-60 DAYS: SMA 1 CATEGORY
22. If value of security is less than 50%, then sub standard account can be straight way taken to Doubtful category.
23. Legal Expenses incurred by Bank in respect of suit filed account to be debited to : P & L account
24. Long duration crop means a crop with harvest season of: More than 12 months.
25. NPA ACCOUNT WILL NOT BE CONSIDERED AS WILFUL DEFAULT: IF DUE TO ECONOMIC RECESSION.
26. Sale of NPA is done on: Without recourse basis
27. Short Duration and long duration crop — who fixes: Agri Deptt of the Govt.
28. State Govt loan can be treated as NPA if a/c is overdue for : 90 days
29. Supervisory Review according to which Central Bank of the country is to ensure that proper capital has been provided for
risk exposure and maintain proper system for the same is provided under?: Pillar II of Basel IL
30. The Exposure norms for a single borrower in normal case and when .financing to Infrastructure are: 15% and 20%
respectively of the capital funds of the bank.
31. The net worth of Asset Reconstruction Company should be: 15% of the assets acquired or Rs 100 crore whichever is less.
32. There is no minimum CRR or SLR as per RBI Act and B R Act.
33. Under OTS, the compromise amount is calculated after taking in _______: Opportunity Cost.
34. What does R stands in ARC: RECONSTRUCTION
35. What is Accrual concept: Mercantile. It means when the amt becomes due you recognize and take it to P & L account
irrespective of the fact that the amount has not been recovered.
36. What is full form of NPA?: Non Performing Asset
37. What is the cut off point for reporting of Willful Defaulter to Credit Information Company?: Rs.25 lakh and above.
38. What is the definition of Quick Mortality: Account becoming NPA with in 12 months from date of first disbursement.
39. What is the purpose of adopting IRAC (Income Recognition and Asset Classification) norms in India?: to move towards
greater consistency and transparency in the published accounts.
40. When a person does not repay bank’s loan though he has profit to pay, he is called: Wilful Defaulter
41. When account will be out of order, in case of non-receipt of Stock Statement: If statement not received for last 3 months.
42. When advance is given to a customer by discounting bills, when the account will become NPA?: When bill is overdue for
more than 90 days.
43. Which of the following can purchase NPA? a) ARC b) Banks c) Financial Institutions d) NBFC e) All of the above.
44. Which of the following entities has released report titled as Framework for Revitalising Distressed Assets in Economy –
Guidelines on Joint Lenders and corrective Action Plan - (i) RBI (ii) Govt of India (iii) Bank Board (iv) IBA: RBI
45. Which of the following was formed first of all : (a) DRT (b) Lok Adalat (c)SARFAESI (d) CDR
46. Which one of the following is not a method as per any law for recovery of bank loan – (a) Filing a case with DRT (b) Action
under Sarfaesi Act (c) Compromise (d) Lok Adalat: Compromise.
PROVISIONING
01. An asset is doubtful for more than 2 years. How much provision is required to be made on the unsecured portion of the
same: 100 %
02. Banks are required to make provision on standard assets at the rate of 0.25% on__ & __accounts : Direct agriculture and
Micro & Small enterprises.
03. General provision on standard assets except specified categories is: 0.40% of the balance outstanding on global basis.
04. How Interest suspense account is to be treated?: Reduce the balance for calculation of provisioning purpose
05. Provision in Standard category under Direct Agriculture & SME: 0.25% of outstanding.
06. Provision in sub standard account, which are abi-initio unsecured: 25% for other than infrastructure
07. Provision on secured Sub-Standard Loan: 15% of outstanding.
08. Provisions in case of accounts classified in Doubtful category for 12 months to 3 years is _____: Deficit + 40% of RVS
09. Prudential accounting norms include : asset classification, income recognition, provision norms.
10. What is the rate of provision in case of doubtful assets which is in D2 category i.e. which is doubtful for two years?:
Unsecured portion 100%; secured portion: 40%
11. What is the rate of provision on secured Sub Standard Loan:15% of outstanding
12. Where provision required (Standard, Sub Standard, Doubtful, Loss): In all cases
DRT / Lok Adalat
01. Limit for filing suit in DRT: Rs.10 lacs and above
02. For referring cases to Lok Adalat, the cut-off limit is: Upto 20 lacs. More than 20 lacs Lok Adalat set up under DRT.
5. TEST YOUR SELF: MCQs ON RURAL BANKING
Test Your self -1 : Companies Act 2013

01 As per the Companies Act 2013, the maximum no. of share holders in a private company is restricted to: a 20 b 50 c
100 d 200
02 The maximum of directors in a public company can be . without any permission
from Central Govt. as per provisions of Companies Act 2013: a 12, b 15, c 20 d 25
03 As per provisions of Companies Act 2013, if the no. of directors is more than the prescribed number, the number of directors can
be increased with : a consent of Board of Directors
b Special resolution from shareholders, c permission of Central Govt. d permission of SEBI
04 As per provisions of Companies Act 2013, the financial year of a company can be only:
a Jan to Dec ,b Apr to Mar, c Jul to Jun ,d any, at discretion of the company
05 A particular per'son can be director of maximum companies concurrently, as per provisions of Companies Act 2013: a 12b
15 c. 20 d 25
06 Out of the prescribed no. of maximum no. of directorships that can be held by a person concurrently, the maximum number of
such public companies can be as per provisions of Companies Act 2013: a 10 b 12 c 15d 18
07 For companies having networth of Rs. 500 crore or more or turnover of Rs. 1000 crore or more or net profit of Rs. 5 crore or more
during any financial year it is mandatory that it spends on corporate social responsibility, at least of average net profit of
immediately preceding 3 financial years for every financial year, as per /provisions of Companies Act 2013 : a 2.5% , b 2.0%, c 1.5%, d
1.0%
08 Every listed company or every other company having a paid up share capital of Rs. of
more are mandatorily required to appoint at least one women director, as per provisions of Companies Act 2013 : a Rs.500 cr
b Rs.200 cr c Rs.100 cr d Rs.50 cr
09 As per provisions of Companies Act 2013, what is minimum paid'up capital of a private company
a Rs.1 lac b Rs.5 lac c Rs.10 lac d No condition
10 As per provisions of Companies Act 2013, what is the minimum paid up capital of a public company : a Rs.1 lac b Rs.5 lac c
Rs.10 lacd No condition
11 As per provisions of Companies Act 2013, what is the paid up capital of a small company (other than a public company): a max
Rs.10 lac b max Rs.20 lac ,max Rs.50 lac d max Rs.100 lac
12 As per provisions of Companies Act 2013, the minimum number of members in a company, is wrongly stated in which of the
following cases: a private company — minimum 2
b one person company — minimum 1, c public company — minimum 7, d none of the above
13 As per provisions of Companies Act 2013, the certificate of commencement of business is not required by: a a subsidiary company
, b a public company a private company, d none of the above
14 Where a company creates charge on its assets to secure a loan, it is required to get the charge registered with Registrar of
Companies as per Section of Companies Act 2013:
a Sec 77 b Sec 89 c Sec 105 d Sec 125
Companies as per provisions of Companies Act 2013 by filing the particulars of charge within from date of creation of such
charge: a 14 days b 20 days c 30 days d 45 days
Companies as per provisions of Companies Act 2013 by filing the particulars of charge within the stipulated period that can be
extended by with permission of Registrar of Companies: a 30 days b 210 days c 270 days d 300 days
17 If a company fails to file details of charges for registration with Registrar of Companies within the stipulated period, the charge
holder can file the details for registration. In such case, the Registrar will give days notice to the company as to why the charge
should not be registered.
a 14 days b 20 days c 30 days d 45 days
18 If a company adjusted the loan where the charge is registered with Registrar of Companies and makes request to the Registrar for
satisfaction of charge, the Registrar will give days notice to the
creditor as to why the charge should not be treated as satisfied. a 14 days b 20 days
e 30 days d 45 days
19 If a company contravenes provision relating to registration of charge, the company shall be punishable with fine which shall not
be less than but which may extend to
a Rs.l lac, Rs.5 lac, b Rs.I lac, Rs.10 lac , c Rs.2 lac, Rs.5 lac , d Rs.2 lac, Rs.I 0 lac
20 If a company contravenes provision relating to registration of charge, every officer of the company who is in default shall be
punishable with imprisonment for a term which may extend to 6 months or with fine not be less than but which may extend to
, or with both. a Rs.10000, Rs.50000 , b Rs.20000, Rs.50000, c Rs.20000, Rs.1 lac, d Rs.25000, Rs.l lac
ANSWER
Q A Q A Q A Q A Q A
1 d 2 b 3 b 4 b 5 c
6 a 7 b 8 c 9 d 10 d
11 c 12 d 13 d 14 a 15 c
16 c 17 a 18 a 19 b 20 d
TEST YOUR SELF -2

1) The decision to develop a Monetary Policy Framework follows from the recommendation of the Expert Committee to Revise and
Strengthen the Monetary Policy Framework or what is popularly known as the committee report, which had suggested that RBI
target to bring down retail inflation to 8% by January 2015 and 6% by January 2016. a) Dr. Urjit Patel*. b) Dr. Usha Thorat,
c) Dr. Nachiket Mor d) Vijaya Bhaskar
2) As per the Monetary Policy Framework, the objective of monetary policy is to primarily maintain price stability, while keeping in
mind the objective of growth. The monetary policy framework in India shall be operated by the Reserve Bank of India. Inflation
means :
a) The monthly change in the CPI-C expressed in percentage terms.
b) The year-on year change in the half yearly CPI-C expressed in percentage terms.
c) The year-on year change in the monthly CPI-C expressed in
percentage terms* d) None of these.
3) As per the Monetary Policy Framework, the Reserve Bank will aim to bring inflation below ____ percent by January 2016. The
Target for financial year 2016-17 and all subsequent years shall be ____ % with a band of +/- ____%.
a) 5;4; 2 b)7;5; 3 c)7 ; 4; 2 d) 6;4;2*
4) As per the Monetary Policy Framework, once every six months, the Reserve Bank shall publish a document explaining Sources of
Inflation; Forecasts of Inflation for the period between _____ to ______ months from the date of the publication of the document;
and Flexible inflation target. a) Six ; Eighteen* b) Five ; Fifteen, c) Four ; Ten d) Six ; Ten
5) As per the Monetary Policy Framework, the Reserve Bank shall be seen to have failed to meet the target if inflation is more than
____ percent for three consecutive quarters for the financial year 2015-16 and all subsequent year; Less than ____ percent for three
consecutive quarters in 2016-17 and all subsequent years. a) 8;4 b) 5;2 c) 6;2* d) 5;3
6) As per the Monetary Policy Framework, if the Reserve Bank fails to meet the Target it shall set out in a report to the Central
Government covering which of the following aspects:
a) The reasons for its failure to achieve the Target;
b) Remedial actions proposed to be taken by the RBI;
c) An estimate of the time-period within which the Target would be achieved pursuant to timely implementation of
proposed remedial actions.
d) All of the above*
7) The Government of India, Ministry of Housing and Urban Poverty Alleviation (MoHUPA), has restructured the existing Swarna
Jayanti Shahari Rozgar Yojana (SJSRY) and launched the ___.
a) National Urban Livelihood Mission (NULM)*, b) Prime Minister Rojgar Yojana., c) National Rural Livelihood Mission
(NRLM), d) Jan Dhan Yojana.
8) Under National Urban Livelihood Mission the maximum unit project cost for individual micro enterprise cases is Rs.
________ : a) 4 lac b) 3 lac c) 2 lac* d) 5 lac
9) As per National Urban Livelihood Mission scheme, which of the following statement is incorrect:
a) Two sub components in terms of beneficiaries are covered namely: Individual Enterprises (SEP-I), & Group Enterprises (SEP-G).
b) In case of Individual Enterprises (SEP-I), Banks are mandated not to accept any collateral security.
c) In case of Individual Enterprises (SEP-I), the banks may approach Credit Guarantee Fund Trust for Micro and Small Enterprises
setup by SIDBI and Government of India for the purpose of availing guarantee cover for SEP loans as per the eligibility of the
activity for guarantee cover.
d) In case of Individual Enterprises (SEP-I), repayment schedule ranges from 5 to 7 years after initial moratorium of 6-18 months as
per norms of bank.
e) None of the above*
10) Under the Group Enterprises (SEP-G) component of National Urban Livelihood Mission scheme, which of the following statement
is incorrect:
a) A Self Help Group (SHGs) or members of an SHG constituted under SJSRY / NULM or a group of urban poor desirous of setting up a
group enterprise for self-employment can avail benefit of subsidized loans under this component from any bank.
b) The group enterprise should have minimum 5 members with a minimum of 70% members from urban poor families.
c) The maximum unit project cost for a group enterprise is 10,00,000 (Rs. Ten lakhs) and no collateral to be obtained.
d) The repayment schedule ranges from 5 to 7 years after initial moratorium of 6-18 months as decided by bank.
e) The target is Women – 30%; Disabled – 3%; and SC / ST – on Pro – rata to local population.
f) None of the above*
11) With respect to loan against shares, debentures and bonds, which of the following is incorrect as per RBI guidelines:
a) Loans against the security of shares, debentures and bonds should not exceed the limit of Rupees Ten lakhs per individual if the
securities are held in physical form and Rupees Twenty lakhs per individual if the securities are held in dematerialised form.
b) Banks should maintain a minimum margin of 50 percent of the market value of equity shares / convertible debentures held in
physical form.
c) In the case of shares / convertible debentures held in dematerialised form, a minimum margin of 25 percent should be
maintained. These are minimum margin stipulations and banks may stipulate higher margins for shares whether held in physical
form or dematerialised form.
d) The margin requirements for advances against preference shares / non-convertible debentures and bonds may be determined by
the banks themselves.
e) None of the above.*
12) As per RBI directions, all Credit Institutions (CI’s) should become member of Credit Information Companies (CICs) and submit
data (including historical data) to them with in a period of ____ months.
a) 6 b) 2 c) 3 * d) 1
13) How many CIC’s have been granted Certificate of Registration by RBI ?
a) 4* b) 3 c) 2 d) 1
14) The one-time membership fee charged by the CICs, for CIs to become their members, shall not exceed Rs._____ each and annual
fees charged by the CICs to CIs shall not exceed Rs. ______ each.:
a) Rs.5,000; Rs.2,500 b) Rs.10,000; Rs.2,500, c) Rs.10,000*; Rs.5,000* d) Rs. 20000; Rs.5,000
15) As per RBI guidelines to banks, a credit card a/c will be treated as NPA if the minimum amount due, as mentioned in the
statement, is not paid fully within ____ days from the next statement date and the gap between two statements should not be more
than one month. a) 90* b) 60 c) 50 d) 30
16) Reserve Bank of India has decided that the interest rates charged by an NBFC-MFI to its borrowers will be the cost of funds plus
margin, or the average base rate of the five largest commercial banks by assets multiplied by____:
a) 5 b) 2.50 c) 2.75* d) 3.5
17) Securitisation Companies / Reconstruction Companies (SC / RCs) are permitted to convert a portion of debt into shares of the
borrower company as a measure of asset reconstruction provided their shareholding does not exceed ____ of the post converted
equity of the company under reconstruction. a) 30% b) 20% c) 26%* d) 28%
18) Securitisation Companies / Reconstruction Companies (SC/RCs) are required to obtain, for the purpose of enforcement of
security interest, the consent of secured creditors holding not less than ____of the amount outstanding to a borrower as against
____hitherto. a) 30%, 75% b) 75%, 60% c) 60%,75%* d) 50%,75%
19) A person makes a draft payable in the name of another person from any particular bank for an amount less than
Rs.49,000/-. This person, on whose name the draft is made, further endorses it in the name of another person in lieu of
payment for purchase of goods or services. The draft is used as a payment cheque without real money changing hands. In
the end, there is a specific group of people who deposits these drafts in their bank accounts, and takes a commission of
1-2% to encash them. This process of conducting transactions is called:
a) Money Laundering b) Money Mules, c) Street Financing* d) Financial frauds
20)are individuals with bank accounts recruited by fraudsters to receive cheque deposit or wire transfer for the purpose of money
laundering. They receive cheque deposits or wire transfers and then transfer these funds to a/cs held on behalf of another person
or other individuals, minus a certain commission.
a) Street Financing b) Money Mules*, c) Money Laundering d) Financial frauds
21) For Money Transfer Service Scheme, Indian Agent should be an Authorized Dealer Category-I bank or an Authorized Dealer
Category-II or a Full Fledged Money Changer with minimum Net Owned Funds of ________:
a) 30 lakhs b) 35 lakhs c) 40 lakhs d) 50 lakhs*
22) A cap of ________has been placed on individual remittance under the Money Transfer Service Scheme. Amounts up to
Rs.50,000/- may be paid in cash to a beneficiary in India. Further, only 30 remittances can be received by a single individual
beneficiary under the scheme during a calendar year. a) US $2000 b) US $2500* c) US $ 3000 d) US $3500
23) The outstation cheques under Speed Clearing will be paid on T+1 or 2 basis within______:
a) 48 hrs* b) 24 hrsc) 6 hrs d) 12 hrs
34) Presenting branches are currently permitted to levy charges at a rate not exceeding _____per cheque (inclusive of all charges
other than Service Tax) for cheques of above Rs. 1 lakh presented through Speed Clearing. No charges are payable for cheques of
value up to Rs. 1 lakh from Savings a/c customers. Banks would be free to fix charges for collection of other types of accounts for all
values and also from Savings a/c customers for cheque of value above Rs. 1 lakh.
a) Rs. 100 b) Rs. 150* c) Rs. 200 d) Rs. 250
24) For evaluation and ratings of banks, RBI uses the_______. The new system is termed as _______. The new system to capture
the risks that may cause a bank to fail. a) CAMELS; INROADS* b) INROADS; CACS, c) CAMELS; CACS e) CRISIL; CARE
25) As per the new module advised by CERSAI, for delay condonation w.e.f. 1st December, 2014, whereby any transaction which is
filed after 30 days of creation of security and upto _____will attract additional fee.
a) 45 days b) 60 days*, c) 90 days d) None of these
st th
26) If the registration on CERSAI is done from 31 to 40 day after the date of transaction, the additional fee will be charged
_______ if loan amount is upto Rs. 5 lakh. The amount of additional fee will be ______if loan amount is above Rs. 5 lakh.
a) Rs. 500 & 1,000* b) Rs. 1000 & 1,500, c) Rs. 1,000 & 2000 d) Rs. 500 & 1,500
st th
______ if loan amount is upto Rs. 5 lakh. The amount of additional fee will be _______if loan amount is above Rs. 5 lakh.
a) Rs. 750 & 1,000 b) Rs. 1250 & 2,500*, c) Rs. 1,250 & 2000 d) Rs. 1000 & 1,500
st th
_________ if loan amount is upto Rs. 5 lakh. The amount of additional fee will be if loan amount is
above Rs. 5 lakh. a) Rs. 2000 & 2500 b) Rs. 2000 & 3000, c) Rs. 2500 & 5000* d) Rs. 3000 & 5000
29) While doing Risk Rating, an asset is downgraded from A+ rating to A rating. What type of risk is involved?
a) Market Risk b) Credit Risk*, c) Interest Rate Risk d) None of these
30) To help in the government's 'smart cities' programme, SEBI approved a new set of norms for listing and trading of municipal
bonds on stock exchanges, while channelising household investments for urban infrastructure development. These municipal
bonds, also known as _____ bonds. a) Muni Bonds* b) Corporation Bonds, c) Smart Bonds d) None of these
31) The Reserve Bank notified the decision to raise foreign direct investment (FDI) cap in the Insurance sector to ____ from existing
cap of 26%. a) 45% b) 49%* c) 50% d) 51%
32) As per new Foreign Trade Policy, value of Export Performance FOB / FOR for ‘Two Star Export House’ category during current
and previous 2 years is : a) 10 b) 15 c) 25* d) 20
33) As per new Foreign Trade Policy, value of Export Performance FOB /FOR for ‘Four Star Export House’ category during current &
previous 2 years is : a) 100 b) 500*, c) 1000 d) 2000.
Records of transactions to be maintained for at least _____from the date of transaction, instead of ten years from the
date of cessation of transactions, and records pertaining to identification of the customer and his address to be preserved
for at least ____ after the business relationship is ended.
a) 10,10* b) 10,15 c) 15,10 d) 5,10
35) The Suspicious Transaction Report (STR) bank as a whole, should be furnished to the FIU–IND, within _____ days of
arriving at a conclusion that any transaction, including an attempted transaction, whether cash or non-cash, or a series of
transactions integrally connected are of suspicious nature:
a) 10 days b) 7days* c) 15 days d) 5 days
36) Under Pradhan Mantri Suraksha Bima Yojana – Premium payable is Rs.____ per annum per member and sum insured on death is
____and partial disability is ____. a) Rs.10; 2 lakhs; 1 lakh b) Rs. 12; 2 lakhs; Rs. 50,000
c) Rs.25; Rs.1 lakh; Rs. 50,000 d) Rs.12; Rs.2 lakh; Rs. 1 lakh*
37) To be eligible for claim under PM Jeeven Jyoti Yojna, the age limit for all saving accounts holder should be between:
a) 18 to 45 yrs b) 18 to 50 yrs* c) 18 to 55 yrs d) 18 to 60 yrs
38) The premium payable under PM Jeeven Jyoti Yojna, is _______ p.a. and assures benefits of Rs. ____ on death due to any reason.
a) Rs. 330 & Rs. 2 lakh* b) Rs. 250 & Rs. 2 Lakhs, c) Rs.300 & Rs. 2.50 lakhs d) Rs. 230 & Rs. 3 lakhs
39) The limit of Education loan for vocational purpose in India for course duration upto 3 months is Rs. ________.
a) 20,000* b) 30000 c) 40000 d) 25000
40) What is the Full form of MUDRA?
a) Micro Units Development and Refinance Agency Ltd *, b) Modern Units Development and Refinance Agency Ltd, c) Micro
Units Development and Reconstruction Agency Ltd, d) None of these
41) Which tax has been abolished in Budget 2015-16:- a) Goods and Service Tax b) Wealth Tax*, c) Corporate Tax
d) Property Tax
42) MUDRA is set up with a corpus of ___________ and a credit
guarantee corpus of Rs 3,000 crore.
a) Rs.15,000 Crore b) Rs. 20,000 Crore*, c) Rs. 30,000 Crore d) Rs. 50,000 Crore
43) As per the new budget, Surcharge has been increased to ____ for individuals earning 1 crore and above annually and on firms
with an annual income of Rs. 10 crore or more. a) 10% b) 12%* c) 14% d) 15%
44) The full form of GIFT City is:-
a) Gandhinagar International Finance Tec-City, b) Gujarat International Finance Tec-City*, c) Gujarat Indian Financial Tec-City,
d) Gandhinagar Indian Financial Tec-City
45) Full Form of CRILC City is:
a) Central Repository of Information on Large Credits*, b) Central Reserve of Information on Large Credits, c) Central Repository
of Information on, d) None of the above
46) Full form of MIBOR;
a) Mumbai Inter bank Offered Rate*, b) Mutual Inter bank Offered Rate, c) Mumbai International Offered Rate
b) Mumbai Inter bank Offer & Bid Rate
47) The limit of Education loan for vocational purpose in India for course duration for 3 to 6 months is ______:
a) 40,000 b) 50000* c) 60000 d) 75000
48) The limit of Education loan for vocational purpose in India for course duration of 6 months to 1 year is ______:
a) 60,000 b) 85,000 c)1,00,000 d) 1,25,000*
49) The limit of Education loan for vocational purpose in India for course duration above 1 year is :
a) Rs.1.5 lakh* b) Rs. 2 lakh c) Rs.2.5 lakh d) Rs.3 lakh
50) Under SHG all the members of the group must be from BPL, however, a maximum of 20% in general and 30% in exception can be
from marginally above poverty line subject to the condition that APL members not eligible for subsidy
a) 20%, 30%* b) 25%, 35%, c) 20%, 25% d) 15%, 25%
51) If the bank has raised an unauthorized/erroneous direct debit to an account and on verification of the entry it is found to be
erroneous and the customer does not involve a third party, the bank will endeavor to complete the process of verification within a
maximum period of _____ working days from the date of reporting of erroneous debit. In case, the verification involves a third party
or where verifications are to be done at overseas centers, the bank shall complete the verification process within a maximum period
of _____ month from the date of reporting of erroneous transaction by the customer.
a) 7 : one* b) 5; one c)14; two d) 10; three
52) The Bank will undertake to carry out direct debit / ECS debit instructions of customers in time. In the event the bank fails to meet
such commitments customer will be compensated to the extent of on account of delay
in carrying out the instruction/failure to carry out the instructions.
a) Any financial loss the customer would incur* b) Rs. 1000/- c) Rs. 2500/- d) Rs. 5,000/
53) Where it is established that the bank had issued and activated a credit card without consent of the recipient, the bank would not
only reverse the charges immediately but also pay a penalty without demur to the recipient amounting to _______ as per regulatory
guidelines in this regard.
a) Twice the value of charges reversed*, b) Thrice the value of charges reversed, c) Value of charges reversed
b) None of these
54) In case a cheque has been paid after stop payment instruction is acknowledged by the bank, the bank shall reverse the
transaction and give value-dated credit to protect the interest of the customer. Any consequential financial loss to the customer will
be compensated. Such debits will be reversed within ____ working days of the customer intimating the transaction to the bank a) 3
b) 5 c) 2* d) 7
55) The 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. Such compensation will be given for delays beyond
week / weeks from the date of credit to Nostro Account/ due date after taking into account normal cooling period stipulated. The
compensation in such cases will be worked out keeping in view interest for the delay in crediting proceeds and compensation for any
possible loss on account of adverse movement in foreign exchange rate.
a) One*, b) Two, c) Three, d) Four
56) As part of the compensation policy of the bank, 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 specified in banks cheque collection policy. Interest for
delayed collection shall be paid at the Savings Bank rate for the period of delay beyond ____, ____, _____ days as the case may be in
collection of outstation cheques.
a) 5/10/15 b) 7/10/14* c) 3/5/7 d) none of these
57) The bank will pay interest to its customer on the amount of collection instruments in case there is delay in giving credit
beyond 14 days. Interest will be paid at the rate applicable for term deposit for the corresponding respective period or Saving Bank
rate, whichever is higher. In case of extraordinary delay, i.e. delays exceeding ____ days interest will be paid at the rate of ___%
above the corresponding Term Deposit rate. a) 60;2 b) 30;3 c) 90; 2* c) 45;2
58) In the event the proceeds of cheque under collection was to be credited to an overdraft/loan account of the customer,
interest will be paid at the rate applicable to the loan account. For extraordinary delays, interest will be paid at the rate of
____above the rate applicable to the loan account. a) 4% b) 3% c) 2%* d) 2.5%
59) In line with the compensation policy of the bank, the bank will compensate the account holder in respect of instruments lost in
transit. In case intimation regarding loss of instrument is conveyed to the customer beyond the time limit stipulated for
collection_____, ____, _____ days as the case may be) interest will be paid for the period exceeding the stipulated collection
period at the rates specified above. a) 4/8/12 b) 5/10/15 c) 7/10/14* d) 6/10/13
60) Issue of Duplicate Draft and Compensation for delays Duplicate draft will be issued within a _______ from the receipt of
such request from the purchaser thereof. For delay beyond the above stipulated period, interest at the rate applicable for
of corresponding period will be
paid as compensation to the customer for such delay.
a) Fortnight; Fixed Deposit* b) 10 days; Fixed Deposit, c) Fortnight; cumulative Deposit d) 30 days / Fixed Deposit
61) In addition, bank will pay interest on the amount of the cheque for a further period of ________ days at Savings Bank rate
to provide for likely further delay in obtaining duplicate cheque / instrument and collection thereof.
a) 15* b) 10 c) 7 d) 12
62) 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 DSA 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, the bank is committed to investigate the matter and endeavor to
communicate the findings to the customer within _____ working days from the date of receipt of complaint and wherever
justified, compensate the customer for financial loss, if any, as contemplated under this policy.
a) 10 b) 7* c) 12 d) 15
In terms of the guidelines for lenders liability, and the Code of Bank’s Commitment to customers, the bank would return to the
borrowers all the securities / documents / title deeds to mortgaged property within _____ days of repayment of all dues agreed to or
contracted The bank will compensate the borrower for monetary loss suffered, if any due to delay in return of the same. In the event
of loss of title deeds to mortgage property at the hands of the banks the compensation will cover out of pocket expenses for
obtaining duplicate documents plus a lump sum amount as decided by the bank.
a) 7 b) 15*, c) 21 d) 25
64) It is mandatory for bank to reimburse the customer, the amount wrongfully debited on account of failed ATM within a maximum
period of _____ working days from the receipt of the complaint. For any failure to re-credit the customer’s account within the
stipulated period from the date of receipt of the complaint, bank shall pay compensation of Rs._____ - per day to the aggrieved
customer. This compensation shall be credited to the customer’s account automatically without any claim from the customer, on the
same day when bank affords the credit for the failed ATM transactions.
a) 5;100 b) 10;150, c) 14;150 d) 7;100/-*
65) Which of the following statement is incorrect?
a) The bank will not honour cheques drawn on current accounts maintained by other banks with it unless arrangements are made
for funding cheques issued. Issuing bank should be responsible to compensate the cheque holder for non payment / delayed
payment of cheques in the absence of adequate funding arrangement.
b) The Bank would not compensate the customer for delays in collection of cheques designated in foreign currencies sent to
foreign countries as the bank would not be able to ensure timely credit from overseas banks.
c) 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, bring the same to the notice of the account holder so that the
account holder can inform the drawer to record stop payment and also take care that cheques, if any, issued by him / her are not
dishonoured due to non-credit of the amount of the lost cheques / instruments. The bank would provide all assistance to the
customer to obtain a duplicate instrument from the drawer of the cheque.
d) The bank would not compensate the customer for any reasonable charges he/she incurs in getting duplicate cheque /
instrument upon production of receipt. The instrument is to be obtained from a bank/ institution who would charge a fee for issue
of duplicate instrument.*
66) The Reserve Bank has set out a five-pillar framework to guide its developmental and regulatory measures. Which of the following
is not the regulatory pillar:
a) PILLAR – I: Clarifying and strengthening the monetary policy framework.
b)PILLAR – II: Strengthening banking structure through new entry, branch expansion, encouraging new varieties of banks, and
moving foreign banks into better regulated organisational forms.
c) PILLAR – III: Broadening and deepening financial markets and increasing their liquidity and resilience so that they can help
absorb the risks entailed in financing India’s growth.
d) PILLAR – IV : Expanding access to finance to small and medium enterprises, the unorganised sector, the poor, and remote and
underserved areas of the country through measures to foster financial inclusion.
e) PILLAR – V: Improving the system’s ability to deal with corporate distress and financial institution distress by strengthening real
and financial restructuring as well as debt recovery.
f) Noneoftheabove*
68) Which pillar of RBI’s developmental and regulatory measures emphasizes on Strengthening banking structure
through new entry, branch expansion, encouraging new varieties of banks, and moving foreign banks into better
regulated organisational forms. a) Pillar I b) Pillar III c) Pillar II* d) Pillar V
69) Which pillar of RBI’s developmental and regulatory measures emphasizes expanding access to finance to small and medium
enterprises, the unorganised sector, the poor, and remote and underserved areas of the country through measures to foster
financial inclusion. a) Pillar Ib) Pillar IV* c) Pillar II d) Pillar V
90) On a review of the permitted transactions under the Rupee Drawing Arrangements (RDAs), the Reserve Bank increased the limit
of trade transactions from the existing Rs.5,00,000/- per transaction to Rs._______ per transaction, with immediate effect.
a) 10,00,000 b) 12,00,000 c) 15,00,000* d) 17,50,000
91) The concept of a _______ account was introduced in the current framework as an important step in fraud risk control.
a) Special Mention account. b) Red Flagged *, c) High Risk account. d) Early Mortality account.
92) A is one where suspicion of fraudulent activity is thrown up by the presence of one or more Early Warning Signals (EWS). This
concept has been introduced in the current framework as an important step in fraud risk control. a) Red Flagged Account* b) Special
Mention account., c) High Risk account.d) Early Mortality account.
93) The threshold for Early Warning Signals and Red Flagged Account is an exposure of ________ or more at the level of a bank
irrespective of the lending arrangement (whether solo banking, multiple banking or consortium). a) 100 million b) 250 million c)
500 million* d) 1000 million
94) The officer responsible for the operations in the account should be sensitized to observe and report any manifestation of the
Early Warning Signal promptly to the or any other group constituted by the bank
for the purpose immediately.
a) Fraud Monitoring Group (FMG) *, b) Fraud Management Group (FMG), c) Core Monitoring Group (CMG), d) Fraud
Surveillance Group (FSG)
95) The Framework for fraud risk management in banks also includes broad guidelines relating to the, which of the following?
(i) Reporting to the Central Repository of Information on Large Credits (CRILC).
(ii) Lending under consortium or multiple banking arrangements
(iii) Staff accountability.
(iv) Filing complaints with law enforcement agencies.
(v) Penal measures for fraudulent borrowers
(vi) Central Fraud Registry.
a) Monitoring of critical areas
a) (i) & (ii) only b) (iii) to (vi) only, c) All of the above* d)
None of these
96) The Reserve Bank has advised all public sector banks and select private sector and foreign banks to appoint an internal
Ombudsman. The internal Ombudsman would be designated as :-
Chief Ombudsman Service Officer, B) Chief Customer Ombudsman Officer, C) Internal Ombudsman Customer Service Officer,
D) Chief Customer Service Officer*
97) The Reserve banks has directed all ______ and few to appoint Chief Customer Service Officers. (Internal Ombudsman).
a) Public Sector Banks; Private Sector & Foreign Banks*
b) Private Sector Banks; Foreign Banks
c) Private Banks & Foreign Banks
d) Private Sector Banks; Public Sector Banks
98) As per the revised norms, the procedures for acquisition of accommodation on lease / rental basis by all commercial
banks will now be determined by the ___________ :- a) State Govt. b) RBI, c) Banks themselves* d) Ministry of Finance
99) P.J. Nayak Committee has prescribed seven broad themes to the Reserve Bank to advise all public sector banks to suitably
determine the agenda items and the periodicity thereof, keeping in view that there is adequate focus on matters of strategic and
financial importance. The seven themes include business strategy, financial reports and their integrity, risk, compliance,_______,
and human resources.
a) Customer protection, Financial inclusion*
b) Customer awareness, Financial integrity
c) Customer awareness, Fraud management.
d) Strategic Marketing, Financial inclusion
100) The Reserve Bank had, in the first bi-monthly monetary policy statement 2015-16, proposed to do away with the _____ and
instead, replace it with the seven critical themes. b) Calendar of Reviews*
c) Monitoring of strategic assets, D) Calendar of performance parameters
101) In order to enable Private Sector Banks to attract and retain professional directors, the Reserve Bank has issued guidelines on
compensation for non-executive Directors for implementation by private sector banks, that will reflect market realities and will be
within the parameters specified in the Banking Regulation Act, 1949 and the Companies Act, 2013. Such compensation, however,
shall not exceed _____ per annum for each director. a) 1 million* b) 1.5 million c) 0.5 million d) 2 million
102) The Board may, at its discretion, provide for in the policy, payment of compensation in the form of ______ to the non-executive
directors (other than the Part-time Chairman), subject to the bank making profits. a) Bonus b) Commission on profits*, c)
Additional Sharesd) None of these
103) In addition to the directors’ compensation, the bank may pay _______ to the non-executive directors and reimburse their
expenses for participation in the Board and other meetings. a) Sitting fees* b) Commission, c) Bonus d) Additional
allowances
104) Banks in private sector would be required to obtain prior approval of the Reserve Bank for granting _______ to the part-time
non-executive Chairman. a) Bonus b) Commission, c) Remuneration* d) Loans
105) The compensation policies of banks would be subject to supervisory oversight including review under the Supervisory Review
and Evaluation Process (SREP) under ______ framework.
a) Pillar 2 and Basel III framework
b) Pillar 3 and Basel III framework
C) Pillar 2 and Basel II framework* D) Pillar 1 and Basel II framework
106) Banks are required to make disclosure on remuneration paid to the directors on an ______ basis at the minimum, in their
Annual Financial Statements. a) Semi annual b) Quarterly c) Monthly d) Annual*
107) Under the revised criteria for opening of branches / extension counters / specialised branches within the area of operation of
the StCBs, Capital to Risk (Weighted) Assets Ratio (CRAR) should not be less than :- a) 9 percent * b) 10 percent c) 8
percent d) 10.5 percent
108) Under the same revised criteria, net Non Performing Assets (NPA) should be less than ______:
a) 9 percent b) 5 percent*, c) 8 percent d) 6 percent
109) The Reserve Bank has relaxed its requirement of additional factor of authentication (AFA) for across all merchant
categories to enhance customer convenience while ensuring security in card based transactions.
a) Low Value Card Present Transactions, b) High Value Card Present Transactions, c) Small Value Card Present Transactions, d)
None of the above.
110) The Reserve Bank has advised all scheduled commercial banks that relaxation for additional factor of authentication (AFA)
requirement is permitted for transactions for a maximum value of ______: a) Rs. 2000 per transaction* b) Rs. 2500 per
transaction, c) Rs. 5000 per transaction d) Rs. 10000 per transaction
111) For additional factor of authentication (AFA) beyond the transaction limit prescribed by RBI, the card has to be processed as a
contact payment and authentication with:- _a) PAN (AFA) b) MICR (AFA), c) PIN (AFA)* d) IFSC (AFA)
112) Even for transaction values below the limit prescribed by RBI, the customer may choose to make payment as a contact
payment. In other words, customers cannot be compelled to do a ________ payment.
a) On the spot b) Contactless* c) Cash less d) None
113) The Contactless cards should necessarily be chip cards adhering to _________ compliant payment standard, so as to be
acceptable across the existing card acceptance infrastructure.
a) Europay, MasterCard and Visa (EMV)*
b) RuPay, MasterCard and Visa (RMV)
c) Only MasterCard and Visa. d) Europay and RuPay only.
114) The Reserve Bank has advised all scheduled commercial banks, that with effect from ________, all new cards issued – debit and
credit, domestic and international by banks shall be EMV chip and PIN based cards. a) 16-8-2015 b) 1-9-2015* c) 1-1-2016
d) 1-4-2016
115) The Reserve Bank has advised authorised dealer (category–I) banks that recognised non-resident External Commercial
Borrowing (ECB) lenders may enter into swap transactions with their overseas bank which shall, in turn, enter into a back-to- back
swap transaction with any AD Category-I bank in India for mobilizing ______as per the prescribed procedure.
a) INR* b) $ c) Euro d) Discretion of the bank
116) On a review of the permitted transactions under the Rupee Drawing Arrangements (RDAs), the Reserve Bank increased the limit
of trade transactions from the existing Rs.5,00,000/- per transaction to Rs. _______ per transaction, with immediate effect. a)
7,50,000 b)10,00,000 c) 12,50,000 d) 15,00,000*
117) Recently, which category of banks were advised by RBI under the framework for Revitalising Distressed Assets in the Economy –
Guidelines on Joint Lenders’ Forum (JLF) and Corrective Action Plan:
a) All Scheduled Commercial Banks (excluding RRB’s), b) Exim Bank c) SIDBI d) NHB e) All of these*
118) With a view to ensuring more stake of promoters in reviving stressed accounts and provide banks with enhanced capabilities to
initiate change of ownership in accounts which fail to achieve the projected viability milestones, banks may, at their discretion,
undertake a by converting loan dues to equity shares.
a) Strategic Debt Restructuring (SDR)*, b) Corporate Debt Restructuring (CDR), c) Organizational Debt Restructuring (ODR), d)
Stressed Debt Restructuring (SDR)
119) At the time of initial restructuring, the JLF must incorporate, in the terms and conditions, an option to convert the entire loan
(including unpaid interest), or part thereof, into ______ in the company in the event the borrower is not able to achieve the
viability milestones and/or adhere to ‘critical conditions’ as stipulated in the restructuring package. a) Bonds b) Shares*
c) Debentures d) All above
120) If the borrower is not able to achieve the viability milestones and/or adhere to the ‘critical conditions’ referred to above, the JLF
must immediately review the account and examine whether the account will be viable by effecting a change in_______.
a) Structure b) Ownership* c) Legal Status d) None
121) The decision on invoking the Strategic Debt Restructuring (SDR) by converting the whole or part of the loan into equity shares
should be taken by the Joint Lenders’ Forum ( JLF) as early as possible but within _______days from the above review of the account.
a) 60 b) 45, c) 30* d) 90
122) The decision on invoking the Strategic Debt Restructuring (SDR) should be well documented and approved by the majority of
the Joint Lenders’ Forum members which comprise of minimum of ______ percent of creditors by value and _____ percent of
creditors by number.
a) 60, 50 b) 80, 50, c) 55, 60 d) 75, 60*
123) Post the conversion, all lenders under the Joint Lenders’ Forum must collectively hold ______ percent or more of the equity
shares issued by the company. a) 49 b) 60 c) 51* d) 45
124) For accounts which have been referred by the JLF to CDR Cell for restructuring, JLF may decide to undertake the SDR either
directly or under the ______ Cell.
a) Strategic Debt Restructuring, b) Corporate Debt Restructuring*, c) Organizational Debt Restructuring (ODR), d)
Stressed Debt Restructuring (SDR)
125) On completion of conversion of debt to equity as approved under Strategic Debt Restructuring, the existing asset classification
of the account, as on the reference date, will continue for a period of ______ months from the reference date.
a) 15 months b) 18 months* c) 12 months d) 10 months
126) Banks should ensure compliance with the provisions of _______ and JLF should closely monitor the performance of the
company and consider appointing suitable professional management to run the affairs of the company.
a) Banking Regulation Act* b) Companies Act, 2013, c) Reserve Bank of India Act. d) SARFAESI Act
127) On divestment of banks’ holding in favour of a ‘new promoter’, the asset classification of the account may be upgraded to
______ , subject to the prescribed conditions.
a) Special Mention Account. b) Sub Standard, c) Standard* d) None of the above
128) At the time of divestment of their holdings to a ‘new promoter’, banks may the existing debt of the company
considering the changed risk profile of the company without treating the exercise as ‘restructuring’ subject to banks making
provision for any diminution in fair value of the existing debt on account of the refinance.
a) Refinance* b) Rephrase c) Reschedule d) Capitalise
129) The Joint Lender Forum must approve the Strategic Debt Restructuring (SDR) conversion package within ___ days from the date
of deciding to undertake SDR. a) 90* b) 45 c) 60 d) 30
130) Which of the following documents have been recently advised by RBI to be deemed to be Officially Valid Documents (OVD’s)
under simplified measures relating to KYC norms for ‘low risk’ customers for the limited purpose of proof of address where
customers are unable to produce any officially valid document:
i) Utility bill which is not more than two months old of any service provider (electricity, telephone, postpaid mobile phone,
piped gas, water bill);
ii) Property or Municipal Tax receipt;
iii) Bank account or Post Office savings bank account statement
iv) Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector
Undertakings, if they contain the address;
v) Letter of allotment of accommodation from employer issued by State or Central Government departments, statutory or
regulatory bodies, public sector undertakings, scheduled commercial banks, financial institutions and listed companies. Similarly,
leave and license agreements with such employers allotting official accommodation; and
vi) Documents issued by Govt. deptt. of foreign jurisdictions and letter issued by Foreign Embassy or Mission in India.
a) Only (i), (ii), (iii) b) Only (iv), (v), (vi), c) All except (v) & (vi) d) All of the above*
131) The compensation policies of banks would be subject to supervisory oversight including review under the Supervisory Review
and Evaluation Process (SREP) under framework.
a) Pillar 2 and Basel III framework, b) Pillar 3 and Basel III framework, c) Pillar 2 and Basel II framework*, d) Pillar 1 and Basel II
framework
132) With a view to developing strong risk management capabilities to manage agri-commodity price risk, the Reserve Bank advised
all scheduled commercial banks (excluding regional rural banks) to encourage by the agri-borrowers through agri-commodity
derivatives. a) Speculation b) Crystalisation c) Hedging* d) Forward sale
133) The Reserve Bank advised all-India Term Lending and Refinancing Institutions (AIFI) to make certain disclosures in addition to
the extant disclosure requirements in the Notes to Accounts in their Annual Financial Statements relating to sale of ______ to
Securitisation Companies / Reconstruction Companies.
a) Fixed assets. b) Non-Performing Assets*, c) Intangibles d) Investments.
134) On a review, the Reserve Bank allowed all scheduled commercial banks (excluding RRBs) to invest in the
issued by other banks for financing of infrastructure and affordable housing. In order to prevent double counting of regulatory
exemptions allowed, such investments will be subject to prescribed conditions. a) Long term debentures b) Long term loans
c) Long term bonds* d) Equity & preference shares
135) The RBI has continued to provide liquidity under overnight repos at ____ per cent of bank-wise NDTL at the LAF repo rate and
liquidity under 14-day term repos as well as longer term repos of up to ____ per cent of NDTL of the banking system through
auctions. a) 0.50 ; 1 b) 0.25; 0.50 c) 0.25; 0.75* d) 0.50; 0.75
136) The Reserve Bank released the final guidelines for introduction of 6-year and 13-year cash settled Interest Rate Futures (IRF) on
Government of India Securities with residual maturity of __________and _______respectively.
a) 4-8 years, 11-15 years* b) 6-8 years, 10-15 years, c) 7-8 years, 12-15 years d) 8-10 years, 12-5 years
137) Agency banks may also promote the use of among pensioners, which would eliminate the need for physical presence at
branches and issue of acknowledgement. b) Digital Life Policy, c) Pension Life code d) Digital Life Certificate*
138) The Government of India has also launched a scheme for introduction of Aadhaar based digital life certificates known
as_________: a) Jeevan Life certificate, b) Jeevan Life code, c) Jeevan Praman*, d) Jeevan Praman certificate
139) The RBI has permitted all banks authorised to deal in foreign exchange to allow remittances by a resident individual up to
_______ per financial year for any permitted current or capital account transaction or a combination of both under Liberalised
Remittance scheme. a) USD 1,50,000 b) USD 2,00,000, c) USD 2,50,000* d) USD 1,75,000
140) As per the revised guidelines, the PAN Card is mandatory if the sale/purchase of Immoveable property is valued excceding Rs.
_____. Further, PAN is also needed if properties valued by stamp valuation authority exceeds the amount of Rs. :
a) Rs 5 lakh and Rs 10 lakh b) Rs 10 lakh and Rs 10 lakh*, c) Rs 10 lakh and Rs 15 lakh d) Rs 10 lakh and Rs 20 lakh
141) Which of the following is correct regarding Time Deposit with a Banking Company w.r.t PAN Card:
a) The PAN Card is mandatory if deposits aggregating is more than Rs. 5 lac during the year.
b) The PAN Card is mandatory even if depositor has an account with Co-op Banks, Post office, Nidhi, NBFC companies.
c) The PAN Card is mandatory if deposits aggregating is more than Rs. 50,000/- during the year.
d) The PAN Card is mandatory if deposits aggregating is more than Rs. 1,00,000/- during the year.
a) Only a & b are true* b) All b & c are true c) Only b & d are true d) All are true.
142) In case of deposits with Post office and Saving Bank, the PAN Card is mandatory if the amount is exceeding Rs. _______:
a) Rs 10,000 b) Rs 20,000, c) Rs 50,000 d) Discontinued*
143) In case of Sale or Purchase of securities, the PAN Card is mandatory if the contract of
a) Pension Life Certificates
sale/purchase value is exceeding Rs. ____: a) Rs 5 lakh b) Rs 4 lakh, c) Rs 2 lakh d)
Rs 1 lakh*
144) Which of the following statement is correct regarding Opening of an account (other than time deposit) with a Banking
Company:
a) PAN Card is compulsory for all the new accounts that are being opened with the banking company.
b) In case of opening of Basic Saving Bank Account there is no requirement of PAN Card.
c) Co-operatives banks also need to comply with the guidelines on Pan.
145) As per the revised guidelines, for installation of telephone / cellphone connections, the PAN Card is : a) Mandatory b)
Discontinued*, c) Varies from State to State. d) None of above
146) In case of Hotel / restaurant bill(s), the PAN Card is required if the cash payment on account of the bill is exceeding Rs. _____:
a) Rs 30,000 b) Rs 40,000 c) Rs 50,000* d) Rs 60,000
147) In case of cash purchase of bank Drafts / Pay orders / Banker’s cheque, the PAN Card is mandatory if the amount aggregating
exceeds Rs. _______ in a day: a) Rs 25,000 b) Rs 50,000* c) Rs 60,000 d) Rs 80,000
148) In case of Cash deposits with the Banking Company exceeding Rs. _____ in a day, then the PAN Card is compulsory: a) Rs
50,000* b) Rs 30,000 c) Rs 25,000 d) Rs 40,000
149) PAN Card is mandatory if the cash payment in connection with foreign travel for fare, payment to travel agent, purchase of
foreign currency is exceeding Rs. _______ at any one time:-
a) 20,000 b) 50,000* c) 1,00,000 d) 5,00,000
150) In case of Mutual funds unit transactions, the PAN Card is compulsory if the payment for purchase of mutual funds units
exceeds Rs. _______: a) Rs 35,000 b) Rs 50,000* c) Rs 45,000 d) Rs 60,000
151) Which of the following statement is true regarding purchase/sale of Shares, Debentures, RBO bonds w.r.t PAN Card:
a) PAN Card is required if the purchase/sale of shares is exceeding Rs. 1 lac per transaction.
b) PAN Card is required if a person opens a demat account.
c) PAN is mandatory in case of purchase of debentures/bonds, RBI bnds is exceeding Rs. 50,000/
d) All of above*
152) PAN Card is compulsory if the payment of the premium is exceeding Rs. _______ in a year:
a) Rs 20,000 b) Rs 30,000, c) Rs 45,000 d) Rs 50,000*
153) In case of Purchase or sales of goods and services, including jewellery/bullion PAN Card is mandatory if the purchase/sale of any
goods and services is exceeding Rs. _____ per transaction:
a) Rs 50,000 b) Rs 1 lakh, c) Rs 2 lakh* d) Rs 2.5 lakh
154) In case of Cash cards/Prepaid instruments issued under Payment and Settlement Act, PAN Card is mandatory if the cash payment
aggregating is more than ____ in a year:
a) Rs 30,000 b) Rs 40,000, c) Rs 50,000* d) Rs 60,000
155) The Reserve Bank in its Fourth Bi-monthly Monetary Policy Statement, 2015-16, announced on Sept. 29, 2015, decided to
reduce the policy Repo rate under the liquidity adjustment facility (LAF) by 50 basis points and now it stands at _______: a) 6.00%
b) 6.25 % c) 6.75%* d) 7.00%
156) The RBI has decided to continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo
rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system
through auctions and continue with daily variable rate repos and reverse repos to smooth liquidity.
a) 0.25 %, 0.50 % b) 0.25%, 0.75 %*, c) 0.5%; 0.75% d) None of these
157) Consequent to the changes in the Repo rate, the Reverse Repo rate under the LAF stands adjusted to ______, and the marginal
standing facility (MSF) rate and the Bank Rate to _____. a) 5.75 %; 7.75%* b) 4.75 %; 6.75 %, c) 4.50%; 6.50% d)
5.50%; 7.50%
th
158) rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate stand revised. Effective rate from 29
Oct 2013, the penal interest is Bank Rate plus _____ percentage points or Bank Rate plus ____ percentage points depending upon
the duration of the shortfalls. a) 1.0; 3.0 b) 3.2; 5.1 c) 3.0; 5.0* d) 2.5; 5
159) Government of India has approved the extension of the Interest Subvention Scheme for the year 2015-16 for short term crop
loans. Interest subvention @ _____% per annum will be made available to the Public Sector Banks and the Private Sector Scheduled
Commercial Banks (in respect of loans given by their rural and semi-urban branches) on their own funds used for short-term crop
loans up to Rs.______ lac per farmer provided the lending institutions make available short term credit at the ground level at ____ %
per annum to the farmers. a) 2 ; 3; 7* b) 3; 4; 7c) 3 ; 5 ; 7 d) 3; 4; 8
160) The Interest Subvention of _______ will be calculated on the crop loan amount from the date of its disbursement / drawal up
to the date of actual repayment of the crop loan by the farmer or up to the due date of the loan fixed by the banks whichever is
earlier, subject to a maximum period of one year. a) 1% b) 2 %* c) 4% d) 8%
161) Additional interest subvention @ _____% per annum will be available to the farmers repaying
the loan promptly from the date of disbursement of the crop loan 158) All penal interest up to the actual date of repayment
or up to the due date fixed by the bank for repayment of crop loan, whichever is earlier, subject to a maximum period of one year
from the date of disbursement. This also implies that the farmers paying promptly would get short term crop loans @ _____% per
annum during the year 2015-16. This benefit would not accrue to those farmers who repay after one year of availing of such loans.
a) 3; 4* b) 4; 6 c) 5; 8 d) 7 ; 10
162) In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses against
warehouse receipts, the benefit of interest subvention will be available to small and marginal farmers having Kisan Credit Card for a
further period of up to ______ months post-harvest on the same rate as available to crop loan against negotiable warehouse
receipt for keeping their produce in warehouses. a) three b) five c) six* d) eight
163) To provide relief to farmers affected by natural calamities, the interest subvention of 2% for short term crop loans will continue
to be available to banks for the ______ on the restructured amount. Such restructured loans may attract normal rate of interest
from the second year onwards as per the policy laid down by the RBI.
a) 3 months b) 6 months c) 9 months d) first year*
164) In respect of 2% interest subvention for short term crop loans, banks are required to submit their claims on a
of which, the latter needs to be accompanied by the Statutory Auditor's certificate certifying the claims for subvention for the
entire year ended March 31, 2016 as true and correct.
a) Quarterly basis b) Half-yearly basis*, c) Yearly basis d) None of the above
165) is essentially a management process integral to the establishment of sound internal accounting functions and effective controls
and setting the tone for a vigilant internal audit to preclude the incidence of serious errors and fraudulent manipulations.
a) Concurrent* b) Separate c) Monthly d) Quarterly
166) Which of the following statement is correct with respect to modified provisions of Concurrent Audit?
a) New areas posing risk and Non-branch units may be brought under the purview of concurrent audit and the branches with
high risk are to be subjected to concurrent audit irrespective of their business size.
b) All specialised branches viz., agriculture, small and medium enterprises(SME), corporate, retail assets, portfolio
management, treasury, forex, back office, etc., may be covered under concurrent audit.
c) Certain areas where risk has reduced on account of computerisation, implementation of core banking system may be
excluded from the purview of concurrent audit.
d) All of the above *
167) Concurrent audit at branches should cover at least __ % of the advances and ____ per cent of deposits of a bank.
a) 50,50* b) 40,60 c) 30,70 d) 60,40
168) Concurrent Audit should be conducted in:
a) Branches rated as high risk or above in the last Risk Based Internal Audit or serious deficiencies found
in Internal Audit;
b) All specialised branches like large corporate, mid corporate, exceptionally large/very large branches
(ELBs/VLBs), SME;
c) All centralised processing units like Loan Processing Units (LPUs), service branches, centralised a/c
opening divisions, etc.
d) Any specialised activities, such as, wealth management, portfolio management services, card
products division, etc., data centres, treasury / branches handling foreign exchange business,
investment banking, etc. and bigger overseas branches, critical head office departments.
e) Any other branches or departments where, in the opinion of the bank, concurrent audit is desirable.
f) All of these *
169) The Reserve Bank has set up _______ to collect, store, and disseminate data on all borrowers’ credit exposures.
a) Central Repository of Information on Large Credits (CRILC)*, AMFI c) ICRA d) ICAI
170) Out of the following which points determine the scope of Concurrent Audit?
a) To supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and
compliance with the procedures laid down.
b) To cover certain fraud - prone areas, such as, handling of cash, deposits, advances, foreign exchange business, off-balance sheet
items, credit-card business, internet banking, etc.
c) To keep a check on high-risk transactions having large financial implications as opposed to transactions involving small amounts.
d) Areas, where the Reserve Bank has specifically advised the banks to be covered under concurrent audit, may also be part of the
checklist of the concurrent auditor.
e) All of the above*
171) The option to consider whether concurrent audit should be done by bank’s own staff or external auditors (which may include
retired staff of its own bank) is left to the discretion of individual banks. Appointment of an external audit firm may be initially for one
year and extended upto ____ years, after which an auditor could be shifted to another branch subject to satisfactory performance.
a) 2 years b) 3 years* c) 4 years d) 5 years
172) If external firms are appointed and any serious acts of omission or commission are noticed in their working, their appointments
may be cancelled and the fact may be reported to:- a) RBI b) ICAI, Bank’s Audit Committee of the Board of Directors (ACB), c) All
of These e) Only a and b*
173) The Reserve Bank has further advised banks to review the present system of concurrent audit immediately and incorporate
necessary changes therein. The modified concurrent audit system of the bank should then be placed before the .
a) ICAIb) Audit Committee of Board of Directors (ACB)*, c) Shareholders d) None of these
174) The Reserve Bank has advised Scheduled Commercial Banks (excluding regional rural banks) to make use of the information
available in Central Repository of Information on Large Credits (CRILC) and not limit their due diligence to seeking no-objection
certificate (NOC) from the bank with whom the customer is supposed to be enjoying the credit facilities as per the declaration. Further
banks may also seek ‘No Objection Certificate’ from the ____ bank where the initial deposit to current account is made by way of a
_____ a) Drawee, Cheque* b) Drawer, Cash, c) Drawer, Cheque d) Drawee, Cash.
175) The Reserve Bank has advised that banks which have capital to risk weighted assets ratio (CRAR) of 10 per cent or more and
have also made net profit as of March 31 of the previous year need not approach the Reserve Bank for prior approval for equity
investments in cases where after such investment, the holding of the bank remains less than 10 per cent of the investee company’s
paid up capital, and the holding of the bank, along with its subsidiaries or joint ventures or entities continues to remain less than
____ per cent of the investee company’s paid up capital. a) 10 % b) 12.5 % c) 15% d) 20 %*
176) In order to streamline the existing processes and to obviate the need to approach the Reserve Bank on case-tocase basis, the
Reserve Bank has permitted commercial banks to grant loans and advances to the
without seeking prior approval of the Reserve bank.
a) Chief Executive Officer / Whole Time Directors*, b) Chief Executive Officers / Managing Director, c) Chief
Financial Officer/ Managing Director, d) Chief Operating Officer / Whole Time Director
168) Which of the following category of loans can be granted to these officials:
a) Loan for purchasing of car, b) Loan for purchasing of personal computer, furniture, c) Loan for constructing / acquiring a house
for personal use., d) Festival advance and credit limit under credit card facility, e) All of
these*
179) Which of the following statements is true with regards to loans and advances to these officials?
a) The loans and advances should form part of the compensation / remuneration policy approved by the Board of Directors or any
committee of the Board to which powers have been delegated or the Appointments Committee, as the case may be.*
b) Guidelines on Base Rate will be applicable on the interest charged on such loans.
c) The interest rate charged on such loans can be lower than the rate charged on loans to the bank’s own employees. d)Other loan
can also be sanctioned to Directors.
180) The Reserve Bank is issuing Banknotes in Mahatma Gandhi Series 2005 with a new numbering pattern and special features for
the visually impaired in ____, ____ and ______ denominations. a) 10, 50,100 b) 100, 500 and 1000 *, c) 50,100 and 500
d) 10, 500 and 1000
181) In the new Banknotes in Mahatma Gandhi Series 2005, in the numbering pattern, the numerals in both the number panels of
these denominations ____ in size from left to right, while the first ____ alphanumeric characters (prefix) remain constant in size. a)
Ascend, 3* b) Descend, 3 c) Ascend, 4 d) Descend, 4
182) With regards to special features for the visually impaired, in order to make it easier for them to identify banknotes, the size of
the identification mark in these denominations has been increased by _____. a) 25% b) 50 %* c) 75 % d) 85%
183) The structure of Angular bleed lines in Banknotes in Mahatma Gandhi Series 2005 has been introduced as
in 3 blocks in Rs. 500 & ____ lines in 4 blocks in Rs.1000 denominations. a) 1, 2, 3 b) 2,3,4 c) 3,4,5 d) 4,5,6*
184) The Reserve Bank has reviewed the procedure for detection of counterfeit notes in consultation with the Government. Which
of these points are true regarding these guidelines?
a) Banknotes tendered over the counter or received directly at the back office / currency chest through bulk tenders should be
examined for authenticity through machines and such of these determined as a counterfeit one, shall be stamped as “COUNTERFEIT
NOTE” and impounded.
b) When a banknote tendered at the counter of a bank branch or treasury is found to be counterfeit, an acknowledgement receipt
in the prescribed format must be issued to the tenderer, after stamping the note.
c) No credit to customer’s account is to be given for counterfeit notes, if any, in the tender received over the counter or at the
back-office / currency chest. d) All of these*
185) Customer charges, if any, levied on cash withdrawals shall not exceed ______ per cent of the transaction amount at all centres
irrespective of the limit of Rs.1000 / Rs.2000. a) 1 %* b) 1.5 % c) 1.75% d) 2%
186) The instructions on compensation to banks of the notional value of and ______ schemes as per the extant rates.
counterfeit notes detected and reported and the system of lodging
claims for compensation by Forged Note Vigilance Cell of banks stand withdrawn and a penalty at__ of the notional value of
counterfeit notes, in addition to__the recovery of loss to the extent of the notional value of such notes, will be imposed. a) 40
% b) 60 % c) 80 % d) 100 %*
187) The Reserve Bank has reviewed and enhanced the limit for cash withdrawal at Point of Sale (POS - for debit cards and open
system prepaid cards issued by banks in India) from Rs.1000 to ________ per day in Tier III to VI centres.
a) Rs. 1500 b) Rs.2000* c) Rs. 2,500 d) Rs. 3000
188) The RBI has decided to pay agency commission to authorised banks for handling the work relating to the _ Kisan Vikas Patra
(KVP), 2014, Sukanya Samriddhi Account*
a) Kisan Vikas Patra (KVP), 2014, Atal Pension Yojana
b) Pradhan Mantri Jan Dhan Yojana & Atal Pension Yojana
c) PM Jeevan Jyoti Bima Yojana & PM Suraksha Bima Yojana
189) As part of the endeavour to smoothen the liquidity management operations, the Reserve Bank has introduced STP in fixed rate
Liquidity Adjustment Facility (LAF) Repo, fixed rate LAF Reverse Repo and Marginal Standing Facility (MSF) operations. What does
STP stand for? a) Short Term Processing b) Straight Through Processing* c) Structured Total Processing d) None of these
190) Which of the following statement is correct with respect to the implementation of STP?
a) It will enable eligible participants to receive the credit or debit immediately on placement of the bids or offers, subject to the
availability of collateral or funds, within prescribed time window.
b) Through STP, Eligible participants can, as hitherto, place multiple bids/offers in the respective liquidity facilities.
c) Settlement of the transaction will be automatic and immediate after the placement of the bid/offer. The transactions undertaken
by a participant will be final and request for cancellation of bids or offers will not be entertained.
d) The automation of these facilities will, in no way, affect the discretionary character of these facilities and the Reserve Bank will
continue to determine the extent of liquidity injection / absorption depending upon the prevailing liquidity conditions in
the system. e) All of these*.
191) The Reserve Bank has now allowed commercial banks (excluding regional rural banks and local area banks) to slot their excess
statutory liquidity ratio (SLR) securities and marginal standing facility (MSF) eligible securities under the ______ bucket.
a) Day 1* b) 2-7 Days c) 8-14 Days d) 15-28 Days
192) On a review, the Reserve Bank advised all scheduled commercial banks (excluding regional rural banks) that a rate____ to the
actual interest rate charged to the borrower before restructuring may be used to discount the future cash flows for the purpose of
determining the diminution in fair value of loans on restructuring.
a) Less than b) Greater than, c) Equal to* d) None of these,
193) The existing overnight benchmark interbank rate in India is replaced from July 22, 2015 by a new benchmark called the
a).Financial Benchmarks India Private Ltd Overnight Mumbai Interbank Outright Rate (FBIL-Overnight MIBOR)* b) LIBOR
c) MIBOR d) None of these
194) The FBIL-Overnight MIBOR will be based on actual traded rates and will be administered by a new company called the Financial
Benchmarks India Private Ltd (FBIL). The existing rate called the Overnight MIBID/MIBOR based on polled rates is set by . a)
FIMMDA-BSE b) FIMMDA-NSE*, c) FIMMDA-OTC d) FIMMDA-SHCIL
195) Financial Benchmarks India Private Ltd (FBIL) has been jointly formed as an independent company for administration of
benchmarks in financial markets by the which of the following institutions?
Fixed Income Money Market and Derivative Association of India (FIMMDA)
b) Foreign Exchange Dealers’ Association of India (FEDAI), c) Indian Banks’ Association (IBA) d) All of these*
196) To facilitate greater level of participation in Corporate Bonds by Stand alone Primary Dealers (SPDs), the Reserve Bank has
increased exposure ceiling limits in respect of single borrower/ counterparty from 25 per cent to _____ of latest audited Net Owned
Funds (NOF) and in respect of group borrower from 40% to of the latest audited NOF
only for investments in AAA rated corporate bonds. a) 50%; 65%* b) 40%; 50% c) 45%;55% d) 40%;60%
197) The Gold Monetisation Scheme, 2015 will replace the existing . However, the deposits outstanding under
the Gold Deposit Scheme will be allowed to run till maturity unless the depositors prematurely withdraw them.
a) Gold Deposit Scheme, 1995, b) Gold Deposit Scheme, 1999*, c) Sovereign Gold Bond Scheme, d) None of these
198) Which of the following are eligible to make deposits under Gold Monetization Scheme?
a) Resident Indians & HUF, b) Trusts including Mutual Funds / Exchange Traded Funds registered under SEBI (Mutual
Fund) Regulations, c) Companies. d) All of these*
199) The minimum deposit at any one time shall be raw gold (bars, coins, jewellery excluding stones and other metals) equivalent to
grams of gold of 995 fineness. a) 10 gm b) 20 gmc) 30 gm* d) 40 gm
200) The maximum limit for deposit under the Gold Monetization Scheme is : a) Rs. 1 lac b) Rs. 5 lac c) Rs. 10 lac d) No limit*
th
201) Consequent to the reduction in the Repo rate on 29 Sept, 2016, the reverse repo rate under the LAF will be reduced to ____
per cent, and the marginal standing facility (MSF) rate and the Bank Rate at ____ per cent.
a) 5.75; 7.75* b) 6.75; 8.75 c) 6;8 d) 7; 8
202) The Govt has launched MUDRA Bank. Which of the following is not true about the MUDRA Bank:
b) a) It will provide credit of upto Rs.10 lac to small entrepreneurs, It will act as a regulator for micro finance
institutions (MFIs).
c) It will have a corpus of Rs. 20,000 cr.
d) It will have a Credit Guarantee corpus of Rs. 3,000 cr. e) None of these.*
203) Which of the following is an objective of Monetary Policy?
a) Regulate capital market., b) Regulate insurance trade, c) Regulate commodity markets, d) Accelerate economic
growth with price stability and stabilization of exchange rates.*
204) Which amongst the following is an opposite activity of ‘SPECULATION’?
a) Arbitrage b) Securitisation, c) Short & Long positions d) Hedging*, e) Spread
199) Which of the following is an Indian credit rating agency? a) CRISIL* b) SIDBI c) CIBIL d) IBA e) IDFC
205) Which of the following terms is NOT directly related to the functioning of the RBI?
a) Ombudsman b) Marginal Standing Facility, c) SENSEX* d) Foreign Exchange Reserves, e) None of these
206) The Government is contemplating tariff rationalization to raise India’s share in global trade to 3.5 percent by 2020. What is
India share in the global trade at present? a) 1 percent b) 1.5 percent c) 2 percent*, 2.5 percent e) 3 percent
207) The Reserve Bank of India has granted ‘in-principle’ approval to _____ applicants to set up Payments Banks under the
Guidelines for Licensing of Payments Banks. a) 10 b) 11*c) 12 d) 13
208) During the validity of ____________ months of the ‘in-
principle’ approval, the applicants have to comply with the requirements under the guidelines and fulfil the other conditions as
stipulated by the Reserve Bank. a) 12 months b) 15 months, c) 18 months* d) 24 months
209) All scheduled and non-scheduled banks i.e public, private, foreign, cooperative, regional rural and local area banks will observe
public holiday on ____ and ____ Saturdays from September 1, 2015; and will observe full working days on Saturdays other than
st rd nd rd st nd th
referred to as non working Saturdays. a) 1 and 3 b) 2 and 3 , c) 1 and last d) 2 and 4 *
210) means shifting / part shifting some activities of a branch in any centre without seeking prior approval of Reserve Bank.
a) Branch shifting b) Premises shifting, c) Para shifting of branches * d) Merger of branches
211) The Reserve Bank has dispensed with the existing instructions permitting domestic scheduled commercial banks (excluding
regional rural banks) to undertake which of the following activities?
a) Merger b) Closure, c) Shifting or part shifting, d) Opening of extension counters, e) All of these*
212) The new location for part shifting would have to be within ____ Kilometer / Kilometers of the existing location.
a) 1* b) 2 c) 3 d) 4
213) Banks are no longer required to report details of opening of a new place of business including Mobile branch /
Mobile ATMs / call centres, closure, merger, shifting or conversion of any existing place of business including call centres to the
Regional Office concerned. They may, however, ensure to continue submitting within ____ days of every quarter, information
relating to opening, closure, merger, shifting and conversion of branches to RBI. a) 7 days b) 14 days* c) 21 days d) 28 days
214) The maximum unit project cost for individual micro enterprises cases is Rs. .
a) 2,00,000* b) Rs. 4,00,000, c) Rs. 6,00,000 d) Rs. 8,00,000
215) The maximum unit project cost for a group enterprise is Rs. : a) 5 lakh b) 7 lakh c) 10 lakh* d) 15
lakh
216) For loans disbursed under NULM scheme, Repayment schedule ranges from 5 to 7 years after initial moratorium of
_____ as per norms of the banks. a) 6-12 months b) 10-15 months, c) 6-18 months* d) 10-12 months
217) A self help group (SHG) or members of an SHG constituted under NULM or a group of urban poor desirous of
setting up a group enterprise for self-employment can avail benefit of subsidised loans from any bank. The group enterprise should
have minimum ________ members with a minimum of 70 percent members from urban poor families.
a) 5* b) 7 c) 9 d) 10
218) In an effort to increase direct lending to agriculture, the target for direct lending to small and marginal farmers
under the recently revised Priority Sector Norms has been increased to ________ percent for 2015-16 and to percent for 2016-17. a)
6;7 b) 7;8* c) 7;9 d) 8;9
219) The Union Government has unleashed second generation banking reforms with a number of measures collectively
named as ________. a) Rainbow b) Indradhanush*, c) Modified Reforms d) Revamped measures
220) These reforms include ____ point agenda to revitalize capital starved public sector banks.
a) 4 point b) 5 point c) 6 point d) 7 point*
221) The points included in reform plan include a series of proposals in alphabetical order staring from Appointments,
Bank Board Bureau, Capitalization, De-stressing, Empowerment, Framework of Accountability and Governance reforms.
a) Appointments, Capitalization* b) Audit, Cost Cutting, c) Advances, Credit portfolio d) Amalgamation, Capitalization
222) As per the reforms, the Government has decided to separate the post of Chairman and Managing Director by
prescribing that in the subsequent vacancies to be filled up the _____ will get the designation of MD & CEO.
a) Chairman b) CEO*, c) Executive Directord) Director
223 ) The Bank Board Bureau ‘BBB’ will be a body of eminent professionals and officials and will comprise of a Chairman and ____
more members of which ____ will be officials and _____ experts (of which two would necessarily be from the banking sector). a)
6,2,4 b) 8, 4,4 c) 7,3,4 d) 6,3,3*
224) As per the revised guidelines, the PAN Card is mandatory if the sale/purchase of Immoveable property is valued exceeding Rs.
_____. Further, PAN is also needed if properties valued by stamp valuation authority exceeds the
amount of Rs. _________ :- Rs 5 lakh and Rs 10 lakh, b) Rs 10 lakh and Rs 10 lakh*, c) Rs 10 lakh and Rs 15 lakh, d) Rs 10 lakh
and Rs 20 lakh
225) Which of the following is correct regarding Time Deposit with a Banking Company w.r.t. PAN Card:
a) The PAN Card is mandatory if deposits aggregating is more than Rs. 5 lac during the year.
b) The PAN Card is mandatory even if depositor has an account with Co-op Banks, Post office, Nidhi, NBFC companies.
c) The PAN Card is mandatory if deposits aggregating is more than Rs. 50,000/- during the year.
d) The PAN Card is mandatory if deposits aggregating is more than Rs. 1,00,000/- during the year.
a) Only a & b are true* b) All b & c are true, c) Only b & d are true d) All are true.
226) In case of deposits with Post office and Saving Bank, the PAN Card is mandatory if the amount is exceeding Rs. _______:
a) Rs.10,000 b) Rs 20,000, c) Rs.50,000 d) Discontinued*
227) In case of Sale or Purchase of securities, the PAN Card is mandatory if the contract of sale/purchase value is exceeding Rs.
____:- a) Rs 5 lakh b) Rs 4 lakh, c) Rs 2 lakhd) Rs 1 lakh*
228) Which of the following statement is correct regarding Opening of an account (other than time deposit) with a Banking
Company:
a) PAN Card is compulsory for all the new accounts that are being opened with the banking company.
b) In case of opening of Basic Saving Bank Account there is no requirement of PAN Card.
c) Co-operatives banks also need to comply with the guidelines on Pan.
229) As per the revised guidelines, for installation of telephone / cellphone connections, the PAN Card is ________: a) Mandatory
b) Discontinued*, c) Varies from State to State. d) None
230) In case of Hotel / restaurant bill(s), the PAN Card is required if the cash payment on account of the bill is exceeding Rs. _____:-
a) Rs 30,000 b) Rs 40,000, c) Rs 50,000* d) Rs 60,000
231) In case of cash purchase of bank Drafts / Pay orders / Banker’s cheque, the PAN Card is mandatory if the amount aggregating
exceeds Rs. _______in a day:- a) Rs 25,000 b) Rs 50,000*, c) Rs 60,000 d) Rs 80,000
232) In case of Cash deposits with the Banking Company exceeding Rs. _____ in a day, then the PAN Card is compulsory: a) Rs
50,000* b) Rs 30,000, c) Rs 25,000 d) Rs 40,000
233) PAN Card is mandatory if the cash payment in connection with foreign travel for fare, payment to travel agent, purchase of
foreign currency is exceeding Rs. _______ at any one time:
a) 20,000 b) 50,000* c) 1,00,000 d) 5,00,000
234) In case of Mutual funds unit transactions, the PAN Card is compulsory if the payment for purchase of mutual funds units
exceeds Rs. _______:-
a) Rs 35,000 b) Rs 50,000*, c) Rs 45,000 d) Rs 60,000
235) Which of the following statement is true regarding purchase/sale of Shares, Debentures, RBO bonds w.r.t. PAN Card:
a) PAN Card is required if the purchase/sale of shares is exceeding Rs. 1 lac per transaction.
b) PAN Card is required if a person opens a demat account.
c) PAN is mandatory in case of purchase of debentures/bonds, RBI bonds is exceeding Rs. 50,000/-
d) All of above*
236) PAN Card is compulsory if the payment of the premium is exceeding Rs. _______ in a year:- a) Rs 20,000 b) Rs 30,000, c)
Rs 45,000 d) Rs 50,000*
237) In case of Purchase or sales of goods and services, including jewellery/bullion PAN Card is mandatory if the purchase / sale of
any goods and services is exceeding Rs. _____ per transaction:- b) Rs 1 lakh, d) Rs 2.5 lakh
238) In case of Cash cards/Prepaid instruments issued under Payment and Settlement Act, PAN Card is mandatory if the cash
payment aggregating is more than ____ in a year:- a) Rs 30,000 b) Rs 40,000, c) Rs 50,000* d) Rs 60,000
Note: (ANSWER is * )
TEST YOURSELF – 3
1.The Reserve Bank has revised Priority Sector lending guidelines w.e.f. 23-4-2015, on the basis of Internal Working Group headed by: a)
Mr. Lily Vadera b) Mr. M.V. Nair c) Dr. Urjit Patel d) Mr. C.S. Murthy committee
2.As per the revised guidelines, bank loans up to a limit of Rs. ___ cr per borrower for building social infrastructure for activities namely
schools, health care facilities, drinking water and sanitation facilities in Tier II to Tier VI centres. a) 3 b) 5 c) 8 d) 10
3.Bank loans up to a limit of Rs. ____crore to borrowers for purposes like solar based power generators, biomass based power
generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities viz. street lighting systems, and remote
village electrification. For individual households, the loan limit will be Rs. ____ lakh per borrower. a) 10 ; 5 b) 15; 10c) 20 ; 15
d) 25 ; 15
4.As per the revised ____ lac & Rs. ___ lakh espectively.
a) 20;15;25; 20 b) 28; 20; 35; 25
c) 25; 20;30;35 d) 30; 25; 35; 30
5.Micro (Manufacturing) Enterprises are those having original investment in plant and machinery up to_______: a) Rs. 25 lakh b) Rs 30
lakh c) Rs 35 lacs d) Rs 40 lacs
6.As per revised guidelines, Net bank credit for priority sector is calculated as bank credit in India minus (1) bills rediscounted with RBI or
other approved FIs (2) Net NPA provisions (3) Interest receivable on loans: a) 1 to 3 all b) 1 & 2 only c) 2 only d) 1 only
7.As per revised guidelines, loans to individuals other than farmers can be sanctioned upto Rs _______ to prepay their debt to non-
institutional lenders. a) 25,000 b) 50,000 c) 1 lac d) no limit
8.Small (Manufacturing) Enterprises are those engaged in the manufacture, processing or preservation of goods and whose
investment in plant and machinery [original cost excluding land and building) does not exceed ____ a) Rs 1 crore b) Rs 2 crore c) Rs
2.5 crore d) Rs. 5 crore
9.Micro (Service) Enterprises are those enterprises engaged in providing / rendering of services and whose investment in equipment
(original cost excluding land and building and furniture, fittings) does not exceed :
a) Rs. 10 lacs b) Rs 20 lacs c) Rs 30 lacs d) Rs 40 lacs
10.Small (Service) Enterprises are enterprises engaged in providing / rendering of services and whose investment in equipment (original
cost excluding Land and Building and furniture, fittings and other items not directly related to the service rendered) does not exceed
: a) Rs 1 crore b) Rs 2 crore c) Rs 2.5 crore d) Rs. 5 crore
11 Bank loans to Housing Finance Companies (HFCs), approved by NHB for their refinance, for on lending for the purpose of purchase
/ construction / reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers, will be classified
as priority sector provided
a) Maximum loan per borrower does not exceed Rs.10 lac. b) Maximum loan per borrower does not exceed Rs.20 lac. d) The overall
eligibility under PS loans to HFC is restricted to 5% of the individual banks total PS lending on an ongoing basis. d) Both (a) and (c)
12) Bank loans to Micro and Small Enterprises (MSE) engaged in providing or rendering of services will be eligible for classification as
direct finance to MSE Sector under priority sector up to an aggregate loan limit of Rs. ___ cr. per borrower / unit provided they satisfy
the investment criteria for equipment as defined under MSMED Act, 2006. a) 2 b) 5 c) 7.5 d) 10 e) 15
13) Bank loans to any Governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum
dwellers will be treated as priority sector provided the amount of loan does not exceed _______ per dwelling unit. a) Rs. 5 lac
b) Rs. 10 lac c) Rs. 15 lac d) Rs. 20 lac
14) Under Priority sector, the loans can sanctioned by banks up to Rs. _____ for solar based power generators, biomass based power
generators, wind mills, micro-hydel plants and for non-conventional energy based public utilizes viz. street lighting systems, and remote
village electrification: a) Rs.1 cr b) Rs. 5 cr c) Rs.15 cr d) Rs. 20 cr
15) Loans for Food and Agro-processing up to an aggregate sanctioned limit of Rs. _____ crore per borrower from the banking system.
a) 25 b) 50 c) 75 d) 100
16) The loans sanctioned by banks for housing projects exclusively for the purpose of construction of houses for economically weaker
sections and low income groups, the total cost of which does not exceed Rs. ___ lakh per dwelling unit. For the purpose of identifying
the economically weaker sections and low income groups, the family income limit of Rs. ___ lakh per annum, irrespective of the
location, is prescribed a) 5; 1 b) 10; 2 c) 15; 5 d) 20; 10
17) The eligibility under priority sector loans to HFCs is restricted to _____ percent of the individual bank’s total priority sector lending,
on an ongoing basis. The maturity of bank loans should be co-terminus with average maturity of loans extended by HFCs. Banks should
maintain necessary borrower-wise details of the underlying portfolio. a) Five b) Ten c) Fifteen d) Twenty
18) Loans to distressed persons other than farmers already included not exceeding______ per borrower to prepay their debt to non-
institutional lenders; a) Rs.100,000 b) Rs.200,000 c) Rs.300,000 d) Rs.400,000
19) Individual Women beneficiary up to _______ per borrower is covered under weaker section:
a) Rs. 1 lakh b) Rs. 2 lakh c) Rs. 3 lakh d) Rs. 5 lakh
20) Foreign Banks with less than 20 Branches to achieve _______ percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet
Exposure, whichever is higher to be achieved in a phased manner by ______:
a) 40; 2020 b) 32; 2020 c) 40; 2022 d) 32; 2022
21) Within the 18% target for agriculture, a target of ____% of ANBC or CEOBE, whichever is higher is prescribed for Small and Marginal
Farmers, to be achieved in a phased manner i.e., ___% by March 2016 & ____% by March 2017 –
a) 6; 5; 6 b) 8; 7; 8c) 5 ; 6; 5 d) 7; 8; 7
22) As per the revised guidelines Agriculture target for Scheduled Commercial Banks is _____% of ANBC or CEOBE whichever is higher.
a) 12 b) 15 c) 18 d) 20
23) As per the revised guidelines, Micro Enterprises target for Scheduled Commercial Banks is ______% of ANBC or CEOBE, whichever is
higher to be achieved in a phased manner i.e. ____% by March 2016 & ____% by March 2017. a) 5 ; 4 ; 5 b) 6 ; 5; 6 c) 7.5; 7;
7.5 d) 7; 8 ; 7
24) The Total Priority Sector target of 40% for foreign banks with less than _____ branches has to be achieved in a phased manner as
under: 2015-16 -32%; 2016-17 -34%; 2017 18 -36%; 2018-19 -38%; 2019-20 - 40%. a) 15 b) 18 c) 20 d) 22
25) As per the revised guidelines, the distinction between direct and indirect agriculture has been dispensed with. Instead, the lending
to agriculture sector has been redefined to include three categories. Which of the following is not part of the categories?
Farm Credit (which will include short-term crop loans and medium / long-term credit to farmers);
Agriculture Infrastructure c) Ancillary Activities. d) Non Farm Credit
26) As per the revised guidelines, loans to Corporate farmers, farmers' producer organizations / companies of individual farmers,
partnership firms and co-operatives of farmers directly engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry,
poultry, bee-keeping, sericulture upto an aggregate limit of Rs. __ cr per borrower. a) 2 b) 3 c) 5 d) 10
27) As per the revised guidelines, the Export target for foreign banks with 20 branches and above, would be classified as priority sector
to the extent of incremental export credit over corresponding date of the preceding year, up to ____ percent of ANBC or CEOBE,
whichever is higher, effective from April 1, _____;
a) 2; 2016 b) 2; 2017 c) 5; 2016 d) 5; 2017
28) As per the revised guidelines, the Export target for foreign banks with less than 20 branches will be allowed up to ____% of ANBC or
CEOBE whichever is higher. a) 12 b) 20 c) 32 d) 40
29) As per the revised guidelines, loans to individuals for educational purposes including vocational courses upto Rs. ____ lakh
irrespective of the sanctioned amount will be considered as eligible for priority sector.
a) 10 b) 15 c) 20 d) 25
30) As per the revised guidelines issued by RBI which are operational w.e.f April 23, 2015, there are 8 categories under Priority Sector.
Which of the following pair is not part of the category:
a) Agriculture; Micro, Small and Medium Entt.; b) Export Credit; Education; Housing; c) Social Infrastructure; Renewable Energy; Others.
d) Agriculture Infrastructure; Retail trade; Financial inclusion.
31) As housing loans which are backed by long term bonds are exempted from ANBC, banks should either include such housing loans to
individuals up to Rs. ____ lakh in metropolitan centres and Rs. _____ lakh in other centres under priority sector or take benefit of
exemption from ANBC, but not both. a) 30; 20 b) 25; 30 c) 28; 20 d) 28; 25
32) Loans for repairs to damaged dwelling units of families up to Rs. ____ lakh in metropolitan centres and up to Rs. ___ lakh in other
centres are eligible to be covered under priority sector. a) 3; 1 b) 5; 2 c) 5; 3 d) 7.5; 5
33) Bank credit to MFIs extended for on-lending to individuals and also to members of SHGs / JLGs will be eligible for categorisation as
priority sector advance under respective categories viz., Agriculture, Micro, Small and Medium Enterprises, and 'Others', as indirect
finance, provided not less than ____ percent of total assets of MFI (other than cash, balances with banks and financial institutions,
government securities and money market instruments) are in the nature of “qualifying assets”. In addition, aggregate amount of loan,
extended for income generating activity, should be not less than ____ percent of the total loans given by MFIs. a) 75 ; 50 b) 80; 50
c) 85; 50 d) 90 ; 60
34) As per the revised guidelines, under Agriculture Infrastructure, loans for construction of storage facilities (warehouses, market yards,
godowns and silos) including cold storage units / cold storage chains designed to store agriculture produce / products, irrespective of their
location, Soil conservation and watershed development; Plant tissue culture and agri-biotechnology, seed production, production of bio-
pesticides, bio-fertilizer, and vermi composting - an aggregate sanctioned limit of Rs. _____ crore per borrower from the banking system,
will apply. a) 100 b) 70 c) 50 d) 25
35) All loans to units in the Khadi and Village Industries Sector (KVI) will be eligible for classification under the sub-target of ____ percent
/ _____ percent prescribed for Micro Enterprises under priority sector.
a) 5 ; 7 b) 5 ; 10 c) 7; 7.5 d) 7.5 ; 10
36) As per the revised guidelines, the Export target for domestic banks, would be classified as priority sector to the extent of incremental
export credit over corresponding date of the preceding year, up to ____% of ANBC or CEOBE, whichever is higher, effective from April 1,
2015 subject to a sanctioned limit of Rs. ____ crore per borrower to units having turnover of up to Rs. ____ crore. a) 2;50;75 b)
2;25;100 c) 2;50;105 d) 5;50;100
37) A “qualifying asset” shall mean a loan disbursed by MFI, which satisfies the stipulated criteria. Which of the following is not a part of
the criteria?
a.The loan is to be extended to a borrower whose household annual income in rural areas does not exceed Rs.1,00,000/ while for non-
rural areas it should not exceed Rs.1,60,000/-.
b.Loan does not exceed Rs.60,000/- in the first cycle and Rs. 100,000/- in the subsequent cycles.
c.Total indebtedness of the borrower does not exceed Rs. 1,00,000/-;
d) Tenure of loan is not less than 24 months when loan amount exceeds Rs.15,000/- with right to borrower of prepayment without
penalty. e) None of the above.
38) For bank credit to Micro Finance Institutions, interest cap on individual loans will be the average Base Rate of five largest
commercial banks by assets multiplied by ____ per annum or cost of funds plus margin cap, whichever is less. The average of the Base
Rate shall be advised by RBI. Further, only three components are to be included in pricing of loans viz., namely a processing fee not
exceeding 1 percent of the gross loan amount; the interest charge and the insurance premium. a) 2.50 b) 2.75 c) 3.0 d) 3.5
39) For bank credit to Micro Finance Institutions the margin cap should not exceed ____ % for MFIs having loan portfolio exceeding Rs.
____ crore and ____ percent for others. a) 10;50;10 b) 10;100;12 c) 10;100;15 d) 15;100;20
40) Loans upto Rs _____crore to Producer Companies set up exclusively by only small and marginal farmers under Part IXA of Companies
Act, 1956 for agricultural and allied activities is covered under Indirect finance to agriculture. a) 2 b) 5 c) 7.5 d) 10
41) Under revised Priority sector guidelines, loans up to Rs _____ crore can be sanctioned to Co-operative societies of
farmers for disposing of the produce of members. a) 2 b) 5 c) 7.5 d) 10
42) As per revised Priority sector guidelines, loans to individuals can be sanctioned up to Rs. ______ lakh in metropolitan centres with
population above ten lakh and Rs. _______lakh in other centres for purchase / construction of a dwelling unit per family excluding
loans sanctioned to bank’s own employees.
a) 25;10 b) 28;35 c) 28;10 d) 28;20
43) RBI has issued guidelines as per which loans for repairs to the damaged dwelling units of families can be sanctioned up to Rs. ____
lakh in rural and semi-urban areas and up to Rs. ____ lakh in urban and metropolitan areas. a) 1;3 b) 2;3 c) 2; 5 d) 3;5
44) As per revised Priority sector guidelines, loans, not exceeding Rs. per borrower can be sanctioned directly by banks to
individuals and their SHG/JLG, provided the borrower’s household annual income in rural areas does not exceed Rs ______ and for
non-rural areas it
should not exceed Rs . a) 50,000; 1,00,000; 1,60,000 b) 1 lac; 1,00,000;1,60,000 c) 2 lac; 60,000;1,00,000 d) 2 lac; 1,00,000;1,60,000
45) The amount of education loan that can be classified as
priority sector is restricted to : a.Education in India Rs.10 and education abroad Rs. 10 lac b. Education in India Rs.20 and education
abroad Rs. 10 lac c. Education in India Rs.10 and education abroad Rs. 20 lac d. Education in India Rs.20 and education abroad Rs. 20 lac
46) Loans to distressed persons can be granted for amount not exceeding Rs _______ per borrower to prepay their debt to non-
institutional lenders. a) 50,000 b) 75,000 c) 1lac d) 2 lac
47) Farmers with landholding of up to 1 hectare is considered as ___. Farmers with a landholding of more than 1 hectare but less than 2
hectares are considered as _____. a.Ultra Small Farmers; Micro Farmers
b.Oral Lessees; Ultra Small Farmers , c.Micro Farmers; Share croppers d) Marginal Farmers; Small Farmers
48) As per RBI guidelines, the banks should not insist for collateral security from Micro & Small ( Mfg) with good track record units upto
Rs. _____ lacs: a) Two b) Five c) Ten d) Twenty five
49) Priority Sector targets are linked to (a) adjusted net bank credit (b) credit equivalent of off-balance sheet exposure (c) whichever is
lower (d) whichever is higher.
a) Only a b) a and b both c) a, b and c together d) a, b and d together
50) Adjusted net bank credit (ANBC) is calculated as:
a) Bank credit in India - Bills rediscounted with RBI or other approved FIs + investment in non-SLR bonds in HTM categories - investments
eligible to be treated as priory sector.
b) Bank credit in India minus bills rediscounted with RBI and other approved financial institutions = net bank credit + bonds /
debentures in HTM categories + other Investments eligible to be treated as priority sector + Outstanding Deposits under RIDF and
other eligible funds with NABARD, NHB and SIDBI on account of priority sector shortfall + outstanding PSLCs (-) issuance of long-term
bonds for infrastructure and affordable housing (-) eligible advances in India against the incremental FCNR (B) / NRE deposits,
qualifying for exemption from CRR / SLR requirements.
c)Bank Credit in India minus bills rediscounted with RBI or other approved FIs + Investment in non-SLR bonds in HTM categories minus
investments eligible to be treated as Priority Sector (-) eligible advances in India against the incremental FCNR (B) / NRE deposits,
qualifying for exemption from CRR / SLR requirements.
d) Bank credit in India minus bills rediscounted with RBI or other approved FIs minus investment in non-SLR bonds in HTM categories +
investments eligible to be treated as priority sector + Outstanding Deposits under RIDF and other eligible funds with NABARD, NHB and
SIDBI on account of priority sector shortfall + outstanding PSLCs.
51) Which of the following statement is correct?
a.Bank loans to only Micro and Small Enterprises, for both manufacturing and service sectors are eligible to be classified under the
priority sector.
b. Bank loans to Micro, Small and Medium Enterprises, for both manufacturing and service sectors are eligible to be classified under the
priority sector.
c. Bank loans to Micro, Small & Medium Enterprises, for only manufacturing sector is eligible to be classified under the PS.
d. Bank loans to Micro and Small Enterprises, for manufacturing sector only is eligible to be classified under the priority sector.
52) As per the revised guidelines, Bank loans up to Rs. ____ crore per unit to Micro and Small Services Enterprises and Rs. ____ crore to
Medium Service Enterprises engaged in providing or rendering of services and defined in terms of investment in equipment under
MSMED Act, 2006 - a) 3 ; 5 b) 5 ; 10 c) 7.5 ; 15 d) 10; 20
53) Which of the following statement regarding Rural Infrastructure Development Fund (RIDF) is not correct:
a.Domestic banks deposit short fall in priority sector lending targets, or weaker section lending or agriculture lending in RIDF.
b. RIDF corpus is estimated annually and for 2015-16 it is Rs. 25,000 crore.
c. Interest is Bank Rate less 2% to 4% and period of deposit for RDIF is determined by RBI
d. Amount deposited in RIDF by banks is not eligible investment for priority sector classification.
54) Micro (Service) Enterprises is defined as enterprise having investment in equipment up to _____:
a) Rs. 10 lakh b) Rs 5 lakh c) Rs 3 lakh d) Rs 2 lacs
55) Domestic SCBs having shortfall in lending to Priority sector and / or Agriculture sector target will be allocated amounts for
contribution to ____ established with NABARD - a) RIDF b) SEDF c) NEF d) Any of the above
56) Bank loans up to Rs _____ per unit to Micro and Small Enterprises engaged in providing or rendering of services and defined in terms
of investment in equipment under MSMED Act, 2006. - a) 150 lac b) 200 lac c) 250 lac d) 500 lac
57) Priority Sector loan application should be disposed off in the following time schedule:
a.2 weeks for loan up to Rs.25000 and 5 weeks for loan above Rs.25,000
b. 2 weeks for loan up to Rs.25,000 and 4 weeks for loan above Rs.25,000
c. 2 weeks for loan upto Rs.25000 and 8 to 9 weeks for loan above Rs.25000 d) At discretion of banks
58) Loans for Food and Agro Processing Units are to be classified as: a) Direct MSE advance b) Direct agriculture advance , c) Agriculture
advance d) Indirect agriculture advance
59) Inter Bank Participation Certificates (IBPCs) bought bybanks, on a , are eligible for classification
under respective categories of priority sector, provided the underlying assets are eligible to be categorized under the respective
categories of priority sector and the banks fulfil the Reserve Bank of India guidelines on IBPCs.
a) Risk sharing basis b) Credit basis c) Profit sharing basis d) None of these
60) Priority sector loans to Artisans, village and cottage industries where individual credit limits do not exceed Rs. ____ are covered
under weaker section: a) 50,000 b) 1 lac c) 1.25 lac d)1.50 lac
61) Overdrafts upto Rs. ______ under Pradhan Mantri JanDhan Yojana (PMJDY) accounts, provided the borrowers’ household annual
income does not exceed Rs. ______ for rural areas and Rs. _______- for non-rural areas.- a) 5,000/-;100,000/-;1,60,000 b)
10,000/-; 100,000/-; 1,60,000
c) 5,000/-; 100,000/-; 1,80,000 d) 5,000/-; 100,000/-; 1,80,000
62) Scheduled Commercial Banks having any shortfall in lending to priority sector shall be allocated amounts for contribution to the
_______ established with NABARD and other Funds with NABARD / NHB / SIDBI, as decided by the Reserve Bank from time to time. For
the year 2015-16, the shortfall in achieving priority sector target / sub-targets will be assessed based on the position as on March 31,
2016. a.Rural Infrastructure Development Fund (RIDF) b. Small Enterprises Development Fund (SEDF)
c.Infrastructure Development Fund ( IDF) d. Priority Sector Deficit Fund (PSDF)
63) You have sanctioned CC (Hyp) limit of Rs.3 lac to a Private Retail trader. The same to be classified under _____:a. Private retail trade
under non priority sector. B.Private retail trade under priority sector
c. mall and Micro services under priority sector. D.Discretion of the bank
64) As per Weaver Card Scheme, what is the maximum amount of loan that can be granted to a beneficiary:
a) Rs.50,000 b) Rs.1,00,000 c) Rs.2,00,000 d) Rs.5,00,000
65) With respect to Joint Liability Group (JLG), which of the following is correct?
a.The group size is 4 -10 people. b.The members may be availing loan singly/jointly. C.The maximum credit facility to a member is
Rs.50,000/- and to the Group is Rs.5,00,000/-. d) All the above
66) Under PMEGP Scheme what is margin requirement for General and Special category beneficiaries?
a) Gen -15%, Spl - 5%b) Gen - 5%, Spl - 5% c) Gen -10%, Spl - 5% d) Gen -10%, Spl - 10%
67) As per revised guidelines, loans to individual women beneficiaries upto Rs per borrower is covered under weaker section. a)
25,000 b) 50,000 c) 1,00,000 d) 2,00,000
68) Swarnjayanti Gram Swarozgar Yojana (SGSY), has been renamed as :
a.National Gram Swarozgar Yojana (NGSY). b. Swarnjayanti Rural Livelihood Mission (SRLM)
c.National Rural Livelihood Mission (NRLM), d.National Rural Mission Yojana (NRMY)
69) When Business Correspondent has to update Current Account, Saving Fund account:
a) Next working day b) Within 2 days c) Within 5 days. d) Within 7 days
70) Under NRLM scheme, the second dose of loan will be repaid in _______ months: a) 6-12b) 12-24 c) 12-36 d) 24-36
71 Pursuant to the Government of India extending the scheme of 1% interest subvention to housing loans up to Rs. ____ lakh where the
cost of the house does not exceed Rs. ____ lakh: a) 5; 15b) 10; 15c) 15; 25 d) 20; 30
72Under Janashree Bima Yojana the annual premium is Rs. _____, of which Rs. _____ is to be contributed by the artisan, Rs._____ by
the Govt. and Rs. _____ by LIC.-
a) 100 ; 20 ; 40 ; 40 b) 100 ;
c) 200; 20 ; 80 ; 100 d) 200; 100
73 Under National Rural Livelihood Mission (NRLM) scheme a women’s self help group consisting of _____ members, coming together
on the basis of mutual affinity is the primary building block of the NRLM community institutional design. In case of special SHGs i.e.
groups in the difficult areas, groups with disabled persons, and groups formed in remote tribal areas, this number may be a minimum
of ____ persons. The mission will provide a continuous hand-holding support to the institutions of poor for a period of _______years
till they come out of abject poverty. a) 5-10; 3; 5-5 b) 7-10; 5; 3-8 c) 10-15; 5; 5-7 d) 15-20; 10; 7-10
74 Under NRLM scheme, the second dose covers _____ times of existing corpus and proposed saving during the next twelve months or
Rs.______ whichever is higher. a) 1-5, 50,000 b) 2-10, 1 lac c) 5-10, 1 lac d) 10-20, 5 lac
75 NRLM would provide a Revolving Fund (RF) support to SHGs in existence for a minimum period of _______months. Only such SHGs
that have not received any RF earlier will be provided with RF, as corpus, with a minimum of Rs. ______and up to a maximum of Rs.
_______ per SHG. a) 1 to 5; 5,000; 10,000 b) 3 to 6; 10,000; 15,000 c) 5 to 7; 12,000; 20,000 d) 7 to 10; 15,000; 25,000
76 Under Janashree Bima Yojana, in addition to the insurance cover, a scholarship of Rs.____ per quarter per child for the education of
two children from 9th to 12th Standard is also provided under the Shiksha Sahyog Yojana. a) 200 b) 300 c) 500 d) 600
77 State level bankers' committees (SLBCs) mandated to prepare a roadmap covering all unbanked villages of population less than ____
and notionally allot these villages to banks for providing banking services, in a time-bound manner. While preparing the roadmap for
providing banking services in all unbanked villages with population of less than 2000 through a combination of banking correspondent
(BC) and branches, it should be ensured that there is a brick and mortar branch to provide support to a cluster of BC units, i.e., about 8-
10 BC units, at a reasonable distance of 3-4 kilometres. a) 1000 b) 1500 c) 2000 d) 2500
78 Which of the following has/have been included as part of priority sector?
a) Medium enterprises b) Social Infrastructure c) Renewable Energy d) None of these e) All of these
79 As per April 15 guidelines on Priority Sector, which of the following distinctions have been dispensed with?
a) Micro and Small Enterprises
b) Marginal and Small farmers
c) Direct and indirect agricultural advances
d) Self Help Group and Joint Liability Group
80 The target for lending to Micro enterprises has been prescribed as ___% of ANBC or CEOBE whichever is higher.
a) 5% b) 6% c) 7.5% d) 8%
81 As per April 15 guidelines on Priority Sector, the target for lending to weaker sections has been increased of ANBC or CEOBE,
whichever is higher. a) 8% b) 10% c) 12% d) There is no change in the target for weaker sections.
82 Foreign Banks with less than 20 branches in India are required to achieve priority sector targets and sub-targets for Agriculture and
Weaker Sections by ___. a) 2018-19 b) 2019-20 c) 2020-21 d) 2015-16
83 Bank loans to food and agro processing units will form part of _____.
a) Agriculture b) Small Enterprises c) Indirect agriculture d) Medium enterprises
84 For domestic commercial banks and foreign banks with 20 or more branches in India, the incremental export credit over
corresponding date of the preceding year will be reckoned as priority sector upto ____% of ANBC or CEOBE, whichever is higher.
a) 1% b) 2% c) 5% d) 10%
85 The priority sector non-achievement will be assessed on _____ average basis at the end of the respective year from 2016-17
onwards. a) fortnightly b) monthly c).quarterly d) half yearly e) yearly
86.The target for Micro Enterprises i.e. 7.5% of ANBC or CEOBE, whichever is higher to be achieved in a
phased manner i.e. 7% by ______and 7.5% by _____ a)March 2017, March 2018 ; b) March 2018, March
2019 c)March 2016, March 2017 ; d)March 2015, March 2016
87. Lending to agriculture sector has been re-defined to include which of the following? : a) Farm Credit ; b) Agriculture
Infrastructure c) Ancillary activities d) Both (a) and (b) only & e) All of these
88. Which of the following is not part of agricultural advance?
a) Crop loans to farmers, which will include traditional/non-traditional plantations and horticulture, and, loans for allied activities.
b) Housing Loan to farmers for their own residence. ;
c) Medium and long-term loans to farmers for agriculture and allied activities
d) Loans to farmers for pre and post-harvest activities, viz., spraying, weeding, harvesting, sorting, grading and transporting of their
own farm produce
89.As per revised guidelines on PS (April 15), loans to farmers up to _____ against pledge/hypothecation of agricultural produce
(including warehouse receipts) for a period not exceeding 12 months ; a) Rs 10 lakhb) Rs 20 lakh; c) Rs 50 lakh d) Rs 100 lakh
90 Which of the following is not an agricultural advance?
a) Loans to distressed farmers indebted to non-institutional lenders.
b) Loans to farmers under the Kisan Credit Card Scheme.
c) Loans to all farmers for purchase of land for agricultural purposes. e) None of these
91 Loans to corporate farmers, farmers' producer organizations/companies of individual farmers, partnership firms and co-operatives of
farmers directly engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture
will be part of priority sector provided loan is up to _____ per borrower.a) Rs 2 crore b) Rs 5 crore c) Rs 10 crore d) None of these
92 Loans for construction of storage facilities (warehouses, market yards, godowns and silos) including cold storage units/ cold storage
chains designed to store agriculture produce/products, irrespective of their location will be part of priority sector provided aggregate
sanctioned limit from the banking system is up to Rs per borrower a) Rs 10 crore b) Rs 20 crore c) Rs 50 crore d) 100 crore
93 Which of the following is not part of agriculture infrastructure as per PS guidelines issued in April 15?
a) Loans for construction of storage facilities to store agriculture produce/products.
b) Soil conservation and watershed development. c) Plant tissue culture and agri-biotechnology, seed production, production of bio-
pesticides, bio-fertilizer, and vermi composting. d) None of these
94 Loans to co-operative societies of farmers for disposing of the produce of members will be part of agriculture provided loan is up to
Rs -a) Rs 1 crore b) Rs 2 crore c) Rs 5 crore d) Rs 10 crore
95 Loan for Food and Agro-processing will be part of Agricultural advance provided sanctioned limit from the banking system is up to
_____ per borrower - a) Rs 10 crore b) Rs 20 crore c) Rs 50 crore d) Rs 100 crore
96 Which of the following is not part of agricultural advance?
a) Loans for setting up of Agriclinics and Agribusiness Centres.
b) Bank loans to Primary Agricultural Credit Societies (PACS), Farmers’ Service Societies (FSS) and Large-sized Adivasi Multi-Purpose
Societies (LAMPS) for on-lending to agriculture
c) Loans sanctioned by banks to MFIs for on-lending to agriculture sector.
d) Outstanding deposits under SEDF and other eligible funds with SIDBI on account of priority sector shortfall.
97 Farmers with landholding of up to ______ are considered as Marginal Farmers and farmers with a landholding upto ____ are
considered as Small Farmers - a) 1 hectare, 2 hectares b) 2.5 hectare, 5 hectare c) 1 hectare, 2.5 hectare d) 5 hectare, 10 hectare
98 Loans to farmers' producer companies of individual farmers, and co-operatives of farmers directly engaged in Agriculture and Allied
Activities, is classified as Small and Marginal farmer where the membership of Small and Marginal Farmers is not less than ____ by
number and whose land-holding share is also not less than ____of the total land-holding –
a) 50%; 50%b) 50%; 75% c) 75%; 75% d) 75%; 50%
99 Bank loan to Micro, Small and Medium manufacturing Enterprises will be part of priority sector provided the loan is up to _____. a)
Rs 5 crore b) Rs 10 crore c) Rs 20 crore d) Irrespective of amount of loan
100 Bank loan to Micro and Small service Enterprises will be part of priority sector provided the loan is up to _____.
a) Rs 2 crore b) Rs 5 crore c) Rs 10 crore d) Rs 20 crore e) None of these
101Bank loan to Medium service Enterprises will be part of priority sector provided the loan is up to _____.
a) Rs 2 crore b) Rs 5 crore c) Rs 10 crore d) Rs 20 crore e) None of these
102Credit outstanding under General Credit Cards (including Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card, and
Weaver’s Card etc. catering to the non-farm entrepreneurial credit needs of individuals) will be part of advance to Micro and Small
enterprises provided the loan is up to _____. a) Rs 50,000 b) Rs 500,000 c) Rs 10,00,000 d) None of these
103Which of the following is not part of Micro, Small and Medium enterprises under priority sector advance?
a) Loans to entities involved in assisting the decentralized sector in the supply of inputs to and marketing of outputs of artisans, village
and cottage industries.
b) Loans to co-operatives of producers in the decentralized sector viz. artisans, village and cottage industries.
c) Loans sanctioned by banks to MFIs for on-lending to MSME sector.
d) Outstanding deposits with SIDBI on account of priority sector shortfall. d) None of these
104As per revised PS guidelines (April 15) banks are required to lend 40% of advance to Micro and Small enterprises to units with
investment in plant and machinery up to_____. a) Rs 2 lakh b) Rs 4 lakh c) Rs 10 lakh d) None of these as there is no such target.
105 The MSME units will continue to enjoy the priority sector lending status up to _____years after they grow out of the MSME category
concerned. a) one b) two c) three d) four e) None of these
106 Loans to individuals for educational purposes including vocational courses in India will be part of Priority sector provided loan is up
to _____. a) Rs 5 lakh b) Rs 10 lakh Rs 20 lakh d) Rs 25 lakh
107 Loans to individuals for educational purposes for studies abroad will be part of Priority sector provided loan is up to ____.a) Rs 5
lakh b) Rs 10 lakh c) Rs 20 lakh d) Rs 25 lakh e) None of these
108 A loan of Rs 20 lakh has been sanctioned to an individual for studies in India. How much of it will be part of priority sector? a) Rs 5
lakh b) Rs 10 lakh c) Rs 20 lakh d) None of these as it will not be part of priority sector.
109 Loans for repairs to damaged dwelling units will be part of priority sector provided loan is up to ____in metropolitan centres and up
to _____ in other centres. a) Rs 2 lakh, Rs 1 lakhb) Rs 5 lakh, Rs 2 lakh c) Rs 4 lakh; Rs 2 lakh d) Rs 10 lakh; Rs 5 lakh
110 Bank loans to any governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum dwellers
will be part of priority sector provide loan is up to ______ per dwelling unit.
a) Rs 2 lakh b) Rs 5 lakh c) Rs 10 lakh d) Rs 20 lakh e) None of these
111 Loans for housing projects exclusively for the purpose of construction of houses for economically weaker sections and low income
groups, will be part of priority sector provide the total cost of the house does not exceed _____ per dwelling unit a) Rs 1 lakh b) Rs 2
lakh c) Rs 5 lakh d) Rs 10 lakh
112 Loans for housing projects exclusively for the purpose of construction of houses for economically weaker sections and low income
groups, the total cost of which does not exceed Rs 10 lakh per dwelling unit for the purpose of identifying the economically weaker
sections and low income groups, the annual family income should not be more than_____.
a) Rs 50,000 in rural areas and Rs 100,000 in other areas
b) Rs 100,000 in rural area and Rs 200,000 in other areas
c) Rs 160,000 irrespective of location d) Rs 200,000 irrespective of location
113 Bank loans for building social infrastructure for activities namely schools, health care facilities, drinking water facilities and
sanitation facilities in Tier II to Tier VI centres will be part of priority sector provided loan is up to ____per borrower. a) Rs 5 crore
b) Rs 1 crore c) Rs 2 crore d) Rs 10 crore
114 Bank loans to borrowers for purposes like solar based power generators, biomass based power generators, wind mills, micro-hydel
plants and for non-conventional energy based public utilities viz. street lighting systems, and remote village electrification will be part of
priority sector provided loan amount is up to______. a) Rs 5 crore b) Rs 10 crore c) Rs 15 crore d) Rs 20 crore e) Rs 25 crore
115 Loans to distressed persons other than farmers to prepay their debt to non-institutional lenders will be treated as other priority
sector provided loan per borrower is limited up to _____ a) Rs 25000 b) Rs 50,000 c) Rs 100,000 d) Rs 200,000
116 Overdrafts upto Rs 5,000/- under Pradhan Mantri JanDhanYojana (PMJDY) accounts will be classified as other priority sector
provided the borrowers household annual income does not exceed ____for rural areas and for non-rural areas.
a) Rs 60,000; Rs 120,000b) Rs 80,000; Rs 160,000 c) Rs 100,000; Rs 1,60,000 d) Rs 100,000; Rs 200,000
117 Artisans, village and cottage industries are classified as weaker section provided individual credit limits do not exceed _____. Rs.
50,000 ; b. Rs. 1.00 lac ; c. Rs. 2.00 lacs & d. Rs.5.00 lacs
ANSWER
1 A 2 B 3 B 4 B 5 A
6 D 7 C 8 D 9 A 10 B
11 D 12 B 13 B 14 C 15 D
16 B 17 A 18 A 19 A 20 A
21 B 22 C 23 C 24 C 25 D
26 A 27 B 28 C 29 A 30 D
31 C 32 B 33 C 34 A 35 C
36 B 37 E 38 B 39 B 40 B
41 B 42 D 43 C 44 A 45 A
46 C 47 D 48 D 49 D 50 B
51 B 52 B 53 D 54 A 55 A
56 D 57 D 58 C 59 A 60 B
61 A 62 A 63 C 64 C 65 D
66 C 67 C 68 C 69 A 70 B
71 C 72 D 73 C 74 C 75 B
76 B 77 C 78 E 79 C 80 C
81 D 82 B 83 A 84 B 85 C
86 C 87 E 88 C 89 C 90 C
91 A 92 D 93 D 94 C 95 D
96 D 97 A 98 C 99 D 100 B
101 C 102 D 103 E 104 D 105 C
106 B 107 B 108 B 109 B 110 C
111 D 112 D 113 A 114 C 115 C
116 C 117 B
Govt.Sponsored Schemes
PMEGP
1. The Prime Minister's Employment Generation Programme (PMEGP):
(a) has been designed to generate employment opportunities in Rural & Urban areas.
(b)relates to the setting up of new self-employment ventures for industries, services and business.
(c) covers whole of the country including J & K
(d)has replaced PMRY & KVIC-REGP scheme (e) all above
2. To be eligible for loan under PMEGP, minimum qualification required is class pass in case project
cost is above Rs 10 lakh in the manufacturing sector and above Rs. 5 lakh in the business or service sector –
th
(a) 8 th (b) 9th (c)5 (d)7th (e) none of the above
3. To be eligible under PMEGP, the applicant's age should be :
-
(a) not more than 40 years (b) not less than 18 years (c) between 25 to 40 years (d) abovel 8 years
4. Under PMEGP, _______________% of the margin money (subsidy) should go to projects in rural areas:
(a) 25% (b) 40% (c) 30% (d) 60% (e) 50%
5. To be eligible for assistance under PMEGP, family income of the applicant should not exceed:
(a) Rs. 24,000 p.a. (b) Rs. 30,000 p.a. (c) Rs.40,000 p.a. (d) Rs. 60,000 p.a. (e) No limit
6. Under PMEGP, the repayment period can be after moratorium period as per bank discretion.
(a) 3 to 5 year (b) 3 to 7 year (c) 5 to 7 year (d) 5 to 9 year (e) None of these
7. Rate of subsidy available under PMEGP is :
-
(a) General category borrowers: 15% of project cost in urban areas and 25%o. in rural areas;
(b) Special category borrowers: 25% of project cost in urban areas and 35% in rural areas.
(c) 15% in rural areas and 25% in urban areas for general category borrowers
(d) Both (a) & (b) above (e) None of these
8. Under PMEGP, the borrower is required to contribute % of project cost as margin money :
(a) 5% for special category and 10% for general category
(b)10% for special category and 5% for general category
(c) 5% for special category as well as general category
(d)10% for special category as well as general category (e) none of the above
9. Maximum Project cost in the case of single borrower for business & service category under PMEGP is:
(a) Rs. 10 lakhs (b) Rs. 25 lakh (c) Rs.5 lakhs (d)Rs. 2 lakh (e) None of these
10. Under PMEGP scheme, rural area means place notified as rural area in revenue records and with population:
(a) up to 10,000 (b)less than 10,000 (c) up to 50,000 (d)up to 20,000 (e) None of these
11. Banks will not insist on collateral security from beneficiaries under PMEGP for loans up to:
(a) Rs. 10 latch (b) Rs. 5 lakh (c) Rs. 1 lakh (d) Rs. 50,000 (e) Rs. 3 lakh
12. Banks should lend at least____________ % of advances under PMEGP to SC/ST
(a) 10% (b) 22.5% (c) 35% (d) 50% (e) None of these
13. Which of the following is not true about PMEGP scheme:
(a) There is no condition for education for project up to Rs 10 lac for industry and Rs 5 lac for service.
(b)There is no limit on Family income. (c) It is not applicable in J&K.
(d) it covers both the rural as well as urban centres
(e) The maximum cost of project for industry is Rs.25 lac and for service & business Rs 10 lakh.
14. Maximum Project cost in the case of single borrower for business & service category under PMEGP is:
(a) Rs. 10 lakhs (b) Rs. 25 lakh (c) Rs.5 lakhs (d)Rs. 2 lakh (e) None of these
15. For which of the following category of beneficiaries, targets have been set up under PMEGP?
(a) SC/ST (b) Women (c) physically handicapped (d) all of these (e) None of these
16. PMEGP is applicable in which of the following areas?
(a) Rural only (b) urban areas only (c) Both Rural and urban areas (d) None of these
17. Which of the following is not correct regarding PMEGP scheme?
(a) Both existing and new projects are eligible (b) Only one person from one family is eligible
(c) Family includes beneficiary and spouse (d) No concession in interest rate (e) None of these
18. Village Industry under PMEGP, means a unit located in the rural area which produces any goods or renders any service with or
without the use of power and in which the fixed capital investment per head of a full time artisan or worker does not exceed :
(a) Rs. 1 lakh in plain areas (b) Rs.1.50 lakh in hilly areas (c) Rs 2 lac in North East
(d) Both (a) & (b) (e) All of these
9. Identification of beneficiaries under PMEGP will be done at the district level by a Task Force consisting of representatives from:
(a) KVIC/State KVIB (b) State DICs (c) Banks (d) Both (a) & (b) (e) All of these.
!0. For the purpose of PMEGP scheme, which of the following is not included in special category?
(a) SC / ST, OBC (b) Minorities, Women (c) Ex servicemen & Physically handicapped
(d) North East, Hill and Border areas . (e) None of these
1. Which of the following is not correct regarding margin money (subsidy) under PMEGP?
(a) Subsidy should be kept in the Term Deposit Receipt of three years
(b)No interest will be paid on the TDR & no interest to be charged on loan on corresponding amount of TDR
(c) Subsidy will be credited to the Borrowers loan account after three years from the date of first disbursement to the
borrower.
(d) If loan goes bad before 3 year period, due to reasons, beyond the control of the beneficiary, subsidy can
be credited to loan account before 3 years (e) None of these
22. Under which situations, proportionate or entire subsidy for working capital component has to be returned?
(a) When utilization of limit does not touch 100% limit of CC on any day within three years of lock in period.
(b) When utilization of the sanctioned limit is less than 75% (c) either (a) or (b) (d) None of these
23. Which of the following is correct regarding training of beneficiaries under PMEGP?
(a) First instalment of loan will be released only after completion of EDP training of at least 2 weeks
(b) If beneficiary has undergone training from the recognized institution, no further EDP training is required.
(c) Both (a) & (b) (d) None of these
24. Which of the following is not correct regarding project cost in case of PMEGP scheme?
(a) Project cost will include Capital Expenditure and one cycle of Working Capital.
(b) Projects without Capital Expenditure are not eligible for financing under the Scheme.
(c) Projects. costing more than Rs.5•Iakh, not requiring working capital, need clearance from RO.
(d) Cost of the land should not be included in the Project cost. (e) None of these
25. Under which situations, proportionate or entire subsidy for working capital component has to be returned?
(a) When utilization of limit does not touch 100% limit of CC on any day within three years of lock in period.
(b) When average utilization of the sanctioned limit is less than 75%
(c) When average utilization of the sanctioned limit is lesS than 80%
(d) either (a) or (b) (e) Either (a) or (c)
26. Which of the following is correct regarding training of beneficiaries under PMEGP?
(a) First instalment of loan will be released only after completion of EDP training of at least 2 weeks
(b) If beneficiary has undergone training from the recognized institution, no further EDP training is required.
(c) Both (a) & (b) (d) None of these
27. Which of the following is not correct regarding project cost in case of PMEGP scheme?
(a) Project cost will include Capital Expenditure and one cycle of Working Capital.
(b) Projects without Capital Expenditure are not eligible for financing under the Scheme.
(c) Projects costing more than Rs.5 lakh, not requiring working capital, need clearance from RO.
(d) Cost of the land should not be included in the Project cost. (e) None of these
28. Which of the following is not eligible for loans under the scheme?
(a) Self Help Groups (b) Institutions registered under Societies Registration Act, 1860
(c) Production Co-operative Societies (d) Charitable Trusts (e) None of these
ANSWER
Q A Q A Q A Q A Q A
1 E 2 A 3 D 4 E 5 E
6 B 7 D 8 A 9 A 10 D
11 A 12 E 13 C 14 A 15 E
16 C 17 A 18 C 19 D 20 E
21 D 22 E 23 E 24 E 25 D
26 B 27 E 28 E
6. MODULE –E: LATEST RBI POLCY -MCQs

Latest RBI POLICY BASED Questions ( 01.04.2017 to 30.09.2017)
BANKING LAW & RBI POLICY RELATED

1 What is the number of digits in UIDAI Aadhaar number : a 10 b 11 c 12 d 14
2 Model Bank sanctioned working capital limits of Rs.30 lac to M/s Janardhan & Co. for which a guarantee was given by Mr.
Satyanarayana, the father of managing partner Mr. Janardhan. Due to some dispute amongst the father and son, Mr. Satyanarayana
gave a notice to the bank withdrawing his guarantee when the balance in the account was Rs.27.60 lac. The guarantee bond provide
for a notice of withdrawal of 2 months.
a With the issue of withdrawal notice the guarantor is totally absolved of his liability and he is no more liable for the outstanding
dues.
b After issue of the withdrawal notice, the guarantor will be liable for 2 months during which the bank can recover the loan from the
guarantor alognwith other parties.
c Bank will send a notice to the firm for arranging another guarantee during 2 months period and would continue with the
operations.
d Bank will stop debit operations in the account to determine the liability of the guarantor and inform the firm about withdrawals
and also for arranging another security as per satisfaction of the bank.
3 Which of the following represents the direct quotation in India, in the forex transactions:
a 1 US$ = 0.75 euro b Rs.100 = 2.10 US$ c 1 pound sterling = Rs.79.10 d all the above
4 The rates of interest on loans and advances given by banks w.e.f. 01.04.2016 are to be determined with reference to:
a bench mark prime lending rate, b marginal cost of funds based lending rate, c base rate, d bank rate
5 Which among the following instruments is not a negotiable instrument as per provisions of Section 13 of Negotiable
Instrument Act? a bill of lading, b commercial paper, c certificate of deposit ,d govt. treasury bill e all the above
6 No collateral security to be taken for loan up to Rs.10 lac in which of the following cases:
a MSE Loan and Agri-clinics and Agro Business Centres , b MSE Loan and PMEGP Loan, c PMEGP Loan and Agri-clinics
and Agro Business Centres d MSE Loan, Loans to individual persons under SGSY, Agri-clinics and Agro Business Centres
7 Bank has granted a loan of Rs.90 lac to an MSE in other than NE States and other than Women enterprise. In case the loan
becomes NPA, what is the amount of guarantee cover that would be available to this loan:
a Rs.65 lac b Rs.62.50 lac c Rs.60.00 lac d Rs.57.50 lac
What is the income ceiling for DRI loan eligibility: a Rs.12000 for rural areas and Rs.15000 for urban areas
b Rs.15000 for rural areas and Rs.20000 for urban areas, c Rs.18000 for rural areas and Rs.20000 for urban areas
d Rs.18000 for rural areas and Rs.24000 for urban areas
9 Where a bank is having unreconciled inter-branch entries old than ____, it has to make provision at ___%
a 6 months, 100%, b 6 months, 75%, c 12 months, 100% , d 18 months, 100%
e no provision is required, entries being intra-bank
10 A doubtful NPA account is purchased by Bank-B from Bank-A. What classification would be given by the Bank-B to this account: a
to be treated as substandard account, b to be treated as doubtful up to 12 months category irrespective of its classification with
Bank-A, c to be treated in the same category in which it had been classified by Bank-A
d to be treated standard account for initial period of 90 days, e to be treated standard account for 12 months.
11 Accumulated losses are shown by a joint stock company, in its balance sheet as: a footnote of the balance sheet
b deduction from the paid up capital, c deduction from the net worth, d intangible asset e non-current asset
12 In case of collection of cheques and bills, the relationship of bank with the customer is that of:
a Bank as agent and customer trustee, b Bank as trustee and customer debtor, c Banker as debtor and customer creditor
d Banker as bailor and customer bailee ,e bank as agent and customer principal
13 The following categories of loans can be priced without being linked to MCLR as the benchmark for determining interest rate: (1)
Advances to banks’ depositors against their own deposits. (2) Advances to banks’ own employees including retired employees.
(3) Advances granted to the Chief Executive Officer / Whole Time Directors. (4) Loans linked to a market determined external
benchmark. - a 1 only b 1 and 3 only c 1 to 4 all d. 1, 3 and 4 only
14 Banks are to review and publish their Marginal Cost of Funds based Lending Rate (MCLR) of different maturities every ___ on a
pre-announced date with the approval of the Board or any other committee to which powers have been delegated.
a fortnight , b month c quarter d six months
15 On comparison of balance sheet of firm for two years, it is observed that its debt equity ratio has increased from 1.5:1 to 2:1 but its
current ratio and the total of balance sheet has not changed. Which of the following is possibly true in this regard
a only the amount of net worth has increased, b only the amount of long term liabilities has declined
c only the amount of intangible assets has decreased , d the amount of long term liabilities has increased or amount of net worth
had declined or amount of intangible assets has increased
16 At the time of renewal of working capital limits of a partnership firm, it was observed by the appraising officer that the quick ratio of
the firm has declined substantially but the current ratio has not changed. Which among the following could be true:
a the amount of stocks has declined, b the firm has become slow in recovery of its book debts
c the firm’s stocks as percentage of current assets have increased , d the firm’s receivables as percentage of current assets have
declined , e c and d above
17 What is the maximum amount that can be remitted outside India, from NRO account, representing sale proceeds of the immovable
property in India - a Rs.10 lac in a calendar year, b Rs.1 lac in a calendar year , c 1 lac US $ per financial year
d 1 million US $ per financial year, e no such remittance is allowed.
18 Hindi day is observed on : a Jan 26 b Jun 22 c Sept 14 d Nov 11
19 The minimum paid up capital of a new Private Universal Bank has to be:
a Rs.100 cr b Rs.200 cr c Rs.300 cr d Rs.400 cr e Rs.500 cr
20 Loan under which of the following scheme/purpose, can be allowed within the DRI financing of 4%:
a housing loans up to Rs.20000 to poor families, b housing loans up to Rs.20000 under National Housing bank Scheme
c housing loans up to Rs.20000 under Indira Awas Yojna, d all the above
21 What is the maximum amount that banks can levy as penal charges for non-maintenance of minimum balances in any inoperative
account.
a no charges can be levied, b within the ceiling rate fixed by RBI, c not more than 1%
d at bank discretion under Board approved procedure and policy
22 HUF cannot be a partner in a partnership firm as per Supreme Court Judgments. The judgments in based on the premise that :
a HUF is a legal person with Karta as its head, but other coparceners are not liable
b HUF is not a legal person and cannot enter into such agreement that makes it liable for the action of others.
c HUF is not competent to enter into any contract with outsiders and make it liable for the actions of others
d HUF cannot enter into any contract with outsiders
23 A company has to make payment of dividend to large no. of its shareholders through electronic medium. It should use:
a RTGS system b EFT system c SWIFT system d ECS – Debit clearing system e ECS – Credit clearing system
24 A firm has obtained a term loan of Rs.12 lac and its capital is Rs.4 lac. The firm has created general reserve of Rs.3 lac while it has
been showing pre-paid expenses of Rs.1 lac in its balance sheet. The debt equity ratio is:
a 1.71:1 b 1.89:1 c 2.00:1 d data incomplete. Calculation not possible
25 Data Storage unit of a computer is called - a random access memory, b hard disk, c memory unit, d compact disk
26 X makes a request to the bank to write the name of his nominee on his pass book.
a This can be done as customer has given his consent
b This cannot be done, since it would amount to disclosure of customer account information
c This cannot be done, as it is a risk-prone proposal.
d Bank can make mention that it is a nomination account but name of the nominee cannot be written.
27 Which of the following is correct with regard to the interest on a saving bank deposit:
a it is paid for the average balance maintained during the month, but from 1.4.2009 it is payable on a daily product basis
th
b it is paid for the minimum balance maintained during 10 day to last day of the month, but from 1.4.2009 it is payable on a daily
product basis
c it is paid for the maximum balance maintained during the month, but from 1.4.2009 it is payable on a daily product basis
d from 1.4.2010 it is payable on a daily product basis
28 When book debts are realised by a firm, what is the effect: a current ratio increases, b current ratio decrease
c quick ratio increase, d quick ratio decreases e there is no effect
29 A bank has an oversold position in foreign exchange on a particular day. It has to square its position at the end of the day. The
foreign exchange rates are increasing: a the bank will gain substantially, b the bank will gain marginally
c there will be no effect on the bank , d the bank will incur loss
30 Form 15-H (in terms of Income Tax Act) is used in which of the following cases:
a issue of tax deduction certificate by the banks, b declaration by senior citizen for non-deduction of tax at source, c declaration by
an ordinary customer for non-deduction of tax at source, d exemption for non-quoting of PAN e: None of the above
31 Under RTGS the transactions time 8 am to 4.30 pm is in respect of which of the following category of transactions:
a inter-bank transactions, b intra-bank transactions, c all transactions d customer transactions
32 What is the time period of the notice which is required to be given by a bank for sale of security charged to the bank after taking
possession under the provision of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act
2002: a 15 days b 30 days c 45 days d 60 days e 90 days
33 As per extant instructions of RBI, what is the maximum amount limit that the bank can fix up to which minors may be allowed to
operate their deposit accounts independently. a max Rs.2 lac, b max Rs.1 lac, c max Rs.50000, d at discretion of banks
34 In a loan account, the Central Govt. has given guarantee. The loan account is overdue for the last 2 years and 5 months. What is the
provision %age on the loan: a. 0.40%, b.10% , c. 20%, d. 30% , e. No provision is to be made
35 A loan is guaranteed by the Guarantee of State govt. and it is running irregular for the last 5 months. The loan will be classified as ___:
a standard account, b special mention account, c sub-standard unsecured account
d sub-standard secured account e: None of the above
36 A monetary ceiling of Rs.20 lac has been imposed for entertaining cases by which of the following:
a Consumer Courts, b Lok Adalat, c District Courts, d Ombudsman Scheme
37 Which of the following in general, is eligible, as a borrower, under National Rural Livelihood Mission (NRLM)?
a SC/ST women and non-SC/ST/women, b women self help groups, c SC/ST and non-SC/ST men,d any of the above
38 A power of attorney executed by an NRI in favour of his mother for obtaining payment from the deceased account in the name of
his father has been received. This requires to be stamped as per rates prescribed by ___ , within a period of ___
a Central Govt., 4 months,b Central Govt., 3 months, c State Govt., 3 months,d State Govt., 4 months
e Not require stamping in India
39 An NPA has been sold by Bank-B to Bank-A. What is the minimum period for which the account should have been in the books of
Bank-B before sale to the bank:- a 12 months as NPA,b any NPA account, c 24 months as doubtful account
d 24 months as sub-standard including special mention account status, e sale of ARC is not permitted.
40 What will be due date for a bill dated 27.12.2016 payable 30 days after date:
a Jan 23, 2017, b Jan 25, 2017, c Jan 26, 2017, d Jan 27, 2017
41 What type of right the banks are having under SARFAESI Act in case of default by the borrower, in repayment of the loan:
a take possession of the secured assets, b takeover management of the assets, c to sell or lease the secured assets
d any of the above
42 Which of the following kinds of LCs, provides for storage of goods in warehouse:
a Back to back letter of credit, b Transferable letter of credit, c Irrevocable letter of credit
d Green Clause letter of credit, e Red clause letter of credit
43 What is the target for domestic banks for priority sector lending:
a 40% of adjusted net bank credit or credit equivalent of off-balance sheet exposure whichever is higher, as on 31st Mar of previous year,
b 40% of the adjusted net bank credit or credit equivalent of off-balance sheet exposure whichever is lower, as on 31st Mar of current year
c 32% of the adjusted net bank credit or credit equivalent of off-balance sheet exposure whichever is higher, as on 31st Mar of previous year
d 40% of the net bank credit or non-fund based limit whichever is higher, as on 31st Mar of previous year
44. Commercial paper is an unsecured money market instrument, which is issued in the form of:
a usance bill of exchange, b usance promissory note , c participatory note d transferable paper
45. Commercial paper can be issued with a minimum maturity period of:
a 7 days b 15 days c 30 days d at discretion of the issuer
46. Commercial paper can be issued with a maximum maturity period of:
a 6 months b 12 months c 3 years d at discretion of the issuer
47. Which of the following cannot issue a commercial paper?
a non-bank finance companies b all India financial institutions c companies d banks
48. If the issuer of a commercial paper is a trust or cooperative society or limited liability partnership, having presence in India, its
minimum networth must be: a Rs. 4 cr b Rs.10 cr c Rs.50 cr d Rs.100 cr
49 The minimum amount for which a commercial paper can be issued is: a Rs.1 lac, b Rs.2 lac, c Rs.5 lac, d Rs.10 lac
50. Which of the following statement about a commercial paper is not correct?
a it can be issued at a discount to face value, b call or put option is not allowed on commercial paper
c issue of commercial paper cannot be under-written or co-accepted , d banks cannot invest in a commercial paper
51. Credit rating from at least 2 SEBI approved credit rating agencies is mandatory, where the size of the issue is:
a Rs.1000 cr or above b Rs.500 cr and above c Rs.100 cr and above d mandatory in all cases
52. The minimum credit rating grade from SEBI approved credit rating agencies should be ___, for an issuer to be eligible to issue
commercial paper? - a triple-A b A-3 c A-1 d AA
53.The issuer of a commercial paper can give a buy back offer which can be made after ____ days from date of issue?
54. The issuer of a commercial paper is required to make arrangement, so that the commercial paper is credited to demat account of
the investor within: a 7 days of issue b 10 days of issue c 14 days of issue d 30 days of issue
55. An instrument for borrowing funds by selling securities with an agreement to repurchase the securities on a mutually agreed
future date at an agreed price which includes interest for the funds borrowed, is called:
a commercial paper b promissory note c reverse repo d repo
56. An instrument for lending funds by purchasing securities with an agreement to resell the securities on a mutually agreed future
date at an agreed price which includes interest for the funds lent, is called:
a commercial paper b promissory note c reverse repo d repo
57. To be eligible to be a tri-party agent under Tri-party Repo Directions-2017 of RBI, the entity should have minimum paid up capital
of: a Rs.10 cr b Rs.15 cr c Rs.20 cr d Rs.25 cr
58. The tri-party agent under Tri¬party Repo Directions of RBI, is required to preserve the trade records for a period of:
a 3 year b 5 years c 8 years d 10 years
59. When a department of Govt. of India wants a letter of credit issued, it is issued by: a RBI ,b SBI c any commercial bank with
which govt. has made arrangement, d any commercial bank on behalf of RBI with which RBI has made arrangement
60. In respect of letter of credit or bank guarantee got issued by Central Govt. department, the role of RBI is :
a limited to advising the LCs/BGs , b limited to reimbursement of payments made by the banks for such LCs/BGs on behalf of the
government, after satisfying itself with the debit mandate given by the government.
c limited to confirming such LC or BGs, d none of the above, as RBI does not deal with LC/BG transactions.
61 As per Financial Literacy Camps guidelines of RBI of July 2017, FLCs and rural branches of banks are eligible for funding support
from the Financial Inclusion Fund for the financial literacy camps to the extent of 60% of the expenditure of the camp subject to a
maximum of ____ per camp - a Rs.5000, b Rs.10000, c Rs.15000, d Rs.20000
62 As per Financial Literacy Camps guidelines of RBI of July 2017, funding for handheld projectors and speakers would be provided
from FIF to the extent of 50% of the cost incurred on purchase of hand held projector and portable speaker (both put together)
subject to a maximum of ____ per rural branch / FLC on a reimbursement basis.
a Rs.5000 b Rs.10000 c Rs.15000 d Rs.20000
63 For ascertaining the investment in plant and machinery for classification of an enterprises as Micro, Small and Medium, which of
the following documents could be relied upon:
a A copy of the invoice of the purchase of plant and machinery,
b Gross block for investment in plant and machinery as shown in the audited accounts
c A certificate issued by a Chartered Accountant regarding purchase price of plant and machinery, d any of the above
64 For the investment in plant and machinery for the purpose of classification of an enterprise as Micro, Small or Medium, which of
the following is to be taken into account
a book value (purchase value minus depreciation) or the purchase value of the plant and machinery, whichever is higher
b book value (purchase value minus depreciation), c the purchase value of the plant and machinery
d book value (purchase value minus depreciation) or the purchase value of the plant and machinery, whichever is lower
65 The limits for investment by foreign portfolio investors (FPIs) in Central Government Securities and State Development
Loans (SDLs) has been increased from Rs.2580 billion to:
a Rs.2680 billion b Rs.2751 billion c Rs.2781 billion d Rs.2865 billion
66 An unauthorized electronic bank transaction has taken place by a 3rd party in the saving bank account of Mr. Z. After receipt of
bank notification about the transaction, the customer notifies the bank within 2 days. Who will bear the loss of this transaction? - a
bank concerned b customer concerned c bank and customer in the ratio of 50:50
d bank up to Rs.25000 and beyond that customer
67 If some unauthorized electronic bank transaction is noticed by the customer in his accounts, he can provide information to the
bank. Which of the following is not a correct channel for this?
a report through website of the bank b report to toll free helpline of the bank
c reporting to home branch d report to any branch of bank.
68 In cases where due to unauthorized electronic bank transaction, the loss is due to negligence by a customer, such as sharin the
payment credentials. Who will bear the loss:
a bank will bear the entire loss until he reports the unauthorised transaction to the bank
b loss occurring after the reporting of the unauthorised transaction shall be borne by the customer
c all loss will be born by the customer, d until report to bank, customer and loss occurring after reporting by customer, bank.
69 In cases where the responsibility for the unauthorised electronic banking transaction lies neither with the bank nor with the
customer, but lies elsewhere in the system and when there is a delay of 4 to 7 working days after receiving the communication from
the bank, on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be
limited to Rs._____ in case of a saving bank account? - a Rs.5000, b. Rs.10000, c Rs.25000 d no liability
limited to Rs._____ in case of a basic saving bank deposit account?
a Rs.5000 b Rs.10000 c Rs.25000 d no liability
limited to Rs._____ in case of a cash credit account with limit of Rs.40 lac.
a Rs.5000 b Rs.10000 c Rs.25000 d no liability
72 On being notified by the customer, the bank shall credit (shadow reversal) the amount involved in the unauthorised electronic
transaction to the customer’s account within ____ days from the date of such notification by the customer (without waiting for
settlement of insurance claim, if any).
a 7 calendar days b 10 calendar days c 7 working days d 10 working days
73 Banks are to ensure that a complaint is resolved and liability of the customer, if any, established within such time, as may be
specified in the bank’s Board approved policy, but not exceeding ____ days from the date of receipt of the complaint,
74. Banking Ombudsman Scheme 2006 as modified w.e.f. July 01, 2017, covers:
a commercial banks and all financial entities ,b commercial banks, RRB and scheduled primary cooperative banks
c commercial banks, RRB and scheduled primary cooperative banks and all financial entities
d commercial banks only
75.Which of the following statement is not correct with reference to Banking Ombudsman Scheme 2006 as modified w.e.f. July 01,
2017: a Ombudsman can be GM or CGM of RBI, b Ombudsman’s term can be max 3 years, at a time
c expenses of Ombudsman Secretariat are borne by participanting banks, d Ombudsman is appointed by RBI
76. A customer can file complaint with Banking Ombudsman. In this respect which statement is not correct?
a complaint can be filed if bank rejects the complaint, b complaint can be filed if customer is not satisfied with bank reply
c complaint can be filed, if does not receive any replay within 15 days,
d complaint can be filed within one year, in the above circumstances.
77.Customer can appeal against grounds of rejection of complaint by Ombudsman to Deputy Governor, the Appellate Authority,
within ___ days of receipt of communication regarding rejection.- a 7 days b 10 days c 15 days d 30 days
78. Where a complaint could not be settled by Banking Ombudsman by agreement within ____ from the date of receipt of the
complaint, Ombudsman may pass an Award or reject the complaint
a 10 days b 15 days c one month d two months
79. Banking Ombudsman can award compensation to be paid by bank to the complainant, not more than actual loss suffered as
direct consequence of act of omission or commission of the bank OR _____, whichever is less:
a Rs.25 lac b Rs.20 lac c Rs.15 lac d Rs.10 lac
80. Banking Ombudsman can also award compensation to be paid by bank to the complainant up to Rs.____, on account of
expenses, mental agony etc. - a Rs.1 lac b Rs.2 lac c Rs.5 lac d Rs.10 lac
81. Banking Ombudsman can award compensation in case of Credit Card issue, to be paid by bank to the complainant, not more than
actual loss suffered as direct consequence of act of omission or commission of the bank OR _____, whichever is less:
82. Customer is required to send acceptance of the award of Ombudsman within ____ days of date of receipt of the award.
83. Bank is to implement the award of Ombudsman within _____ and intimate compliance to the Banking Ombudsman.
a one month from the date of receipt of the acceptance from the complainant
b two months from the date of receipt of the acceptance from the complainant
c one month from the date of receipt of the award of Ombudsman,
d two months from the date of receipt of the award of Ombudsman
84. The complainant can file an appeal to Appellate Authority (Dy. Governor RBI) againt Award of Ombudsman within ___ of date of
receipt of Award - a 3 months b 2 months c 30 days d 15 days
85. The Bank can file an appeal to Appellate Authority (Dy. Governor RBI) againt Award of Ombudsman within ___ of date of receipt
of acceptance of customer, with permission of CMD or MD or ED or CEO:
a 3 months b 2 months c 30 days d 15 days
86. The Appellate Authority (Dy. Governor RBI) can extend the specified period, to make appeal againt Award of Ombudsman by
complainant, by ___ : a 3 months b 2 monthz c 30 days d 15 days
87. Who can represent a bank before the Ombudsman on issues relating to complaints under Ombudsman Scheme?
a Chief Customer Service Officer , b Internal Ombudsman of the bank
c Nodal Officer at Regional/Zonal Office of the bank , d Any officer of the bank
88. As per RBI guidelines, what is the minimum original maturity period for Masala Bonds raised upto USD 50 million equivalent in
INR per financial year ? a 2 years b 3 years c 5 years d 7 years
89. As per RBI guidelines, what is the minimum original maturity period for Masala Bonds raised above USD 50 million equivalent in
INR per financial year ? a 2 years b 3 years c 5 years d 7 years
90. What is the risk weight for capital adequacy ratio purpose, of a home loan up to Rs.30 lac, where the loan to value ratio is max
80% : a 25% b 35% c 50% d 75%
91. What is the risk weight for capital adequacy ratio purpose, of a home loan up to Rs.30 lac, where the loan to value ratio is above
80% but max 90% : a 25% b 35% c 50% d 75%
92. What is the risk weight for capital adequacy ratio purpose, of a home loan above Rs.30 lac up to Rs.75 lac, where the loan to
value ratio is max 80% - a 25% b 35% c 50% d 75%
93. What is the risk weight for capital adequacy ratio purpose, of a home loan above Rs.75 lac, where the loan to value ratio is max
75% - a 25% b 35% c 50% d 75%
94. What is the rate of provision on a standard home loan, where the loan to value ratio is between 75% to 90% according to size of
the loan amount: a 25% b 35% c 50% d 75%
95. The State Level Bankers’ Committees are required to send a confirmation to RBI by ___, that that all unbanked rural centres in
villages with population above 5000 have been banked.
a 30.06.17 b 30.09.17 c 31.12.17 d 31.03.18
96. What is the no. of domestic credit rating agencies approved by RBI for prudential guidelines on capital adequacy ratio, as on
30.06.2017? - a 10 b8 c7 d6
97. Which of the following is the latest credit rating agency approved by RBI for credit rating for the purpose of prudent guidelines
on capital adequacy ratio?
a SMERA b INFOMERICS c BRICKWORK RATING d FITCH Rating
98. The agency banks can furnish their claim on agency commission to Reserve Bank within ____ from the end of the quarter in
which the transactions have been conducted, starting with June 2017.
99. With reference to the implementation of Goods and Service Tax (GST) regime, the term CPIN stands for :
a Common Portal Identification Number (CPIN), b Central Portal Identification Number (CPIN)
c Central Portal Information Number (CPIN), d Common Payment Identification Number (CPIN)
100. For the quarter July to September, what is the rate of interest on Senior Citizens Saving Scheme:
a 7.5% b 7.8% c 8.3% d 9.1%
101. For the quarter July to September, what is the rate of interest on Public Provident Fund Scheme:
a 7.5% b 7.8% c 8.3% d 9.1%
102. For the quarter July to September, what is the rate of interest on Sukanya Samridhi Account Scheme:
a 7.5% b 7.8% c 8.3% d 9.1%
103. For the quarter July to September, what is the rate of interest on Kissan Vikas Patra Scheme:
a 7.5% b 7.8% c 8.3% d 9.1%
104 With effect from July 10, 2017, what is the batch interval time in NEFT settlements:
a half-hour b an hour c two hours d three hours
105With effect from July 10, 2017, what is the no. of batches in NEFT settlements:
a 11 b 12 c 23 d 25
106.Under NEFT, all participating banks are required to give the credit to beneficiary customer :
a after the inter-bank settlement has been completed, b after inter-bank settlement has been completed and the End-of¬Batch
(EOB) message is received by them, c after the End-of-Batch (EOB) message is received by them,
d after all the settlements have been completed and there is return message
107 A Banking Outlet for a Domestic Scheduled Commercial Bank (DSCB), a Small Finance Bank (SFB) and a Payment Bank (PB) is a
fixed point service delivery unit, manned by either bank’s staff or its Business Correspondent where services of acceptance of
deposits, encashment of cheques/ cash withdrawal or lending of money are provided for a minimum of __ hours per day for at least
___ days a week.- a 5 hours and 5 days b 6 hours and 5 days, c 4 hours and 5 days d 4 hours and 6 days
108 A banking outlet which does not provide delivery of service for a minimum of 4 hours per day and for at least 5 days a week will
be considered a : a Banking unit b Unbanked rural centre c part-time banking outlet d Place of banking business
109. Which of the following is categorized as a banking outlet as per RBI branch authorization policy 2017?
a ATMs b Mobile branches c E-lobbies d none of the above
110 As per RBI’s Branch Authorization Policy 2017, ____ banking outlets opened duing a financial year, must be in rural areas?
a. 20%, b. 25%, c. 30%, d. 35%
111. Merger, Closure and shifting of any rural ‘Banking Outlet’ as well as a sole semi urban ‘Banking Outlet’ would require approval
of: a RBI b SLBC c DCC/DLRC d local administration
112. On short term crop loans, interest subvention of 2% is available to ___ during 2017-18 as an interim measure:
a public sector banks b private sector banks
c public sector banks and loans in rural and semi-branches given by Private sector banks , d farmers
113. For availing short term crop loan interest subsidy, the eligible loan amount is:
a up to Rs.3 lac b up to Rs.2 lac c up to Rs.1 lac d any amount
114 To avail short term crop loan interest subsidy, the rate of interest from borrower should be:
a 4% pa ,b 5% pa, c 6% pa ,d 7% pa
115 Additional interest subvention of ___ % is available to prompt payee farmers from date of disbursement of crop loan up to
actual date of repayment by farmer or up to due date fixed by bank, whichever is earlier: a 1% ,b 2% c 3% d 4%
116 If additional interest subvention is available to prompt payee farmers for short term crop loan, the effective interest rate shall
be: a 1% b 2% c 3% d 4%
117. In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses against warehouse
receipts, the benefit of interest subvention will be available to small and marginal farmers having Kisan Credit Card for a further
period of upto ____ post-harvest on the same rate as available to crop loan against negotiable warehouse receipt for keeping their
produce in warehouses.- a 3 months b 6 months c 9 months d 12 months
118 To provide relief to farmers affected by natural calamities, the interest subvention of 2% will continue to be available to banks
for the _____ on the restructured amount. - a 1st six months ,b 1st year, c 1st 2 years d moratorium period
119. Banks are required to submit their claims for interest subvention of 2% and 3% for short term crop loans on: a half yearly basis
b yearly basis, c half yearly for 2% and yearly for 3% subvention d half yearly for 3% and yearly for 2% subvention
120 Statement of Financial transactions is required to be submitted by banks to Income Tax Department. Which of the following is
not correct in this context: a it replaced the previous statement called Annual Financial Information
b it is required to be submitted by 31st May, c it is required to be submitted on Form 61A, d none of the above
121. Consequent to Enforcement of Security Interest and Recovery of Debts Laws & Misc. Provisions (Amendment) Act, 2016, Asset
Reconstruction Company can commence or carry on the business of securitisation or asset reconstruction only if its Net
Owned Fund are minimum : a Rs.1 crore or amount notified by RBI, b Rs.2 crore or amount notified by RBI
c Rs.5 crore or amount notified by RBI, d Rs.10 crore or amount notified by RBI
122. Keeping in view the greater role envisaged for ARCs in resolving stressed assets as also the recent regulatory changes governing
sale of stressed assets by banks to ARCs, RBI decided to fix the minimum NOF requirement for ARCs at ____crore on an ongoing
basis: a Rs.10 cr b Rs.50 cr c Rs.100 cr d Rs.200 cr
123 For effective risk management, banks are required to appoint Chief Risk Officer, who can be appointed / transferred /removed
only with permission of:
a Board of Directors, b Reserve Bank of India c Ministry of Finance, d Risk Management Committee
124Under Sovereign Gold Bond 2017¬ 18 (series-1), what is the price fixed for the purpose of issue:
a Rs.2951 b Rs.2901 c Rs.2881 d Rs.2811
125The Sovereign Gold Bond 2017¬ 18 (series-1), have a maturity period of: a 5 years b 6 years c 7 years d 8 years
126 The denomination of Sovereign Gold Bond 2017-18 (series-1), is:
a one gram of gold b two gram of gold c five gram of gold d ten gram of gold
127. The rate of interest offered on Sovereign Gold Bond 2017-18 (series-1) is: a 2.5% pa payable annually , b 2.5% pa payable half-
yearly , c 2.25% pa payable annually d 2.25% pa payable half-yearly
128 Sovereign Gold Bond 2017-18 (series-1), the payment can be accepted in Indian Rupees through cash up to a maximum of ?
a Rs.10000 b Rs.20000 c Rs.25000 d Rs.50000
129 Which of the following statement is not corrected with regard to Sovereign Gold Bond 2017-18 (series-1)?
a the bonds can be accepted as collateral security for loan b the loan to value ratio for loan is 80%
c the bonds can be traded on stock exchange d the bonds are transferable.
130 Banks are required to make suitable disclosures in their balance sheet w.e.f. 31.03.17, wherever the additional provisioning
requirements assessed by RBI exceed ____ percent of the published net profits after tax for the reference period.
a 5% b 10% c 15% d 20%
131 Banks are required to make suitable disclosures in their balance sheet w.e.f. 31.03.17, wherever the additional Gross NPAs
identified by RBI exceed ____ percent of the published incremental Gross NPAs for the reference period, or both.
a 5% b 10% c 15% d 20%
132 Banks are to put in place a Board–approved policy for making provisions for standard assets at rates higher than the regulatory
minimum, based on evaluation of risk and stress in various sectors. For this purpose, the policy shall require a review, at least on a
_____ basis, of the performance of various sectors of the economy to which the bank has an exposure to evaluate the present and
emerging risks and stress therein.- a monthly basis b quarterly basis c half-yearly basis d annual basis
133 Banks can participate up to ____ % of the unit capital of Real Estate Investment Trusts (REITs) and Infrastructure Investment
Trusts (InvITs) within the overall ceiling for direct investments in shares, convertible bonds/ debentures, units of equity-oriented
mutual funds and exposures to Venture Capital Funds (VCFs) ?- a 10% b 15% c 20% d. 25%
134 A Bank’s direct investment in shares, convertible bonds/ debentures, units of equity-oriented mutual funds and exposures to
Venture Capital Funds (VCFs) can be up to ?-
a 10% of its capital funds b 10% of its net worth c 20% of its capital funds d 20% of its net worth
135 RBI can invoke Prompt Corrective Action, if the capital adequacy ratio + capital conservation buffer ratio, of a bank in India, falls
below: - a 10.25% b 9.75% c 8.50% d 7.75%
136 RBI can invoke Prompt Corrective Action, if the Common Equity Tier-1 ratio + capital conservation buffer ratio, of a bank in India,
falls below: a 10.25% b 9.75% c 8.50% d 7.75%
137 RBI can invoke Prompt Corrective Action, if net NPA ratio of a bank crosses the following level ?
a 5% b 6% c 8% d 9%
138 RBI can invoke Prompt Corrective Action, if a bank has shown negative return on assets for:
a one year b two consecutive years c three consecutive years d four consecuitive years
139 RBI can invoke Prompt Corrective Action, if the Tier-1 leverage ratio of a bank, comes below:
a 4% b 3.5% c 3% d 2.5%
140 As per Monetary Policy 2017-18 announced in April 2017, RBI decided to narrow the policy rate corridor around the policy repo
rate to plus and minus _____ bps with immediate effect. - a 25 bps b 50 bps c 75 bps d 100 bps
141 As per Monetary Policy 2017-18 announced in April 2017, RBI decided to stipulate a minimum net owned funds of Rs.____ crore
for ARCs.- a 200 cr b 100 cr c 50 cr d 25 cr
142 As per Monetary Policy 2017-18 announced in April 2017, RBI decided to reduce the settlement cycle of NEFT from hourly batch
to half-hourly batch, thus increasing the batches from present ____ to ___ :
a 11 to 21 b 12 to 23 c 11 to 23 d 12 to 24
143. The return discipline under NEFT is settlement batch time plus ____ hours?
a half-hour b one-hour c two hours d two and half hour
144 Financial literacy centres are required to hold special camps for a period of one year beginning 01.04.2017, on the following
aspects: a small entrepreneurs and school children, b senior citizens and self help groups, c UPI and #99 (USSD),d all the above
145 Financial literacy centres are eligible for funding support of maximum Rs. ___ per financial literacy camps?
a Rs.10000 b Rs.15000 c Rs.20000 d Rs.25000
146. Under financial literacy, the rural branches of banks are required to conduct one camp per month on ____, after branch hours
beginning 01.04.2017: a last working day b last Friday c 3rd Friday d 1st Friday
147. SLBCs are required to submit to Regional Office of RBI, a ____ return on financial literacy centres, within ___ days.
a monthly, 7 days b monthly, 15 days c quarterly, 20 days d half-yearly, 20 days
148. According to RBI definition under RBI (Interest Rate on Deposits) Directions 2016, bulk deposit means:
a single rupee term deposit of Rs.15 lac and above, b single rupee deposit balance of Rs.15 lac and above
c single rupee term deposit of Rs.1 cr lac and above, d single rupee deposit balance of Rs.1 cr lac and above
149. According to RBI definition under RBI (Interest Rate on Deposits) Directions 2016, notice deposit means:
a deposit which is withdrawable on demand, b deposit which is withdrawable on one day notice
c deposit which is withdrawable on 3 days notice, d deposit which is withdrawable on 10 days notice
150. According to RBI definition under RBI (Interest Rate on Deposits) Directions 2016, the maximum maturity period of a term
deposit can be: a one year b five years c 10 years d at bank discretion
151. According to RBI definition under RBI (Interest Rate on Deposits) Directions 2016, the minimum maturity period of a term
deposit can be: a 7 days b 15 days c 30 days d at bank discretion
152. All transactions, involving payment of interest on deposits shall be rounded off to the ____ for rupee deposits:
a nearest 25 paise b nearest 50 paise c nearest one rupee d at bank discretion
153 All transactions, involving payment of interest on FCNR (B) deposits shall be rounded off to ____ decimal places:
a 4 decimal points b 3 decimal points c 2 decimal points d at bank discretion
154 A term deposit matured on July 12, being Sunday. It is presented for payment by the customer on Jul 13. The contracted rate of
interest is 8.5%. Bank changed the interest rate to 8% from Jul 11. In this connection which of the following option is appropriate? - a
bank shall pay interest till Jul 12 at 8.5% b bank shall pay interest till Jul 12 at 8.0%
c bank shall pay interest till Jul 13 at 8.5% d bank shall pay interest till Jul 13 at 8.0%
155 On credit balance of which of the following current account, the bank shall not pay interest in case of death of the customer:
a individual account of X b proprietorship account of Z, c joint account of P and Q d all the above
156 Interest on domestic rupee savings deposits shall be calculated on a daily product basis and a uniform interest rate shall be set
on balance up to _____ , irrespective of the amount in the account within this limit:
a Rs.10000 b Rs.50000 c Rs. 1 lac d Rs.10 lac
157 On domestic rupee savings deposits, banks can pay differential rates of interest for any end-of-day savings bank balance ____: a
of Rs.1 lac and above b exceeding Rs.1 lac c of Rs.15 lac and above d exceeding Rs.15 lac
158 All term deposits accepted from individuals (held singly or jointly) for amount of ____ must have premature-withdrawal-facility.-
a Rs.15 lac or below b less than Rs.15 lac c Rs.1 cr or above d less than Rs.1 cr
159 Banks can offer term deposits of without pre-mature withdrawal facility, on which they can offer differential rate of interest? - a
Rs.15 lac or above b above Rs.15 lac c Rs.1 cr or above only d above Rs.1 cr only
160 If a Term Deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as
applicable to ____: a FD on date of maturity b FD on date of original contract c saving bank d no interest
161 Interest on savings deposit shall be credited by banks at ____ :
a monthly or shorter intervals b quarterly or shorter intervals c half-yearly or shorter intervals d at discretion of banks
162 Interest on the minimum credit balance in the composite cash credit account of a farmer during the period from the ____ of
each calendar month shall be paid- a 10th to the last day b 1st to the last day c daily balance product d at bank discretion
163. Banks can offer inexpensive gifts at the time of accepting deposits, costing not more than ____ , to the depositor as per Indian
Banks’ Association.- a Rs.1000 b Rs.500 c Rs.250 d Rs.100
164. As per RBI guidelines, the banks should impose ‘partial freezing’ on KYC non-compliant accounts in a phased manner. Partial
freezing after the first 6 months period, includes: a transactions at the discretion of the bank
b only credits to be permitted, c only debits to be permitted, d no debit and no credit to be permitted
165 What is the minimum maturity period of a commercial paper ?-
a 7 days, b 15 days, c 29 days, d 45 days, e 60 days
166. In order to ensure that a coloured photo copy or scanned coloured image of the cheque is not used, which of the following
features is included in the cheque under CTS 2010 standards?
a ultra-violet ink, b intaglio, c void pantograph, d UV enabled scanning
167. What is the minimum value of stock of gold coins, bullion and foreign securities, which RBI has to maintain at any point of time,
against issue of currency?- a Rs.200 cr, b Rs.215 cr, c Rs.115 cr, d Rs.500 cr, e Rs.1000 cr
168. While renewing the working capital limits of a partnership firm, the loan officer observes that the long terms uses are 25% more
than the long terms sources during the previous year. This will lead to:
a improvement in the debt equity ratio, b deterioration in debt equity ratio, c deterioration in current ratio
d improvement in current ratio, e improvement in debt service coverage ratio
169. If the current assets are 36 and net working capital is 12, what is the current ratio:
a 1.17:1 b 1.25:1, c 1.33:1 d 1.50:1
170. Which of the following instruments represents the share in Indian companies in India and traded in America/Europe?
a GDR/ADR, b IDR/ADR, c GDR/IDR, d Zero Coupon Bonds, e. Debentures
Answers
1 C 2 D 3 C 4 B 5 E 6 B 7 C 8 D 9 A 10 D
11 D 12 E 13 C 14 B 15 D 16 E 17 D 18 C 19 E 20 C
21 D 22 B 23 E 24 A 25 B 26 A 27 D 28 E 29 D 30 B
31 D 32 B 33 D 34 E 35 D 36 B 37 B 38 C 39 B 40 C
41 D 42 D 43 A 44 B 45 A 46 B 47 D 48 D 49 C 50 D
51 A 52 B 53 B 54 A 55 D 56 C 57 D 58 C 59 C 60 B
61 A 62 A 63 D 64 C 65 B 66 A 67 D 68 D 69 B 70 A
71 C 72 D 73 A 74 B 75 C 76 C 77 D 78 C 79 B 80 A
81 A 82 D 83 A 84 C 85 C 86 C 87 C 88 B 89 C 90 B
91 C 92 B 93 C 94 A 95 C 96 C 97 B 98 C 99 A 100 C
101 B 102 C 103 A 104 A 105 C 106 B 107 C 108 C 109 D 110 B
111 C 112 C 113 A 114 D 115 C 116 D 117 B 118 B 119 C 120 D
121 B 122 C 123 A 124 B 125 D 126 A 127 B 128 B 129 B 130 C
131 C 132 B 133 A 134 D 135 A 136 D 137 B 138 B 139 A 140 A
141 B 142 B 143 C 144 C 145 B 146 C 147 C 148 C 149 B 150 D
151 A 152 C 153 C 154 C 155 C 156 C 157 B 158 A 159 B 160 C
161 B 162 A 163 C 164 D 165 A 166 C 167 C 168 C 169 D 170 A
MCQ ON KYC & CC

1) The data on detection of counterfeit Indian notes at bank branches & treasuries should be included in the ______ Returns
forwarded to the Reserve Bank Issue Offices: a) Fortnightly b) monthly c) Bi-monthly d) Quarterly
2) The banks should re-align their cash management in such a manner so as to ensure that cash receipts in the denominations of
_____and above are not put into recirculation without the notes being machine processed for authenticity:
a) Rs. 20 b) Rs. 50 c) Rs. 100 d) Rs. 500
3) As per RBI guidelines, penalty at ____ of the notional value of counterfeit notes, in addition to the recovery of loss to the
extent of the notional value of such notes, will be imposed when counterfeit notes are detected in the soiled note remittance of the
bank and in the currency chest balance of a bank during Inspection / Audit by RBI:
a) 50% b) 60% c) 80% d) 100%
4) The responsibility of ensuring the quality and genuineness of cash loaded at _______would be that of the Sponsor Bank:
a) White Label ATM’s b) Brown Label ATM’s c) Both (a) & (b) d) None of these.
5) Data on counterfeit notes detected by all the branches of the bank shall be reported in the prescribed format, on a monthly
basis. A statement showing the details of counterfeit notes detected in the bank branches during the month shall be compiled and
forwarded to the Issue Office of Reserve Bank concerned so as to reach them by ___ of the next month:
th th th
a) 5 b) 6 c) 7 d) 8th
6) Under Rule 3 of Prevention of Money Laundering Rules, 2005, Principal Officers of banks are also required to report
information on cash transactions where forged notes have been used as genuine note to The Director, FIU-IND, Financial Intelligence
Unit- India, within _____ working days. A ‘nil’ report may be sent in case no counterfeit has been detected during the month. a) 5
b) 7 c) 10 d) 14
07 Reporting Entities (REs) other than Scheduled Commercial Banks are to upload the KYC data pertaining to all new individual
accounts opened on or after from ___ with Central KYC Records Registry, immediately.
(a) 01.01.17 (b) 01.03.17(c) 01.04.17 (d) 01.07.17
08 Where a reporting entity provides an option for One Time Pin (OTP) based e-KYC process for on-boarding of customers, the
maximum balance in such accounts can be: (a) Rs.25000 (b) Rs.50000 (c) Rs.1 lac (d) Rs.2 lac
09 Where a reporting entity provides an option for One Time Pin (OTP) based e-KYC process for on-boarding of customers, the
aggregate credit in a financial year, in such accounts can be: (a) Rs.25000 (b) Rs.50000 (c) Rs.1 lac (d) Rs.2 lac
10 Where a reporting entity provides an option for One Time Pin (OTP) based e-KYC process for providing term loan, the amount of
sanctioned term loan can be max ____ per financial year: (a) Rs.50000 (b) Rs.60000 (c) Rs.75000 (d) Rs. 1 lac
11 Deposit and borrowal account opened using one-time-pin (OTP) based e-KYC shall not be allowed for more than ____ within
which Customer Due Diligence (CDD) procedure is to be completed.
(a) one month (b) one quarter (c) one half-year (d) one year
12 Reporting Entities (REs) are required to preserve the customer account information including preservation of records pertaining
to the identification of the customers and their addresses obtained while opening the account, for at least ____ after the business
relationship is ended. : (a) one year (b) two years (c) three years (d) five years
13 The banks are to maintain, at the Currency Chest level and at link branches level, a Daily Record of Issuances showing the serial
numbers of Mahatma Gandhi (New) Series banknotes in the denominations of Rs.500 and above received from RBI as remittance
and issuance thereof to their own branches, branches of other banks and post offices, branch wise and denomination wise on daily
basis. These records are to be preserved for a period of: (a) one year (b) two years(c) three years (d) five years
14 Government of India has authorised the______, to act as, and to perform the functions of the Central KYC Registry (CKYCR) :.(a)
Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI)
(b) Credit Information Bureau India Limited (c) Credit Rating India Limited (d) Central KYC Registry Limited
15 Scheduled Commercial Banks (SCBs) may upload the KYC data with Central KYC Registry, in respect of new individual accounts
opened on or after : (a) 30.06.16 (b) 15.07.16 (c) 31.07.18 (d) 30.09.16
16 As per extant Rules for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), with effect from June 1, 2016 the claims for deaths
which occur during the first ___ days from the date of enrolment will not be paid:
(a) 15 days (b) 30 days (c) 45 days (d) 60 days
17 All Scheduled Commercial Banks (SCBs) are required to invariably upload the KYC data pertaining to all new individual accounts
opened on or after ____ with Central KYC Records Registry, immediately:
(a) 01.01.17 (b) 01.03.17(c) 01.04.17 (d) 01.07.17
18 Know Your Customer (KYC) guidelines have been issued by RBI:
(a) u/s 35A of Banking Regulation Act 1949 (b) Rule 9 (14) of Prevention of Money Laundering Act
(c) u/s 25 of Payment and Settlement System Act 2007 (d ) a and b both
19 Under KYC, in case of a company, the beneficial owner is the natural person, who has a controlling ownership interest or who
exercise control of more than ____ per cent of the shares or capital or profits of the company.
(a) 10% (b) 15% (c) 20% (d) 25%
20 Under KYC, in case of a partnership firm, the beneficial owner is the natural person, who has a controlling ownership
interest or who exercise control of more than ____ per cent of the capital or profits:
(a) 10% (b) 15% (c) 20% (d) 25%
21 Under KYC, in case of unincorporated association or body of individuals, the beneficial owner is the natural person, who has
a controlling ownership interest or who exercise control of more than ____ per cent of the property or capital or profits : (a)
10% (b) 15% (c) 20% (d) 25%
22 Under KYC rules, which of the following is not an officially valid document for both the purposes namely identity proof and proof
of address, as it does not contain address details (1) Passport, (2) Driving licence, (3) Permanent Account Number (PAN) Card, (4)
Voter’s Identity Card issued by the Election Commission of India, (5) job card issued by NREGA duly signed by an officer of the State
Government (6) letter issued by the Unique Identification Authority of India containing details of name, address and Aadhaar
number. (a) 3, 5 and 6 only (b) 3 and 6 only ( c ) 3 o n l y (d) none of the above
23 For KYC purpose, where ‘simplified measures’ are applied for verifying the identity of the customers, the utility bill, which is
not more than ____ months old, of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill)
shall be deemed to be OVD: (a) 1 month (b) 2 months (c) 3 months (d) 6 months
24 For the purpose of small account under KYC, which of the following conditions is correctly stated:
(a) aggregate of all credits in a financial year does not exceed Rs.50000
(b) the aggregate of all withdrawals and transfers in a month does not exceed Rs.10000
(c) the balance at any point of time does not exceed Rs.100000 (d) none of the above
25 Common Reporting Standards means reporting standards set for implementation of multilateral agreement signed by India to
automatically exchange information based on Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters
relating to bank a/cs of :
(a) European citizens only (b) US Citizens (c) Citizens of all countries (d) Citizens of countries other than USA
26 Foreign Account Tax Compliance Act (FATCA) inter alia, requires foreign financial institutions to report about financial
accounts held by ____ taxpayers or foreign entities in which ____ taxpayers hold a substantial ownership interest. -- (a)
European citizens only ( b) US taxpayers (c) Citizens of all countries (d) Citizens of countries other than USA
27 A bank which is incorporated in a country where it has no physical presence and is unaffiliated to any regulated financial group, is
called: a Universal Bank b Narrow Bank c Sh el l Bank d Correspondent Bank
28 Which of the following is a key element of KYC policy of a bank, as per RBI directions (1) customer acceptance policy (2)
risk management (3) customer identification procedure (4) monitoring of transactions (5) reporting of transactions
(a) 1 to 5 all (b) 1 to 4 only (c) 1 to 3 only (d) 1 and 2 only
29 For risk management under KYC rules of RBI, the customers are categorized into following categories (which one is not
correct) (a) hi gh ri s k (b) medium risk (c ) l ow ri s k (d) nominal risk
30 In cases where a customer categorised as ‘low risk’, expresses inability to complete the documentation requirements on
account of any reason that the bank considers to be genuine, the bank shall, at its option, complete the verification of
identity of the customer within a period of ____ months from the date of establishment of the relationship.
(a) 1 month (b) 2 months (c) 3 months (d) 6 months
31 In case an individual customer who does not possess either any of the OVDs or the documents applicable in respect of
simplified procedure and desires to open a bank account: (a) he cannot be allowed the bank account (b) he can open a
small account (c) he can open a basic saving bank deposit account (d) he can open saving bank account without cheque
book and cheque collection facility
32 A small account allowed to be opened by a customer as per KYC procedure can be allowed:
(a) up to 3 months (b) up to 6 months (c) up to one year (d) up to two years
33 Under KYC, a system of periodic review of risk categorisation of accounts, with such periodicity being at least once in ___ shall be
put in place (a) 3 months (b) 6 months (c) one year (d) two years
34 Periodic updation of proof of identity and proof of address of the customer shall be carried out by the banks under KYC at
least once in every ____ years for medium risk customers from the date of opening of account / last verification under KYC: (a)
two years (b) five years (c) eight years (d) ten years
35 Periodic updation of proof of identity and proof of address of the customer shall be carried out by the banks under KYC at
least once in every ___ years for high risk customers from the date of opening of account / last verification under KYC:
(a) two years (b) five years (c) eight years (d) ten years
36 Periodic updation of proof of identity and proof of address of the customer shall be carried out by the banks under KYC at least
once in every ____ years for low risk customers from the date of opening of account / last verification under KYC:
(a) two years (b) five years (c) eight years (d) ten years
37 In existing accounts, where the KYC requirement has not been fulfilled by customers, the option of ‘partial freezing (only
credit, no debit)’ shall be exercised by the bank, after giving due notice of months followed by a reminder for further period of
____, to the customers to comply with KYC requirements.
(a) one month, one month (b) two months, three months (c) three months, three months (d) six months, three months
38 In existing accounts, where the KYC requirement has not been fulfilled by customers, all debits and credit shall be disallowed
after ____ months of use of the option of ‘partial freezing’ :
(a) 1 month (b) 2 months (c) 3 months (d) 6 months
ANSWER
1 B 2 C 3 D 4 A 5
6 7 C 8 C 9 D 10 B
11 D 12 D 13 B 14 A 15 B
16 C 17 A 18 D 19 D 20 B
21 B 22 C 23 B 24 B 25 D
26 B 27 C 28 B 29 D 30 D
31 B 32 C 33 B 34 C 35 A
36 D 37 C 38 D
ADVANCES : MCQ ON MCLR
1 Which of the following is not a component of marginal cost of funds based lending rate (MCLR) which is an internal benchmark:
(a)marginal cost of funds (b) negative carry on account of CRR and SLR (c) operating cost (d) tenor premium
2 Negative carry on the mandatory CRR which arises due to return on CRR balances being nil, is calculated as under for the purpose of marginal
cost of funds based lending rate (MCLR): (a)required CRR x marginal cost / (1 – CRR) (b) required CRR / marginal cost / (1 – CRR)
(c) required CRR + marginal cost / (1 – CRR) (d) required CRR x marginal cost / (1 + CRR)
3 Under the marginal cost of funds based lending rate (MCLR), the banks are required to publish the internal benchmark for the following
maturities (1) overnight MCLR (2) one-month MCLR (3) three month MCLR (4) six month MCLR
(a)1 only (b) 1 and 3 only (c) 1, 3 and 4 only (d) 1 to 4 all
4 The following categories of loans can be priced without being linked to MCLR as the benchmark for determining interest rate: (1)
Advances to banks’ depositors against their own deposits. (2) Advances to banks’ own employees including retired employees. (3) Advances
granted to the Chief Executive Officer / Whole Time Directors. (4) Loans linked to a market determined external benchmark.
(a)1 only (b) 1 and 3 only (c) 1, 3 and 4 only (d) 1 to 4 all
5. Banks are to review and publish their Marginal Cost of Funds based Lending Rate (MCLR) of different maturities every ___ on a
pre-announced date with the approval of the Board or any other committee to which powers have been delegated.
(a)fortnight (b) month (c) quarter (d) six months
6 Banks can reset the interest rates under Marginal Cost of Funds based Lending Rate (MCLR) system, for which the periodicity can be:
(a)one year or lower (b) 6 months or lower (c) 3 months or lower (d) 1 month or lower
7.Under Marginal Cost of Funds based Lending Rate (MCLR) system, the marginal cost of borrowings shall have a weightage of ___ % of
Marginal Cost of Funds while return on networth will have the balance weightage of ___%. (a) 50%, 50% (b) 75%, 25
(c) 90% , 10% (d) 92%, 8%
8. Govt. of India has established Central KYC Records Registry (CKYCR) under provisions of which of the following Act, as amended
from time to time? (a)RBI Act 1934 (b) Prevention of Money Laundering Act 2002 (c) Banking Regulation Act 1949 (d)
Negotiable Instruments Act 1881
9 Banks can extend financial assistance to support the factoring business of Factoring Companies complying with certain criteria, which,
inter-alia states that they derive at least ____ of their income from factoring activity.
(a) 80% (b) 75% (c) 60% (d) 50%
10. ECS (Credit) payments can be initiated by any institution (called ECS user) : (a)which has to make small payments (b) which has to
recover amount of bills repeatedly (c) which has to make large size payments in small numbers (d) which has to make bulk or
repetitive payments of small amounts to a number of beneficiaries.
FINANCIAL INCLUSION & GOVT. SCHEMES
11 Under the structure of Financial Literacy Centre (FLC) Scheme, the FLC and rural branches are to arrange ____ outdoor
special camps for newly included persons: (a) minimum one camp per fortnight (b) minimum one camp per month
(c) minimum one camp per quarter (d) minimum one camp per half-year
12 Under the structure of Financial Literacy Centre (FLC) Scheme, the FLC and rural branches are to arrange ____ camps for target group
persons such as farmers, SHG, MSEs, school children etc: (a) minimum one camp per fortnight (b) minimum one camp per month
(c) minimum one camp per quarter (d) minimum one camp per half-year
13 Report about activities of financial literacy centres (FLC) is to be sent to Regional Office RBI, within :
(a) 20 days from end of each month (b) 20 days from end of each quarter
(c) one month from end of each half-year (d) one month from end of each financial year
14 SLBC Convenor banks are to identify villages with population _____ without a bank branch of a scheduled commercial bank in their State
to ensure that opening of bank branches should be completed by March 31, 2017.
(a) below 2000 (b) above 2000 (c) below 5000 (d) above 5000
NULM
15 Under DDU – National Rural Livelihood Mission, interest subvention is available to a bank for lending to women self group in 250
specified districts, if the rate of interest charged from borrower is: \
a) 4% (b) 7% (c) base rate of the bank (d) MCLR of the bank
16 Under DDU – National Rural Livelihood Mission, interest subvention is available to a bank for lending to women self group in 250
specified districts, for loan amount up to : - (a) Rs.2 lac (b) Rs.3 lac (c) Rs.5 lac (d) bank discretion
17 Under DDU – National Rural Livelihood Mission, interest subvention is available @ _____ to a bank for lending to women self
group in 250 specified districts, if other conditions such as rate of interest and amount of loan are satisfied:
(a) rate of interest of the bank less 7% subject to maximum of 3%
(b) weighted average rate of interest as determined by the bank less 7% subject to maximum of 5%
(c) weighted average rate of interest as determined by the bank less 7% subject to maximum of 5.5%
(d) weighted average rate of interest as determined by Ministry of Finance less 7% subject to maximum of 5.5%
18 Under DDU – National Rural Livelihood Mission, special interest subvention is available for prompt payment @ _____ to women
self group in 250 specified districts. In such cases, the effective interest rate for the borrower shall be:
(a) 3%, 2% (b) 3%, 4% (c) 2%, 3% (d) 2%, 4%
CGTMSE & MSME
19 Under CGTMSE guarantee scheme for MSE, the maximum amount of eligible loan is ___ wef 01.01.17:
(a) Rs.200 lac (b) Rs.100 lac (c) Rs.50 lac (d) Rs.25 lac
20 Under CGTMSE guarantee scheme for MSE, the maximum amount of claim payable by CGTMSE is restricted to ___ wef 01.01.17:
21 Under CGTMSE guarantee scheme for MSE, the guarantee cover available for a loan up to Rs.50 lac to women enterprises or loan
in NE States is ___ wef 01.01.17: (a) 85% of amount in default max Rs.42.50 lac (b) 80% of amount in default max Rs.40 lac (c) 75%
of amount in default max Rs.37.50 lac (d) 50% of amount in default max Rs.25 lac
22 Under CGTMSE guarantee scheme for MSE, the guarantee cover available for a loan above Rs.50 lac up to Rs.200 lac to women
enterprises or loan in NE States is ___ wef 01.01.17:
(a) 85% of amount in default (b) 80% of amount in default (c) 75% of amount in default (d) 50% of amount in default
23 Under CGTMSE guarantee scheme for MSE, the guarantee cover available for a loan up to Rs.5 lac to a micro enterprises, is ___
wef 01.01.17: (a) 85% of amount in default max Rs.4.25 lac (b).80% of amount in default max Rs.4 lac
(c).75% of amount in default max Rs.3.75 lac (d).50% of amount in default max Rs.2.50 lac
24 Under CGTMSE guarantee scheme for MSE, the guarantee cover available for a loan up toRs. 50 lac to a micro enterprises, is ___
wef 01.01.17: (a).85% of amount in default max Rs.42.50 lac (b).80% of amount in default max Rs.40 lac
(c).75% of amount in default max Rs.37.50 lac (d). 50% of amount in default max Rs.25 lac
25 Under CGTMSE guarantee scheme for MSE, the rate of interest (including cost of guarantee cover) on an eligible
loan can be max ___ wef 01.01.17: (a).14% p.a. (b).12% p.a. (c).MCLR + 3% (d). MCLR + 4%
PSLC
26 Priority sector lending certificates (PSLC) can be issued by banks in respect of their (1) eligible agriculture loans (2) eligible loans to
small and marginal farmers (3) all loans to MSME sector (4) priority sector loans other than agriculture and MSME
(a) 1 to 4 all (b) 1 and 3 only (c) 1, 2 and 3 only (d) 1, 3 and 4 only
27 Normally Priority sector lending certificates can issued against the underlying assets. But a bank is permitted by to issue PSLCs
upto ___ of previous year’s PSL achievement without having the underlying in its books.
(a) 10% (b) 25% (c) 33% (d) 50%
28 Priority sector lending certificates (PSLC) will expire _____ irrespective of the date it was first sold.
st
(a) within 3 months (b) within 6 months (c) within 9 months (d) by 31 March
29 Priority sector lending certificates (PSLC) can be issued with a standard lot size of ___ and multiples thereof.
30 In case of cash credit which of the following is correct statement:
(a) in hypothecation ownership is with the bank. (b) in cash credit pledge, the possession with the borrower
(c) in case of hypothecation the possession is with the bank (d) in case of pledge the ownership remains with the borrower
(e) in case of hypothecation ownership and possession is with the bank
MCQ on PM Fasal Bima Yojna
31 The implementing agency of Pradhan Mantri Fasal Bima Yojna is : (a) Ministry of Rural Development, Govt.of India (b) Ministry
of Agriculture, Govt. of India (c) Agriculture Insurance Co. Limited (d) Commercial banks
32 Unit area of insurance under Pradhan Mantri Fasal Bima Yojna is: (a) Farmer land holding (b) village (c)district ( d ) S t a t e
33 Which crops are covered by Pradhan Mantri Fasal Bima Yojna :(a) all crops (b) notified crops
(c) all crops in notified areas where yield data is available (d) discretion of insurance company
34 Which farmers are covered by Pradhan Mantri Fasal Bima Yojna :
(a) farmers who have raised crop loans and renewed their limit (b)farmers who have raised crop loans
and not renewed their limit (c) farmers who have not raised loans (d) all farmers
35 Which of the following risk is covered by PM Fasal Bima Yojna : (1) yield losses (2) prevented sowing losses (3) post harvest losses (4)
localized calamities (5) war and nuclear risk -- (a) 1 to 5 all (b) 1 to 4 only (c) 1 to 3 only (d) 1 only
36 Which risk out of the following is not covered by PM Fasal Bima Yojna :
(a) war and kindred perils (b) nuclear risk, (c) riot, theft, malicious damages, act of enmity (d) all the above
37 What is the amount of insurance where farmer is a loanee farmer under Pradhan Mantri Fasal Bima Yojna :
(a) value of crop (b) threshold yield x MSP or gate price of the insured crop
(c) scale of finance (d) scale of finance or up to value of threshold yield at option of the farmer
38 What is the amount of insurance where farmer is not a loanee farmer under PM Fasal Bima Yojna :
(a) value of crop (b) threshold yield x MSP or gate price of the insured crop
(c) scale of finance (d) scale of finance or up to value of threshold yield at option of the farmer
39 Actuarial premium rate (APR) is charged under Pradhan Mantri Fasal Bima Yojna, which is presently fixed at ___ in case of Annual
commercial or horticulture Crops:
(a) 2% of sum insured or actuarial rate whichever is less (b) 1.5% of sum insured or actuarial rate whichever is less
(c) 5% of sum insured or actuarial rate whichever is less (d) at rates negotiated by the bank and insurance company
40 Actuarial premium rate (APR) is charged under Pradhan Mantri Fasal Bima Yojna, which is presently fixed at ___ in case of Rabi
Crops:
(A) 2% of sum insured or actuarial rate whichever is less (b) 1.5% of sum insured or actuarial rate whichever is less
(c) 5% of sum insured or actuarial rate whichever is less (d) at rates negotiated by the bank and insurance company
41 Actuarial premium rate (APR) is charged under Pradhan Mantri Fasal Bima Yojna, which is presently fixed at ___ in case of Khariff
Crops: (a) 2% of sum insured or actuarial rate whichever is less (b) 1.5% of sum insured or actuarial rate whichever is less (c)
5% of sum insured or actuarial rate whichever is less (d) at rates negotiated by the bank and insurance company
42 Under Pradhan Mantri Fasal Bima Yojna, the risk to be shared by the Insurance agency is:
(a) 150% of total premium collected or 35% of total sum insured whichever is higher
(b) 250% of total premium collected or 25% of total sum insured whichever is higher
(c) 350% of total premium collected or 35% of total sum insured whichever is higher
(d) 50% of total premium collected or 25% of total sum insured whichever is higher
43 Under Pradhan Mantri Fasal Bima Yojna, the risk sharing ratio between Central and State Govt. is:
(a) 75:25 (b) 60:40 ( c ) 5 0 : 5 0 ( d ) 3 3 : 6 7
44 There are 3 indemnity levels under Pradhan Mantri Fasal Bima Yojna :
(a) 70%, 80%, 90% (b) 60%, 70%, 80% (c) 50%, 60%, 70% (d) 40%, 50%, 60%
MCQ on Credit Guarantee Fund Scheme for Education Loans
45 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, the amount of
eligible education loan is up to : (a) Rs.5 lac (b) Rs.7.50 lac (c) Rs.10 lac(d) Rs.15 lac
46 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, the margin on
eligible education loan is (find the correct): (a) Nil for loan up to Rs.4 lac (b)5% for loan above Rs.4 lac for education in India
(c) 15% for loan above Rs.4 lac for education in India (d) all the above
47 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, to be eligible for
guarantee, the rate of interest on the loan can be maximum :
(a) base rate + 2% (b) base rate + 4% c bank rate + 2% (d) bank rate + 4%
48 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, the annual
guarantee fee is ___ of outstanding balance on date of application for guarantee cover.
( a ) 0 . 2 5 % ( b ) 0 . 5 % (c) 0.75% (d) 1%
49 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, the prescribed
annual guarantee fee is payable within ___ from the date of Credit Guarantee Demand Advice Notice of guarantee fee: (a) 10 days
(b) 15 days (c) 20 days (d) 30 days
50 Under Credit Guarantee Fund Scheme for Education Loans offerred by National Credit Guarantee Trust Company, ___ amount of
the claim payable is to be paid within 30 days -- ( a ) 7 0 % ( b ) 7 5 % (c) 80% (d) 85%
MCQ on Interest Subvention
51 On short term crop loans, interest subvention of 2% is available to ___ :
(a) public sector banks (b) private sector banks
(c) public sector banks and loans in rural and semi-branches given by Private sector banks (d) farmers
52 For availing short term crop loan interest subsidy, the eligible loan amount is:
(a) up to Rs.3 lac (b) up to Rs.2 lac (c) up to Rs.1 lac (d) any amount
53 To avail short term crop loan interest subsidy, the rate of interest from borrower should be:
(a) 4% pa (b) 5% pa (c) 6% pa (d) 7% pa
54 Additional interest subvention of ___ % is available to prompt payee farmers from date of disbursement of crop loan up to actual
date of repayment by farmer or up to due date fixed by bank, whichever is earlier:
(a) 1% (b) 2% (c) 3% (d) 4%
55 If additional interest subvention is available to prompt payee farmers for short term crop loan, the effective interest rate shall be:
(a) 1% (b) 2% (c) 3% (d) 4%
56 In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses against warehouse
receipts, the benefit of interest subvention will be available to small and marginal farmers having Kisan Credit Card for a further
period of upto ____ post¬harvest on the same rate as available to crop loan against negotiable warehouse receipt for keeping their
produce in warehouses.
(a) 3 months (b) 6 months (c) 9 months (d) 12 months
57 To provide relief to farmers affected by natural calamities, the interest subvention of 2% will continue to be available to banks for
the _____ on the restructured amount.
(a) 1st six months (b) 1st year (c) 1st 2 years (d) moratorium period
58 Banks are required to submit their claims for interest subvention of 2% and 3% on:
(a) half yearly basis (b) yearly basis
(c) half yearly for 2% and yearly for 3% subvention (d) half yearly for 3% and yearly for 2% subvention
ANSWER
1 B 2 A 3 A 4 D 5 D
6 B 7 D 8 B 9 D 10 D
11 B 12 B 13 A 14 D 15 B
16 B 17 C 18 B 19 A 20 B
21 B 22 D 23 A 24 C 25 A
26 A 27 D 28 D 29 B 30 D
31 B 32 B 33 C 34 D 35 B
36 D 37 D 38 B 39 C 40 B
41 A 42 C 43 C 44 A 45 B
46 D 47 A 48 B 49 D 50 B
51 C 52 A 53 D 54 C 55 D
56 B 57 B 58 C

1 With a view to monitoring the performance of banks in providing credit to the specified minority communities, data on credit
assistance provided to members of minority communities is to be furnished to RBIand to the Govt. of India, on half yearly basis as on
the last Friday of March and September every year within ___ from the close of each half year.
(a) 10 days (b) 15 days (c) one month (d) two months
2 A lending institution can consider publication of the photographs of borrowers/ proprietors/ partners / directors / guarantors of
borrower firms/ companies:(a) who have defaulted in loan repayment (b) whose accounts have been classified as Red Flagged
accounts (c) who have been declared willful defaulters (d) all the above
3 According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016, the Distt. Magistrate when approached by a bank under SARFAESI Act shall complete the process of possession of charged
security within: (a) 10 days (b) 20 days (c) 30 days (d) 45 days
2016, RBI can impose penalty of on an Asset _____ Reconstruction Company for non-compliance of RBI directions:
(a) up to Rs.5 cr (b) up to Rs.1 cr (c) up to Rs.50 lac(d) up to Rs.10 lac
2016, the govt. can create a central database of charges by integrating the registration records under (1) Companies Act 2013 (2)
Registration Act 1908 (3) Merchant Shipping Act 1958 (4) Motor Vehicles Act etc.
(a) 1 to 4 all (b) 1 to 3 only (c) 1 and 4 only (d) 1 only
2016, the age limit of Presiding Officer of Debt Recovery Tribunal (under RDDBFI Act) has been raised from :
(a) 60 to 62 years (b) 62 to 63 years (c) 62 to 65 years (d) 62 to 67 years
2016, the age limit of Chairperson of Debt Recovery Appellate Tribunal (under RDDBFI Act) has been raised from:
(a) 62 to 65 years (b) 62 to 65 years (c) 65 to 67 years (d) 65 to 70 years
2016 amending the RDDBFI Act, the defendant is required to submit a statement of defence in writing within a period of ____ from
date of receipt of summons from Debt Recovery Tribunal: (a) 45 days (b) 30 days (c) 25 days (d) 15 days
2016 amending the RDDBFI Act, the time available for making appeal against order of DRT to DRAT has been reduced from: (a) 60
days to 45 days (b) 60 days to 30 days (c) 45 days to 30 days (d) 45 days to 15 days
10. According to provisions of The Enforcement of Security Interest and Recovery of Debt Law and Misc. Provisions (Amendment) Act
2016 amending the RDDBFI Act, the amount which is required to be deposited by defendant borrower before making appeal against
order of DRT to DRAT has been reduced from:
(a) 75% of amount of debt due to 50% of amount due (b) 75% of amount of debt due to 60% of amount due
(c) 75% of amount of debt due to 25% of amount due (d) 75% of amount of debt due to 0% of amount due
2016 amending the RDDBFI Act, the amount which is required to be deposited by defendant borrower before making appeal against
order of DRT to DRAT can be reduced by DRAT, which should not be less than __ after such reduction:
(a) 75% of amount of debt due (b) 50% of amount of debt due
(c) 25% of amount of debt due (d) 0% of amount of debt due
2016 amending the RDDBFI Act, Presiding Officer of DRT, after issue of recovery certificate, can allow extra time, if acceptable to
bank/FI, for payment by defendant, where he makes payment of at least ___ of amount specified in the Recovery Certificate. (a)
10% (b) 25% (c) 40% (d)50%
2016 amending the RDDBFI Act, where the borrower wants to make an appeal to DRT against order of Recovery Officer, he has to
deposit ____ of amount due, before the appeal is entertained by DRT.
(a) 10% (b)25% (c) 40% (d)50%
MCQ on MSME Rehabilitation Framework
14 The Framework notified by RBI during March 2016 for revival and rehabilitation of MSMEs can be used for MSME loans for limit up to:
(a) Rs.50 cr (b) Rs.25 cr (c) Rs.10 cr (d) Rs.5 cr
15 Restructuring of loans of _____ relating to MSME will be governed by the extant guidelines on Corporate Debt Restructuring / Joint
Lenders’ Forum mechanism: (a) above Rs.50 cr (b) above Rs.25 cr (c) above Rs.10 cr (d) above Rs.5 cr
16 Under the Framework for Revival & Rehabilitation of MSMEs mechanism, the branch maintaining the account should forward the
details of stressed account with loan limits _____ to the Committee constituted under the mechanism, for suitable corrective action plan
(CAP)? (a) above Rs.50 lac (b) above Rs.25 lac (c) above Rs.10 lac (d) above Rs.5 lac
17 Under the Framework for Revival & Rehabilitation of MSMEs mechanism, the branch maintaining the account should forward the details
of stressed account with loan limits falling under the prescribed cut off celing, to internal Committee at Distt/Regional/ Zonal level
constituted under the mechanism within a period of ___ for suitable corrective action plan (CAP)?
(a) 5 banking days (b) 10 banking days (c) 15 banking days (d) 25 banking days
18 A borrower can voluntarily initiate the proceedings under the Framework for Revival & Rehabilitation of MSMEs mechanism if any of
the following condition is satisfied: (a) apprehension about failure of business (b) inability or likely inability to pay debts
(c) erosion in net worth du e to accumulated loss to the extent of 50% of NW (d) any of the above
19 When a request is received from borrower to initiate the proceedings under the Framework for Revival & Rehabilitation of
MSMEs mechanism by the Standing Committee for Stressed Assets, it should convene a meeting for corrective action plan (CAP)
within: (a) 5 banking days (b) 10 banking days (c) 15 banking days (d) 30 banking days
20 When a request is received under the Framework for Revival & Rehabilitation of MSMEs mechanism by the Standing Committee
for Stressed Assets, it has to write to statutory creditors regarding outstanding liabilities for making claim within a period of: (a)
5 banking days (b) 10 banking days (c) 15 banking days (d) 30 banking days
21 For consortium or MBA loans Under the Framework for Revival & Rehabilitation of MSMEs mechanism, the Standing Committee for
Stressed Assets shall take a decision about corrective action plan (CAP) within:
(a) 5 days (b) 15 days (c) 20 days (d) 30 days
22 For consortium or MBA loans under the Framework for Revival & Rehabilitation of MSMEs mechanism, if Techno-Economic Viability
(TEV) is to be conducted, the Standing Committee for Stressed Assets shall finalize the terms of restructuring within ___ when the
amount is up to Rs.10 cr: a) 5 working days (b) 15 working days (c) 20 working days (d) 30 working days
23 Under the Framework for Revival & Rehabilitation of MSMEs mechanism, upon finalization of terms of corrective action plan, the
implementation will be completed within ____ if CAP is restructuring and within ___ if CAP is rectification:
(a) 60 days and 30 days (b) 90 days and 30 days (c) 90 days and 60 days (d) 60 days and 90 days
24 Under the Framework for Revival & Rehabilitation of MSMEs mechanism, the basis for proceeding with a decision is agreement of the
majority of banks which means ___ majority by amount and ___ by no. of banks.
( a) 50 % , 6 0 % ( b ) 6 0 % , 7 5 % ( c ) 8 0 % , 6 0 % ( d ) 7 5% , 5 0%
25 You are incharge of loans department in your branch. In which situation, in the loan accounts the interest can be debited and taken
to income to in-crease the profits: (a) It has become due (b) It has become due and stands recovered if it is NPA account
(c) It has become due and account has not been a non-performing account (d) b and c above (e): None of the above
ANSWER
1 C 2 C 3 C 4 B 5 A
6 C 7 D 8 B 9 C 10 A
11 C 12 B 13 D 14 B 15 B
16 C 17 A 18 D 19 A 20 C
21 D 22 C 23 B 24 D 25 D
GENERAL BANKING :INCOME TAX RELATED QB
01 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114B), w.e.f. 1.1.2016, quoting of permanent account number (PAN) is not
mandatory for opening ___ : (a) a saving bank account (b) a current account (c) a basic saving bank deposit account (d) for issue
of credit card or debit card
02 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114B), w.e.f. 1.1.2016, quoting of permanent account number (PAN) is mandatory
for depositing cash _____ with a bank, on any one day:
(a) above Rs.10000 (b) above Rs.20000 (c) above Rs.25000 (d) above Rs.50000
03 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114B), w.e.f. 1.1.2016, quoting of permanent account number (PAN) is
mandatory for purchase of demand draft or pay order or bankers’ cheque by depositing cash above Rs._____ during any one day:
(a Rs.100000 (b) Rs 500000 (c) Rs 25000 (d) Rs 20000
04 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114B), w.e.f. 1.1.2016, quoting of permanent account number (PAN) is mandatory
for a time deposit exceeding Rs. _____ or aggregating to more than Rs.____ in a financial year:
(a) Rs.10000, Rs.1 lac (b) Rs.20000, Rs.2 lac (c) Rs.50000, Rs.5 lac (d) Rs.1 lac, Rs.10 lac
0 Rs.100000 (b) Rs 50000 (c) Rs 25000 (d) Rs 200000
06 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114B), w.e.f. 1.1.2016, quoting of permanent account number (PAN) of ______ is
mandatory if the transaction requiring PAN details are in the name of minor:
(a) father (b) mother (c) guardian (d) any of the above
07 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114B), w.e.f. 1.1.2016, where quoting of permanent account number (PAN) is
mandatory and the person concerned does not have PAN, he is required to make a declaration on Form No.___
( a ) 6 0 ( b) 6 1 A ( c ) 1 5 G (d) 15H
08 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114C), w.e.f. 1.1.2016, relating to permanent account number (PAN) where a
bank receives declaration on Form 60, in the absence of PAN, it is required to preserve Form 60 for ____ from end of the financial year in
which the transaction was undertaken: - (a) 7 years (b) 6 years (c) 5 years (d) 3 years
09 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114C), w.e.f. 1.1.2016, relating to permanent account number (PAN) where a bank
receives declaration on Form 60, in the absence of PAN, a consolidated statement is to be submitted to Income Tax department for HY ended
Sept and March, within ___ from close of the HY:-(a) 10 days (b) 15 days (c) one month (d) two months
10 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114E), w.e.f. 1.4.2016, banks are to send report about payment in cash for purchase of
pre-paid payment instruments or demand drafts or pay orders or banker’s cheque of an amount aggregating to Rs. ___ or above in a financial year,
to Income Tax Department, through the Statement of Financial Transactions:
11 As per Income–tax (22nd Amendment) Rules, 2015 (Rule 114E), w.e.f. 1.4.2016, banks are to send report to Income Tax Department,
through the Statement of Financial Transactions about cash deposit or cash withdrawal (including through bearer cheques) aggregating to
Rs. ___ or above in a financial year from current account of a person:
-(a) Rs.10 lac (b) Rs.20 lac (c) Rs.50 lac (d) Rs.1 cr
through the Statement of Financial Transactions about deposit of cash in one or more bank accounts (other than current account and term
deposit) by a person of an amount aggregating to Rs. ___ or above in a financial year:
through the Statement of Financial Transactions about one or more time deposits (other than by way of renewal), of a person of an amount
aggregating to Rs. ___ or above in a financial year:-(a) Rs.10 lac (b) Rs.5 lac (c) Rs.2 lac (d) Rs.1 lac
through the Statement of Financial Transactions, about payment of bills under a credit card for an amount aggregating to Rs.____ or above
in cash or aggregating to Rs.____ or above in other mode, in a financial year:
(a) Rs.50000 lac, Rs.5 lac (b) Rs.1 lac, Rs.10 lac c Rs.2 lac, Rs.20 lac d Rs.5 lac, Rs.50 lac
through the Statement of Financial Transactions for certain transactions in deposit accounts. In case of joint accounts, for the purpose of
reporting, the amount shall be aggregated with the transactions, in the name of:
(a) first named person (b) second named person (c) all the persons (d) none of the persons
through a Statement of Financial Transactions for certain transactions in deposit account on Form No. ___ by ____ each financial year: (a)
st th th st
60, 31 May (b) 60A, 30 April (c) 61, 30 April (d) 61A, 31 May
17 Reporting of details of bank accounts of foreigners in India, is required to be made by banks (called reporting financial institutions) to Income
Tax Department (u/s 282BA of Income Tax Act 1961 – Rule 114F) under Foreign Account Tax Compliance Act (FATCA) for persons of: ( a ) U S A
(b) UK and Europe (c) USA, UK, Europe, Australia, Singapore (d) countries other than USA
18 Reporting of details of bank accounts of foreigners in India, is required to be made by banks (called reporting financial institutions) to Income
Tax Department (u/s 282BA of Income Tax Act 1961 – Rule 114F) under Common Reporting Standards as part of Global Standards on
Automatic Exchange of Information, (AEOI) for persons of:
( a) U S A (b) UK and Europe (c) USA, UK, Europe, Australia, Singapore (d) countries other than USA
19 Reporting of details of bank accounts of foreigners in India, is required to be made by banks (called reporting financial institutions) to
Income Tax Department (u/s 282BA of Income Tax Act 1961 – Rule 114F) under Foreign Account Tax Compliance Act (FATCA) and Common
Reporting Standards under Global Standards on Automatic Exchange of Information on form:
( a ) 6 0 A (b) 60B ( c ) 6 1 A ( d) 6 1B
ANSWER
1 C 2 D 3 B 4 C 5 B
6 D 7 A 8 B 9 C 10 A
11 C 12 A 13 A 14 B 15 C
16 D 17 A 18 D 19 D
6. LATEST ON RURAL BANKING

 PEHCHAN IDENTITY CARDS FOR ARTISANS:
 Union government has launched a scheme of ‘Pehchan’ identity cards to artisans in Ahmedabad as part of the Pehchan’ initiative
of Union Textile ministry to register and provide Identity (ID) cards to handicraft artisans and link them to a national database.
 It is a new upgraded ID card for artisans that will be linked with their Aadhaar numbers and bank accounts so that they can receive
direct cash transfer benefit. Besides, it is also announced to give tool kits and safety equipment to women and BPL artisans for
metal craft for free of cost.
KEY ANNOUNCEMENTS OF PM ON NEW YEAR EVE:
Pri me Mi ni ster announced a number of welfare sops to help th e poor, the rural s ector, small businesses and
other citizens to li ghten the burden of d emoneti zation. Some of the fe w anno uncements are: ˜ R ural and
Urban Housing for Poor:
 Under Rural and Urban Housing for poor, PM announced two new housing schemes for the urban poor. Under Pradhan Mantri
Aawas Yojana (PMAY), the poor and middle class in cities will get 4% exemption on interest for home loans up to Rs.9 lakh and 3%
exemption for home loans up to Rs.12 lakh.
 Under PMAY, 33% more houses will be built in villages. Home loans up to Rs 2 lakh will get 3% exemptions for building a new
house and also for renovation in villages.
For Farmers:
 3 crore Kisan credit cards will be converted into RuPay cards in coming 3 months. Government will bear 60 days interest on select
farm loans.
 Government will add Rs.20,000 crore more to fund created by NABARD of Rs.21000 crore for giving loans to cooperative banks
and societies at low interest rate.
˜For Micro, Small and Medium Enterprises (MSME):
 To give boost to the small entrepreneurs credit guarantee for small businesses doubled to Rs 2 crore.
 Banks have been asked to raise cash credit limit for small business to 25% from 20% of turnover.
 Banks also have been asked to increase working capital loans from 20% of turnover to 30% for enterprises that transact digitally.
˜Women and Elderly:
 Pregnant women and lactating women in above 650 rural districts will get Rs.6,000 in bank accounts to meet medical expenses
and reduce child & woman mortality.
 Senior citizens will get guarantee of 8% interest rate on deposits up to Rs.7.5 lakh for 10 years.
 FIRST TRE PLATFORM FOR MSMEs TO BE LAUNCHED: RBI has authorized the Receivables Exchange of India to launch the country’s
First Trade Receivables Exchange (TRE) Platform for MSMEs, buyers and financiers. The apex financial institution has been promoted
by SIDBI and NSE. RBI’s nod to launch the platform has been received on December 1, 2016.
 CABINETAPPROVES SOPS TO BOOST “MADE-UPs” SECTOR: The Union Cabinet approved a package of incentives for the “Made-ups”
Sector to increase exports and create additional direct and indirect employment of up to 11 Lakh over the next 3 years. The measures
include extending additional subsidy under the Technology Up-gradation Fund Scheme, enhancing employer’s contribution in the
Provident Fund Scheme and increasing duty drawback on exports. Permissible overtime has been increased to 100 hours per quarter
&EPF has been made optional for employees earning less than Rs.15000 a month.
 GOVT. ANNOUNCED TAX RELIEF FOR SMALL TRADERS: Under Presumptive Tax Scheme for certain assesses engaged in specified
businesses (Other than transportation, agency, brokerage and commission) and having a turnover of up to Rs.2 Crore wherein the
profit is deemed to be 8% of the total turnover. Now the government has announced that the digital payments accepted by small
traders and businesses would attract lower tax. It has accordingly been decided by the Govt. to reduce the rate of deemed profit
of 8% to 6% for amounts of total turnover or gross receipts through banking channel or digital means for the FY 2016-17.
 GOVT. PROVIDES LOAN RELIEF TO FARMERS: The Govt. has said that the farmers, whose crop loan dues fall between Nov 1 and Dec
31, may be allowed an additional grace period of 60 days for repayment of their loan dues. If such farmers repay their dues within 60
days with effect from the repayment due date, they will be eligible for prompt repayment incentive for 2016-17. Currently, crop loans
are given at a subvented interest rate of 7% p.a and an additional incentive of 3% p.a. is provided to the farmers for prompt
repayment of loans.
 NABARD TO GIVE RuPAY CARDS TO FARMERS: With the government pushing for digital payments even in rural areas and the
agriculture sector, NABARD has planned to provide RuPay Cards to over 34 million farmers in villages across India. These cards will
be provided through co-operative banks and farmers’ credit co-operative societies. NABARD has already planned to deploy 200,
000 point-of-sale (POS) machines in 100, 000 villages for which it has allotted funds of Rs.120 Crore. These POS machines will be
installed by commercial banks. NABARD will give Rs.6000 per equipment incentive to the commercial banks for purchase of POS
machines.
 C A B I N E T A P P R O V E S N E W S C H E M E F O R PROMOTION OF RURAL HOUSING:
 The Union Cabinet has approved a new scheme for promotion of Rural Housing in the country. It will enable people in rural areas
to construct new houses or add to their existing pucca houses to improve dwelling units.
 Under it, Government will provide interest subsidy to every rural household who is not covered under the Pradhan Mantri Aawas
Yojana (Grameen) - PMAY(G). It will be implemented by National Housing Bank (NHB).
 Under the scheme, the beneficiary will be provided interest subsidy for loan amount upto Rs. 2 lakhs for taking loan.
 Government will provide net present value of interest subsidy of 3% to NHB upfront which will, in turn, pass it to the Primary
Lending Institutions (SCBs), NBFCs etc.).
 CABINET CLEARS INTEREST WAIVER FOR FARM LOANS:
 The Union Cabinet has given its ex-post facto approval for an interest waiver of farmers accessing short-term crop loans from co-
operative banks for the two months of November and December, 2016.
 The decision also provides for interest subvention to National Bank for Agricultural and Rural Development (NABARD) on
additional refinance provided by NABARD to Co-operative Banks.
 This decision will ensure availability of resources with Cooperative Banks to help farmers to get easy access to crop loans from
Co-operative Banks to overcome difficulties due demonitisation during Rabi operations.
 Additional resources are to be provided to Cooperative Banks through NABARD for refinance to the Cooperative Banks on
account of interest waiver of two months for November and December, 2016.
˜REVENUE INSURANCE SCHEME FOR PLANTATION CROPS:
 The Ministry of Commerce and Industry has launched pilot Revenue Insurance Scheme for Plantation Crops (RISPC) for protecting
the growers from the risks such as pest attacks, yield loss and income decline caused by fall in prices.
 It shall be covering tea, coffee, rubber, cardamom and tobacco plantations and shall be implemented by the
commodity boards. It will be implemented on a pilot basis for two years i.e. till 2018 in eight districts in West Bengal, Kerala,
Andhra Pradesh, Assam, Karnataka, Sikkim and Tamil Nadu.
˜ PRADHAN MANTRI GRAMIN DIGITAL SAKSHARTA ABHIYAN FOR RURAL DIGITAL LITERACY:
 The Cabinet has approved ‘Pradhan Mantri Gramin Digital Saksharta Abhiyan’ (PMGDISHA) to make 6 crore rural households
digitally literate by March 2019.
 PMGDISHA is expected to be one of the largest digital literacy programmes in the world. Under the scheme, 25 lakh candidates
will be trained in the FY 2016-17; 275 lakh in 2017-18; and 300 lakh in 2018-19. The outlay for this project is Rs. 2,351.38 crore to
usher in digital literacy in rural India.
Capital Requirement
BANKS CAPITALS
New bank license 500 crores
Private banks 500 crores
Foreign bank 500 crores
Urban cooperative banks 100 crores
State cooperative banks 100 crores
Small bank & payment 100 crores
EXIM bank 8500 crores
Central Govt. Budget SIDBI 1000 crores 2017 – Highlights:
CHALLENGES IN 2017-18 Authorised Regional 2000 crores
 World economy faces MUDRA BANK 20000 crore considerable uncertainty, in
the aftermath of recent NABARD 500 crores major economic and
political developments.
 The US Federal Reserve’s, intention to increase policy rates in 2017, may lead to lower capital inflows and higher outflows from
the emerging economies.
 Uncertainty around commodity prices, especially that of crude oil, has implications for the fiscal situation of emerging
economies.
 Signs of retreat from globalisation of goods, services and people, as pressures for protectionism are building up.
ROADMAP & PRIORITIES
 Agenda for 2017-18 is : “Transform, Energise and Clean India” – TEC India, which seeks to:
 Transform quality of governance and quality of life of people;
 Energise various sections of society, especially the youth and the vulnerable, and enable them to unleash their true potential;
 Clean the country from the evils of corruption, black money and non-transparent political funding
Ten distinct themes to foster this broad agenda:
•Farmers : committed to double the income in 5 years;
 Rural Population : providing employment & basic infrastructure;
 Youth : energising them through education, skills and jobs;
 Poor and underprivileged : strengthening the systems of social security, health care and affordable housing;
 Infrastructure: for efficiency, productivity & quality of life;
 Financial Sector : growth & stability by stronger institutions;
 Digital Economy : for speed, accountability and transparency;
 Public Service : effective governance and efficient service delivery through people’s participation;
 Prudent Fiscal Management: to ensure optimal deployment of resources and preserve fiscal stability;
 Tax Administration: honouring the honest.
FARMERS
 Target for short term agriculture credit disbursement in 2017 18 has been fixed at Rs.10 lakh crores.
 Govt. to support NABARD for computerisation and integration of all 63,000 functional Primary Agriculture Credit Societies with the
Core Banking System of District Central Cooperative Banks within 3 years, at an estimated cost of Rs.1,900 crores
 Coverage under Fasal Bima Yojana scheme will be increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in 2018-
19 for which a budget provision of Rs.9000 crore has been made.
 Long Term Irrigation Fund already set up in NABARD to be augmented by 100% to take the total corpus of this Fund to Rs.40,000
crores.
 Dairy Processing and Infrastructure Development Fund to be set up in NABARD with a corpus of Rs.2000 crores and will be
increased to Rs.8000 crores over 3 years
 Dedicated Micro Irrigation Fund in NABARD to achieve ‘per drop more crop’ with an initial corpus of Rs.5,000 crores
 Coverage of National Agricultural Market (e-NAM) to be expanded from 250 markets to 585 APMCs. Assistance up to Rs.75 lakhs
will be provided to every e-NAM
 A model law on contract farming to be prepared and circulated among the States for adoption.
FINANCIAL SECTOR
 Foreign Investment Promotion Board to be abolished in 2017-18 and further liberalisation of FDI policy is under consideration.
 An expert committee will be constituted to study and promote creation of an operational and legal framework to integrate spot
market and derivatives market in the agricultural sector, for commodities trading. e- NAM to be an integral part of the
framework.
 Bill relating to curtail the menace of illicit deposit schemes and a bill relating to resolution of financial firms will be introduced. This will
contribute to stability and resilience of financial system
 A mechanism to streamline institutional arrangements for resolution of disputes in infrastructure related construction contracts, PPP and
public utility contracts will be introduced as an amendment to the Arbitration and Conciliation Act 1996.
 A Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be established
 Government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock
exchanges. The shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed in stock exchanges.
 Propose to create an integrated public sector ‘oil major’ which will be able to match the performance of international and
domestic private sector oil and gas companies
 A new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18
 Rs.10,000 crores for recapitalisation of Banks provided in 2017-18. Further Rs.3500 cr provided
for subscription to share capital of NABARD.
 Lending target under Pradhan Mantri Mudra Yojana to be set at Rs.2.44 lakh crores. Priority will be given to Dalits, Tribals,
Backward Classes and Women.
 Board for Regulation and Supervision of Payment and Settlement Systems, proposed to be replaced by Payment Regulatory
Board within RBI.
 The allowable amount of deduction on account of provision on NPA, for income tax purpose, increased to 8.5% from existing
7.5%.
 The benefit of provisions of Sec 43D of Income Tax Act i.e. interest taxable on actual receipt instead of accrual basis in respect of NPA
accounts of all non-scheduled cooperative banks, also to be treated at par with scheduled banks
 For persons above 60 years, LIC will provide an investment scheme with an assured return of 8% for 10 years.
 Divestment target shall be Rs.72500 cr including by listing 3 PSU general insurers,
DIGITAL ECONOMY PUSH & CASH TRANSACTION LIMITS
 The Government will launch two new schemes to promote the usage of BHIM (a) Referral Bonus Scheme for individuals and (b) Cashback
Scheme for merchants
 Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched
 A Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit
cards
 Govt. will prescribe mandate all Government receipts through digital means, beyond a prescribed limit
 Banks have targeted to introduce additional 10 lakh new POS terminals by March 2017. They will be encouraged to introduce 20 lakh
Aadhar based POS by Sep 2017.
Under scheme of presumptive income for small and medium tax payers whose turnover is upto 2 crores, the present, 8% of their turnover
which is counted as presumptive income is reduced to 6% for turnover which is by non-cash means
No person will receive an amount of Rs.3 lac or more in cash in aggregate from a person in a day, in respect of a single transaction or in
respect of transactions relating to one event. (new Sect 269ST). For contravention, the penalty will be equal to the amount so received.
(Already wef 01.01.16, quoting of PAN is mandatory for purchases over Rs.2 lac).
 Under provisions of Sec 80G, the eligible amount for cash donations has been reduced from Rs.10000 to Rs.2000.
 For any capital expenditure incurred in cash for an amount above Rs.10000, the amount will be excluded from cost of assets
(amendment to Sec 43 and 35AD).
 For any expenditure in cash for an amount above Rs.10000, no deduction shall be allowed for tax purpose (Sec 40A).
AFFORDABLE HOUSING AND REAL ESTATE SECTOR
 Affordable housing to be given infrastructure status
 Under the scheme for profit-linked income tax deduction for promotion of affordable housing, carpet area instead of built up
area of 30 and 60 Sq.mtr. will be counted.
 The 30 Sq.mtr. limit will apply only in case of municipal limits of 4 metropolitan cities. For the rest of the country including in the
peripheral areas of metros, limit of 60 Sq.mtr. will apply
 For builders for whom constructed buildings are stock-in-trade, tax on notional rental income will only apply after one year of the end
of the year in which completion certificate is received
 Reduction in the holding period for computing long term capital gains from transfer of immovable property from 3 years to 2 years.
 The base year for indexation proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property
 For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year
the project is completed
 Exemption from capital gain tax for persons holding land on 2.6.2014, the date on which the State of Andhra Pradesh was
reorganised, and whose land is being pooled for creation of capital city of Andhra Pradesh under the Government scheme
MEASURES FOR STIMULATING GROWTH
 Concessional withholding rate of 5% charged on interest earned by foreign entities in external commercial borrowings or in bonds and
Government securities is extended to 30.6.2020. This benefit is also extended to Rupee Denominated (Masala) Bonds
For the purpose of carry forward of losses in respect of start-ups, the condition of continuous holding of 51% of voting rights has been relaxed
subject to the condition that the holding of the original promoter/promoters continues. Also the profit (linked deduction) exemption available
to the start-ups for 3 years out of 5 years is changed to 3 years out of 7 years
 MAT credit is allowed to be carried forward up to a period of 15 years instead of 10 years at present
In order to make MSME companies more viable, income tax for companies with annual turnover upto Rs.50 crore is reduced
to 25%.
EASE OF DOING BUSINESS
 Threshold limit for audit of business entities who opt for presumptive income scheme increased from Rs.1 cr to Rs.2 cr. The threshold for
maintenance of books for individuals and HUF increased from turnover of Rs.10 lakhs to Rs.25 lakhs or income (profit) from Rs.1.2 lakhs to
Rs.2.5 lakhs.
 Foreign Portfolio Investor (FPI) Category I & II exempted from indirect transfer provision. Indirect transfer provision shall not apply
in case of redemption of shares or interests outside India as a result of or arising out of redemption or sale of investment in India
which is chargeable to tax in India
 Commission payable to individual insurance agents exempt from the requirement of TDS subject to their filing a self-declaration
(15G or 15H) that their income is below taxable limit
 Under scheme for presumptive taxation for professionals with receipt upto Rs.50 lakhs p.a. advance tax can be paid in one
instalment instead of four.
 Time period for revising a tax return is being reduced to 12 months from completion of financial year, at par with the time period
for filing of return. Also the time for completion of scrutiny assessments is being compressed further from 21 months to 18
months for Assessment Year 2018-19 and further to 12 months for Assessment Year 2019-20 and thereafter.
PERSONAL INCOME-TAX
 Existing rate of taxation for individual assesses for income of above Rs.2.5 lakhs to 5 lakhs reduced to 5% from the present rate of
10%. All tax payers will get a benefit of Rs.12875, due to this change.
 Existing tax credit of Rs.5000, for income up to Rs.5 lac has been reduced to Rs.2500 and will be available for income only up to
Rs.3.50 lac (Sec 87A).
 Income tax slabs:
(1) up to Rs.2.50 lac – Nil.
(2) Above Rs.2.50 lac to Rs.5 lac @5% + cess 0.15% total – 5.15%,
(3) above Rs.5 lac to Rs.10 lac @20% + cess 0.60%. Total 20.60%.
(4) Above Rs.10 lac @30% + cess 0.90% total 30.90%.
(5) Above 50 lakhs to 1 cr @30%+surcharge @10%+cess @0.99%, total:33.99%
(6) Above Rs.1 cr @30% + surcharge @15% + cess @1.04%, total – 35.54%
 Tax rate for Domestic companies : (1) Annual turnover up to Rs.50 cr @ 25% and (2) annual turnover above Rs.50 cr @ 30%. (3)
Partnership firms and LLP : 30%
 Simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income upto Rs.5 lakhs other
than business income
 If amount of rent exceeds Rs.50000 per month, the TDS shall become mandatory for individuals and HUF.
 Self employed can claim deduction up to 20% of gross total income for contribution to National Pension Scheme.
 Delay in filing ITR for 2017-18, will attract penalty of Rs.5000 up to December and Rs.10000 after that. The penalty is Rs.1000 for tax
payer with income up to Rs.5 lac.
 Due date and amount for Advance tax for 2017-18 shall be 15% of estimated tax by Jun 15, 2017, 45% by Sep 15, 2017, 75% by Dec 15
and 100% by Mar 15, 2018.
 The rate of TDS is proposed to be reduced to 2% (from 10%) in respect of deduction u/s 194J, for professional fee payments w.e.f
1.7.2017.
 Interest on delay of refund of tax shall be 0.5% p.m. w.e.f. 14.2017.
HIGHLIGHTS OF ECONOMIC SURVEY 2016-17

The Economic Survey 2016-17 presented in the Parliament on Jan 31, 2017. According to the Survey, the Indian Economy has sustained a
macro-economic environment of relatively lower inflation, fiscal discipline and moderate current account deficit coupled with broadly stable
rupee-dollar exchange rate.
 As per the advance estimates released by the Central Statistics Office, the growth rate of GDP at constant market prices for the year
2016-17 is placed at 7.1%, as against 7.6% in 2015-16.It is based mainly on information for the first 7-8 months of the financial year.
Government final consumption expenditure is the major driver of GDP growth in the current year.
 Fixed investment (gross fixed capital formation) to GDP ratio (at current prices) is estimated to be 26.6% in 2016-17, vis-à-vis 29.3% in
2015-16.
 For 2017-18, it is expected that the growth would return to normal as the new currency notes in required quantities come back
into circulation and as follow-up actions to demonetisation are taken. On balance, there is a likelihood that Indian economy may
recover back to 6.75 % to 7.5% in 2017-18.
Fiscal
 Indirect taxes grew by 26.9% during April-November 2016.
 The strong growth in revenue expenditure during April-November 2016 was boosted mainly by a 23.2% increase in salaries due to
the implementation of the Seventh Pay Commission and a 39.5% increase in the grants for creation of capital assets.
Prices
 The headline inflation as measured by Consumer Price Index (CPI) remained under control. The average CPI inflation declined to 4.9% in
2015-16 from 5.9% in 2014-15 and stood at 4.8% during April-December 2015.
 Inflation based on Wholesale Price Index (WPI) declined to (-) 2.5% in 2015-16 from 2% in 2014-15. It averaged 2.9% during April-
Dec 2016.
 Inflation is repeatedly being driven by narrow group of food items, of these pulses continued to be the major contributor of food
inflation.
 The CPI based core inflation has remained sticky in the current fiscal year averaging around
5%. Trade
 The trend of negative export growth was reversed somewhat during 2016 17 (April-December), with exports growing at 0.7 per
cent to US$ 198.8 billion. During 2016-17 (April-December) imports declined by 7.4 per cent to US$ 275.4 billion.
 Trade deficit declined to US$ 76.5 billion in 2016-17 (April-December) as compared to US$ 100.1 billion in the corresponding
period of the previous year.
 The current account deficit (CAD) narrowed in the first half (H1) of 2016-17 to 0.3 per cent of GDP from 1.5 per cent in H1 of 2015-16 and
1.1 per cent in 2015-16 full year.
 Robust inflows of foreign direct investment and net positive inflow of foreign portfolio investment were sufficient to finance CAD
leading to an accretion in foreign exchange reserves in H1 of 2016-17.
 In H1 of 2016-17, India’s foreign exchange reserves increased by US$ 15.5 billion on BoP basis.
 During 2016-17 so far, the rupee has perf ormed better than most of the other emerging market economi es.
External Debt
 At end-September 2016, India’s external debt stock stood at US$ 484.3 billion, recording a decline of US$ 0.8 billion over the level at end-
March 2016.
 Most of the key external debt indicators showed an improvement in September 2016 vis-à-vis March 2016. The share of short-
term debt in total external debt declined to 16.8 per cent at end-September 2016 and foreign exchange reserves provided a cover of
76.8 per cent to the total external debt stock.
India’s key debt indicators compare well with other indebted developing countries and India continues to be among the less
vulnerable countries.
Agriculture
 Agriculture sector is estimated to grow at 4.1 per cent in 2016-17 as opposed to 1.2 per cent in 2015 16; the higher growth in
agriculture sector is mainly due to the monsoon rains being much better in the current year than the previous two years.
 The total area coverage under Rabi crops as on 13.01.2017 for 2016-17 is 616.2 lakh hectares which is 5.9 per cent higher than that in
the corresponding week of last year.
 The area coverage under wheat as on 13.01.2017 for 2016-17 is 7.1 percent higher than that in the corresponding week of last year.
The area coverage under gram as on 13.01.2017 for 2016-17 is 10.6 percent higher than that in the corresponding week of last year.
Industry
 Growth rate of the industrial sector is estimated to moderate to 5.2 per cent in 2016-17 from 7.4 per cent in 2015-16.During April-
November 2016-17, a modest growth of 0.4 per cent has been observed in the Index of Industrial Production (IIP).
 The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and
electricity registered a cumulative growth of 4.9 per cent during April-November 2016-17 as compared to 2.5 per cent during April-
November 2015-16. The production of refinery products, fertilizers, steel, electricity and cement increased substantially, while the
production of crude oil, natural gas fell during April-November 2016-17. Coal production attained lower growth during the same period.
 The performance of corporate sector (Reserve Bank of India, January 2017) highlighted that the growth of sales grew by 1.9 per cent
in Q2 of 2016-17 as compared to near stagnant growth of 0.1 per cent in Q1 of 2016-17. Growth in net profit registered a remarkable
growth of 16.0 per cent in Q2 of 2016-17 as compared to 11.2 per cent in Q1 of 2016-17. Services
 Service sector is estimated to grow at 8.9 per cent in 2016-17, almost the same as in 2015-16. It is the significant pick-up in public
administration, defence and other services, boosted by the payouts of the Seventh Pay Commission that is estimated to push up the growth
in services.
Social Infrastructure, Employment and Human Development
The Parliament has passed the “Rights of Persons with Disabilities Act, 2016”. The Act aims at securing and enhancing the rights and
entitlements of Persons with Disabilities. The Act has proposed to increase the reservation in vacancies in government establishments from 3
per cent to 4 per cent for those persons with benchmark disability and high support needs.
 INCLUSIVE DEVELOPMENT INDEX: India ranked 60th among the 79 developing countries in 2017 Inclusive Development Index
(IDI) released in World Economic Forum’s (WEF) ‘Inclusive Growth and Development Report’. The index is based on 12 performance
indicators and countries are ranked on IDI scores based on a scale of 1-7.
 INDIAN ECONOMY PROJECTED TO OVERTAKE US BY 2040 - PWC REPORT:
According to PwC, E7 economies comprising Brazil, China, India, Indonesia, Mexico, Russia and Turkey would grow at an annual
average rate of almost 3.5 per cent over the next 24 years, compared to just 1.6 per cent for the advanced G7 nations of Canada,
France, Germany, Italy, Japan, the UK and the US. The global economic order is expected to shift from advanced to emerging
economies over the next few decades. By 2040 India could edge past the US to become the worlds second largest economy in
purchasing power parity (PPP) terms. Moreover, PwC believes Vietnam, India and Bangladesh would be three of the world’s fastest
growing economies over this period.
 INDIA TO REMAIN FASTEST GROWING ECONOMY AMONG G-20 NATIONS:
 As per Moody's Investors Service, India is forecast to have the fastest growing economy among all G-20 countries with growth
put at 7.1% for 2017, down from a previous expectation of 7.5% because of the effects of demonetization.
 With respect to the global economic growth, Moody's noted that although the economic activity in G20 countries is picking up,
with 3% projected growth in 2017 and 2018, up from 2.6% in 2016, the unpredictable economic policy of the US could pose some
uncertainty to the projected growth.
Changes in IT law that come into effect from 1-4-2017

(1) Limit for payment of expenses by cash (both, capital and revenue expenditure) reduced from Rs.20000 to Rs.10000 per day in
aggregate per person. Capital expenses paid in cash beyond the said limit will not be taken into account for depreciation
purposes. However, the cash payment limit for lorry fright etc. remains the same at Rs.35000.
(2) No person shall receive an amount of two lakh rupees or more, by cash (Sec. 269ST) —
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion.
The penalty for violation of above is to be a sum equal to the amount of such receipt.
Examples for above -
 i) If one sells goods worth Rs. 300000 through three different bills of Rs.100000 each to one person and accepts *cash in single
day* at different times then section 269ST(a) will get violated.
 ii) If one sells goods worth Rs. 300000 through *single bill* to another person and receives cash of Rs.150000 on day 1 and
another Rs.150000 on day 2 then section 269ST(b) will get violated, since it pertains to single transaction.
 iii) If one accepts cash of Rs.180000 for *sales* and Rs.20000 for *freight charges*, then section 269ST(c) will get violated even if
cash is accepted on different dates, since they pertain to a single sales event.
 iv) If one sells his car for Rs.300000 and receives the amount in cash, then penalty levied on him will be Rs.300000.
(2A) In view of the newly introduced above said penal provisions relating to cash sales, the existing provisions (in vogue from
1.6.2016) relating to collection of TCS @ 1% on cash sales exceeding Rs.2 lakhs (Rs.5 lakhs, in the case of jewellery) are
deleted. Consequently, there is no need to collect TCS on cash sales exceeding Rs.2 lakhs. Straight away it will attract equal amount
penalty now.
(3) For below Rs.2 crores turnover cases -
 For Non Cash Sales (through Digital, Online, cheque, Bank etc.) : Net Profit will be taken as 6% of Turnover/Gross Receipt.
 For Cash Sales : Net Profit will be taken as 8% of Turnover/Gross Receipt.
(4) Tax Exemption limit is Rs.2,50,000/- (same as earlier) -
 After that, upto Rs.5 lakh, Tax Rate is 5% (earlier it was 10%). Tax rebate of maximum Rs.2500 will be allowed, for total income
upto Rs.3.50 lakhs.
 Individuals having total income exceeding Rs.50 lakhs but below Rs.1 crore, are to pay surcharge @ 10% of the tax. Those having
total income exceeding Rs. 1 crore shall continue to pay surcharge @ 15%.
(5) Payment of Rent - Rs.50,000 per month by any Individual or HUF (not subject to Tax Audit requirements) - deduct TDS @ 5%.
(6) Capital Gain in respect of Land & Buildings -
– Periodicity for long term Capital Gain is reduced from 3 years to 2 years.
– Base year shifted from 01.04.1981 to 01.04.2001 for all assets including Immovable property.
(7) Corporate tax rate for the account year 2017-18 for companies with annual turnover upto Rs. 50 crores (in the account year
2015-16) is reduced to 25%. No change in firm tax rate of 30%.
(8) Donations made exceeding Rs.2000 will be not be eligible for deduction under section 80G, unless these are made using modes
other than cash. Consequently, trusts accepting 80G donations may advise their donors to give donations exceeding Rs.2000 vide
cheque / RTGS / digital modes.
(9) Sale of unquoted shares to be taxed at (deemed) fair value.
(10) In absence of PAN of the buyer of specified goods, the rate of TCS will be twice of the extent rate or 5%, whichever is higher.
(11) From financial year 2017-18, if Return is not filed within due date, late fee of Rs.5000 for delay up to 31st December, and Rs.
10000 thereafter.
(12) Every person who is eligible to obtain AADHAR number, should quote such number, on or after 1 July 2017, in the Return of
income. Furthermore, every person who has been allotted PAN as on 1st July 2017 must intimate the AADHAR number to the Tax
Authority, failing which, PAN allotted to such person shall be deemed to be invalid. Kindly note that linking of AADHAR with PAN is
not possible, unless name as per AADHAR and PAN match perfectly. Hence, please take steps to rectify your name as per AADHAR
to match as per PAN.
(13) Where Sec.12AA registered trusts modify their objects clause, they need to apply within 30 days to CIT for approval of the
modified clauses.
RECENT COMMITTEE ON BANKING
IMPORTANT COMMITTEE
1. B N Srikrishna Committee - to review institutionalization of arbitration mechanism in India_____
2. Ajit Mohan committee - to fight against the menace of online piracy.
3. Nripendra Mishra Committee - on Indus Water Treaty.
4. Ratan Watal Committee for Digital Payments. Note: The 11- member committee was notified in September 2016 by the Union
Finance Ministry to review existing payment systems in country and recommend appropriate measures for encouraging Digital
Payments & - to suggest steps to promote card payments
5. Committee on Demonetisation - Andhra Pradesh Chief Minister N. Chandrababu Naidu.
6. Recalibration of Automated Teller Machines (ATM) - Task Force headed by S.S Mundra, Deputy Governor, Reserve Bank of
India (RBI)
7. Chandrababu Naidu Committee : Committee on effects of Demonetisation of States/People
Committee Date Headed by

Mundra Committee-To Speed up the Process of November 2016 S.S .Mundra
Recalibration of ATMs
To study the regulatory issues relating to June 2016 SudarshanSen
Financial Technology (Fintech) and Digital
Banking in India
PJ Nayak Committee -To Review Governance of June 2016 P J Nayak
Boards of Banks in India.
To look at the various facets of household August 2016 Dr. TarunRamadorai
finance in India and to benchmark India's
position
Working Group on Import Data Processing and April 2016 A. K. Pandey
Monitoring System
Working Group on Interest Rate Options February 2016 P. G. Apte
Advisory Committee on Ways and Means Advances December 2015 Deepak Mohanty RECE
to State Governments January 2016 Sumit Bose
Committee on Mediumterm Path on Financial NT
Inclusion RBI
Committee on Differential Premium System for September 2015 Jasbir Singh COM
Banks in India
Working Group on Compilation of Flow of Funds August 2015 D. K. Mohanty
MITT
Accounts for Indian Economy August ESS
2015 D. K. Mohanty Compilation of Flow of
Funds Accounts of the Indian Economy
High Powered Committee on Urban Co June 2015 R. Gandhi
operative Banks (UCBs)
Committee on Data Standardization March 2015 LP. Parthasarathi
Internal Working Group (1WG) to Revisit the March 2015 Lily Vadera
Existing Priority Sector Lending Guidelines
Committee on Capacity Building in Banks and September 2014 G. Gopalakrishna
NonBanks
Committee on Implementation of July 2014 B. Mahapatra
Countercyclical Capital Buffer
Committee on Data and Information July 2014 D. K. Mohanty
Management in the Reserve Bank of India.
Committee on Productivity Growth for the June 2014 B. N. Goldar
Indian Economy
Committee to Review Governance of Boards of May 2014 P. J. Nayak
Banks in India
Working Group on Resolution Regime for May 2014 Anand Sinha
Financial Institutions
GIRO Advisory Group - UmeshBellur Group on April 2014 Anil Kumar Sharma
Enabling PKI in Payment System Applications
Committee on Licensing of New Urban September 2011 Malegam Committee
Cooperative Banks
Committee on Issues and Concerns in the NEFC August 2011 Usha Throat
Sector
10. TEST YOUR SELF

Questions Based on Budget 2017-18
1) The Union Budget 2017 focuses on three major areas. They are: Transform, Energise and Clean India. (TEC)
2) Union Budget 2017 has pegged fiscal deficit for 2017-2018 as: 3.2 percent of GDP
3) How much has been allocated for the infrastructure sector for 2017-2018: INR 3,96,134 Cr.
4) Union Budget 2017 has introduced SANKALP which stands for: Skill Acquisition and Knowledge Awareness for Livelihood
Promotion Programme
5) According to the Union Budget, transaction above how much will not be permitted in cash: INR 3 lakhs.
6) In order to promote transparency in electoral funding, one person will allowed to donate not more than how much amount:
INR 2000
7) Which national agency will be phased out in the next fiscal, as per the Budget 2017: Foreign Investment Promotion Board
8) What is the percentage of FDI through automatic route at present according to the Budget: 90 percent
9) Allocation for PM's Employment Generation and Credit Support schemes has been increased by how many times: 3
10) In Budget 2017-18, the allocation in BharatNet Project has been increased by _______: Rs. 10,000 crore
11) Which app has been launched to unleash the power of mobile phones for digital payments and financial inclusion: BHIM app
12) The Government will launch two new schemes to promote the usage of BHIM. These are: Referral Bonus Scheme for
individuals and a Cashback Scheme for merchants.
13) Name the merchant version of Aadhar Enabled Payment System which will be launched for those who do not have debit cards,
mobile wallets and mobile phones: Aadhar Pay
14) Agriculture sector will grow by what percent in 2017-2018, as per Budget 2017: 4.1 percent
15) Which facility was announced for senior citizens in Budget 2017-2018: Aadhaar-enabled smart cards
16) As per the budget, a dedicated micro-irrigation fund for ‘More Crop Per Drop’ will have an allocation of: Rs. 5000 crore.
17) What is the maximum cash donation any political party can receive from one source, as proposed in the Budget: Rs. 2,000
18) What is the total expenditure envisaged under Union Budget 2017-18: Rs. 21,47,000 crore.
19) How much fund has been allocated for NABARD in the Union Budget 2017-18: Rs.40,000 crore
20) As announced in Union Budget 2017-18, existing rate of taxation for individual assesses between income of Rs.2.5 to Rs.5
lakhs has been reduced to _____ from present rate of 10%: 5%
21) The tax rate for companies with an annual turnover up-to Rs.50 crore has been brought down from 30% to ____: 20%
22) How much surcharge on individuals earning an income between Rs. 50 lakh to Rs. 1 crore has been proposed in the Union
Budget 2017-18: 10%
23) Budget 2017-18 has proposedas the front office for issuing passports in far flung areas: Post office
24) Under ten distinct themes of the Budget 2017-18, a commitment to double the farmers’ income in _____ been targeted: 5
years
25) The target for agricultural credit in 2017-18 has been fixed at a record level of Rs._____: 10 lakh crores
26) The Budget 2017-18 has announced _______interest waiver in respect of loans taken by farmers from the cooperative credit
structure: 60 days.
27) The Budget provision for Pradhan Mantri Fasal Bima Yojana is set at _______ for the FY 2017-18: Rs 9,000 crores.
28) As per Budget 2017-18, the coverage of Pradhan Mantri Fasal Bima Yojana scheme will be increased from 30% of cropped area
in 2016-17 to _____ in 2017-18 and ______ in 2018-19: 40% ; 50%.
29) The Union Budget 2017-18 focuses on which mission to bring one crore households out of poverty and to make 50,000 gram
th
panchayats poverty free by 2019, the 150 birth anniversary of Gandhiji: Mission Antyodaya
30) The allocations for Deendayal Antyodaya Yojana - National Rural Livelihood Mission for promotion of skill development and
livelihood opportunities for people in rural areas has been increased to ______ in 2017-18: Rs.4,500 crore
31) The allocation for Pradhan Mantri Awaas Yojana - Gramin has been increased from Rs.15,000 crores in BE 2016-17 to
in 2017-18: Rs.23,000 crores
46) The total allocation for the rural, agriculture and allied sectors in 2017-18 is which is 24% higher than
the previous year: Rs.1,87,223 crores
47) Name the platform that will be introduced to leverage information technology, with at least 350 online courses to enable
students to virtually attend the courses; take tests and earn academic grades: SWAYAM
48) Name the new and restructured Central scheme launched in 2017-18 to focus on export infrastructure: Trade Infrastructure for
Export Scheme (TIES).
49) In line with the 'Indradhanush' roadmap, how much amount has been provided for recapitalisation of Banks in 2017-18 with a
provision for additional allocation as may be required: Rs.10,000 crores
50) The lending target under Pradhan Mantri Mudra Yojana has been doubled and set at Rs._______: 2.44 lakh crores
51) As announced in Budget 2017-18, banks have been targeted to introduce additional _____ new PoS terminals by March 2017 and
to introduce ____ Aadhar based PoS by Sept. 2017: 10 lakh; 20 lakh
52) As per UnionBudget 2017-18, Governmentto encourage to refinance creditinstitutions whichprovide
unsecured loans, at reasonable interest rates, to borrowers based on their transaction history: SIDBI
53) In order to give a boost to banking sector and reduce the tax liability of banks, the allowable provision for Non-Performing Asset
has been increased from 7.5% to _____: 8.5%
54) As announced in Budget 2017-18, a concessional withholding rate of _____ charged on interest earned by foreign entities in
external commercial borrowings or in bonds and Govt. securities is extended to 30.6.2020 including Rupee Denominated
(Masala) Bonds: 5%
55) For the purpose of carry forward of losses in respect of startups, the condition of continuous holding of ____ of voting rights
has been relaxed subject to the condition that the holding of the original promoter/promoters continues and the profit linked
deduction available to the start-ups for 3 years out of 5 years is being changed to 3 years out of ____: 51%; 7 years
56) As per Budget 2017-18, in order to make MSME companies more viable and also to encourage firms to migrate to company
format, the income tax for smaller companies with annual turnover upto Rs.50 crore has been reduced to _____: 25%
57) As announced in Union Budget 2017-18, with regards to scheme of presumptive income tax for small and medium tax payers
with turnover upto Rs.2 crores, what percentage of the turnover will be counted as presumptive income as against 8%
previously: 6%
58) As per Budget 2017-18, the threshold limit for audit of business entities who opt for presumptive income scheme has been
increased from Rs.1 crore to ____: Rs. 2 crores
59) As per Budget 2017-18, the threshold for maintenance of books for individuals and HUF is being increased from turnover of
Rs.10 lakhs to _____ or income from Rs.1.2 lakhs to _______: Rs.25 lakhs; Rs 2.5 lakhs
60) As announced in Budget 2017-18, individual Insurance agents are exempted from what percentage of TDS charged on
commission payable to them subject to their filing a self-declaration that their income is below taxable limit: 5%
61) In order to allow people to claim the refund expeditiously, the time period for revising a tax return is being reduced to how
many months from completion of financial year, at par with the time period for filing of return: 12 months
62) As per Budget 2017-18, the time for completion of scrutiny assessments is being compressed further from 21 months to _____
for Assessment Year 2018-19 and further to 12 months for Assessment Year 2019-20 and thereafter: 18 months.
63) In the Union Budget 2017-18, a simple one page return has been introduced for people with an annual income of _____ other
than business income: Rs.5 lakh
64) As per Budget 2017-18, the percentage of surcharge marked for an individual income above Rs.50 lakh and up to Rs.1 crore and
on individual income above Rs.1 crore has been marked as ____ and ____ respectively: 10%; 15%
th
65) India, which was the 7 largest economy has now become
the sixth largest in _______ : Manufacturing
66) The Union Budget 2017 announced Rs. _____ micro irrigation fund and Rs. ______ diary processing fund: 5,000 crore and 8,000
crore.
67) The government will support _____ to digitize 63,000 Primary Agri Societies: NABARD
68) The lending target under Pradhan Mantri Mudra Yojana is : Rs. 2.44 trillion
83) The Government proposes to complete ______ houses by 2019 for houseless and those living in Kaccha houses: 1 crore.
84) As per Indradhanush plan for PSU Banks, Govt to infuse Rs. _______ over five years: Rs. 70,000 crore
85) In order to disincentivise cash transactions, it is proposed to reduce the existing threshold of cash payment to a person from
Rs. 20,000 to _______in a single day; i.e any payment in cash above ten thousand rupees to a person in a day, shall not be
allowed as deduction in computation of Income from "Profits and gains of business or profession".
86) (Rs. 10,000)
87) Long Term Capital Gain 3-yr period for LTCG tax on immovable property reduced to _____ years and base year
indexation shifted from 1-4-1981 to _______ : 2;1-4-2001.
ECONOMIC SURVEY 2016-17
88) What does abbreviation ‘UBI’ stand for in context of Economic Survey 2016-17? Universal Basic Income
89) The Economic Survey 2016 was prepared by: Arvind Subramanian (Chief Economic Advisor)
90) As per the Economic Survey, the GDP growth estimated for 2016-17 is 6.5% whereas it is expected to be in the range of in
2017-18 : 6.75% to 7.5%
91) The Farm Sector Growth is estimated for 2016-17 at: 4.1%
92) Industrial Sector Growth is estimated at 5.2% whereas the Service Sector Growth is estimated at: 8.9%
93) The Fiscal Deficit estimate for 2016-17 is _ whereas it was in 2015-16: 3.5% of GDP ; 3.9%
94) The Economic Survey 2016-17 proposes widening of Tax net from present 5.5% of earning individuals to more than ____. 20%
95) As per the Economic Survey, the Capital Requirement for banks is estimated around: Rs. 1.8 trillion by 2018-19
96) Gross NPA to the Advances of Public Sector Banks was the highest till Sept 2016 at : 12%
97) As per the Economic Survey, sectors recommended for the job creation are: Cloth & Leather
98) The Poverty line of Rs. 893 per person per month has been computed by the committee: Suresh
Tendulkar
99) India has________taxpayers for every 100 voters: 7
100) In H1 of 2016-17, India’s foreign exchange reserves increased by US$ ____ on BoP basis. (15.5 billion)
101) Trade Deficit declined to US$ _____ in 2016-17(AprilDecember) as compared to US$ 100.1 billion in the corresponding period
of previous year. (76.5 billion)
GOODS AND SERVICES TAX
102) The One Hundred and First Amendment of the Constitution of India, officially known as The Constitution (One Hundred and First
Amendment) Act, 2016, introduced a national : Goods and Services Tax.
st st
103) GST will be implemented from?: 1 July 2017 (earlier it was 1 April)
104) For GST turnover of Rs. 1.5 crore or less, state will have the power to access ____ of all assesses and remaining will be with
centre: (90%)
105) As per the condition for accessibility for GST turnover of over Rs. 1.5 crore, it will be assessed in ______ ratio by the centre
and states. (50:50 ratio)
106) With respect to the limit set on taxing of high sea trade, within _______ nautical miles into territorial waters, Coastal States
would have the power to collect Tax. (12)
107) What will be the Base Year for the purpose of compensation to states for GST? 2015-16
108) The Compensation to the states will be given for ____ years from GST & Clean Energy Cess. (5)
109) Name the Chairman of GST council? Arun Jaitely
110) GST Council will comprise of _____________ of States &
Centre. (Finance Ministers)
111) How many tax slabs are there in GST? 4
112) What are the tax rates proposed under 4 slabs by GST Councli? (5%; 12%; 18%; 28%)
113) In the first slab of GST tax, ____will be charged on items of common consumption. (5%)
114) For the fast moving consumer goods, two standard rates are fixed, which are: 12% and 18%
115) What rate of GST is fixed for Ultra Luxury Items/ Demerit & Sin Goods like Expensive Car, Tobacco? 28% + GST cess
116) Name the cesses which will be included in GST: Swachh Barat Cess, Krishi Kalyan Cess & Education Cess
117) Which type of cess will not be included in GST: Clean Environment Cess
118) The GST will subsume all indirect taxes except: VAT on Petroleum Products, Stamp duties on Property, Tax on
Entertainment at Panchyat, Municipality or Districts level.
119) President has signed the GST Bill under which Article. 111
nd
120) The constitutional 122 Amendment GST Bill 2014 will
enter the Statute Book as the ____________. (Constitution
st
101 amendment Bill 2016)
121) Which entities has been exempted from GST? Entities having Turnover of less than Rs. 20 lakh (in case of North Eastern
States & Hill States Rs. 10 lakhs)
122) The Amendments done by Rajya Sabha in GST included removal of ______ additional tax on Interstate Sales, Removal of
_______ additional Manufacturing levy and ____ compensation to the states for 5 years, All disputes to be solved by GST
council. (1%;1%;100%)
st
123) Name the 1 state that passed the GST bill: Assam
st
124) Name the 1 Nation that Introduced the GST Bill: France
MCQs based on Budget 2017-18
01 Which of the following type of expenditure classification has been done away with, in the Union Govt. Budget 2017-18?
a revenue expenditure ,b plan and non-plan expenditure,c capital expenditure d fiscal expenditure
02 Which of the following independent budget has been merged in the Union Govt. Budget 2017-18?
a Railway Budget , b Defence Budget, c State Budget, d Performance Budget
03 The agenda for Union Govt. Budget 2017-18 is TEC-India, which stands for:
a Transition, Energize, Clean India , b Transform, Excellence, Clean India
c Transform, Energize, Clean India, d Transform, Energize, Creative India
04 As per provisions of Union Govt. Budget 2017-18, the farmers’ income is targeted to be doubled within:
a 10 years b 7 years c 5 years d 3 years
05 As per provisions of Union Govt. Budget 2017-18, the disbursement target for short term crop loans by the banking system, has
been fixed at? a Rs.800000 cr, b Rs.900000 cr, c Rs.950000 cr, d Rs.1000000 cr
06 As per Union Govt. Budget 2017-18, the Long Term Irrigation Fund already set up in NABARD shall be augmented to take the total
corpus of this Fund to Rs._____ crores. a Rs.50000 cr b Rs.40000 cr c Rs.25000 cr d Rs.20000 cr
07 As per Union Govt. Budget 2017-18, the Dairy Processing and Infrastructure Development Fund will be set up in NABARD with a
corpus of Rs.____ crores? a Rs.10000 cr b Rs.5000 cr c Rs.2000 cr d Rs.1000 cr
08 As per Union Govt. Budget 2017-18, the Dedicated Micro Irrigation Fund in NABARD to achieve ‘per drop more crop’ will be set
up with an initial corpus of Rs.____ crores? a Rs.10000 cr, b Rs.5000 cr c Rs.2000 cr, d Rs.1000 cr
09 The allocation for Pradhan Mantri Awaas Yojana – Gramin has been increased to Rs.____ crores with a target to complete 1
crore houses by 2019 for the houseless and those living in kutcha houses, as per Union Govt. Budget 2017-18
a Rs.23000 cr, b Rs.25000 cr, c Rs.30000 cr, d Rs.40000 cr
10 As per Union Govt. Budget 2017-18, which of the following platform is proposed is to be launched with at least 350 online
courses by leveraging IT, which would enable students to virtually attend courses taught by the best faculty?
a Kaushal b Swayam c Sankalp d Shakti
11 As per Union Govt. Budget 2017-18, SANKALP shall be launched at a cost of Rs.4000 crores which will provide market relevant
training to 3.5 crore youth. SANKALP program stands for:
a Skill Adaptability and Knowledge Awareness for Livelihood Promotion programme
b Skill Acquisition and Knowledge Application for Livelihood Promotion programme
c Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme
d Skill Adaptability and Knowledge Application for Livelihood Promotion programme
12 As per Union Govt. Budget 2017-18, the National Housing Bank will refinance individual housing loans of about _____ crore in
2017-18? a Rs.20000 cr b Rs.25000 cr c Rs.30000 cr d Rs.40000 cr
13 As per Union Govt. Budget 2017-18, Government has prepared an action plan to eliminate certain deceases. The target date for
which of the following is not stated correctly? a Kala-Azar and Filariasis by 2017
b Leprosy by 2018, c Measles by 2020 d Tuberculosis by 2022
14 As per Union Govt. Budget 2017-18, by the end of 2017-18, high speed broadband connectivity on optical fibre will be available in
more than 1,50,000 gram panchayats, under which of the following program?
a Digital India, b Indianet,c BharatNet,d DigitalBharat
15 As per Union Govt. Budget 2017-18, which of the following is proposed to be abolished? a Planning Commission, b Directorate
of Foreign Trade, c Board for Financial Supervision, d Foreign Investment Promotion Board
16 As per Union Govt. Budget 2017-18, Rs.____ crores has been provided for recapitalisation of Banks.
a Rs.3500 cr, b Rs.5600 cr, c Rs.10000 cr, d Rs.12460 cr
17 As per Union Govt. Budget 2017-18, Rs.____ crores has been provided for subscription by Govt. to share capital of NABARD.
a Rs.3500 cr, b Rs.5600 cr, c Rs.10000 cr,d Rs.12460 cr
18 The lending target under Pradhan Mantri Mudra Yojana has been set at Rs.____ crores where the priority will be given to Dalits,
Tribals, Backward Classes and Women, as per Union Govt. Budget 2017-18.
a Rs.1000000 cr, b Rs.675400 cr, c Rs.366000 cr d Rs.244000 cr
19 As per Union Govt. Budget 2017-18, the allowable amount of deduction on account of provision on NPA for commercial banks, for
income tax purpose, is proposed to be increased to ___ %? a 8.5% b 7.5% c 6.5% d 5.5%
20 For persons above 60 years, LIC will provide an investment opportunity with an assured return of ___ % for 10 years, as per Union
Govt. Budget 2017 18. a 7.5% b 8.0% c 8.5% d 9.0%
21 As per Union Govt. Budget 2017-18, the divestment target for 2017-18 is: a Rs.83575 cr, b Rs.79340 cr
c Rs.76500 cr, d Rs.72500 cr
22 As per Union Govt. Budget 2017-18, under scheme of presumptive income for small and medium tax payers whose turnover is upto
Rs.2 crores, ___ % of their turnover will be counted as presumptive income in respect of turnover which is by non-cash means? a
5% b 6% c 7% d 8%
23 No person will receive an amount of ____ or more in cash in aggregate from a person in a day, in respect of a single transaction or
in respect of transactions relating to one event, as per Union Govt. Budget 2017-18?
24 As per Union Govt. Budget 2017-18, under provisions of Sec 80G of Income Tax Act, the eligible amount for cash donations has
been reduced from Rs.10000 to ____. a Rs.7500 b Rs.5000 c Rs.3000 d Rs.2000
25 As per Union Govt. Budget 2017-18, for any payment in cash for an amount above Rs., no deduction shall be
allowed as expense while computing profit by a business enterprise?
a Rs.20000 b Rs.15000 c Rs.10000 d Rs.5000
26 As per Union Govt. Budget 2017-18, the fiscal deficit has been projected at ___ % of gross domestic product?
a 3.2% b 1.9% c 0.7% d 0.1%
27 As per Union Govt. Budget 2017-18, the primary deficit has been projected at ___ % of gross domestic product?
a 3.2% b 1.9% c 0.7% d 0.1%
28 As per Union Govt. Budget 2017-18, the effective revenue deficit has been projected at ___ % of gross domestic product?
a 3.2% b 1.9% c 0.7% d 0.1%
29 As per Union Govt. Budget 2017-18, the revenue deficit has been projected at ___ % of gross domestic product?
a 3.2% b 1.9% c 0.7% d 0.1%
30 As per Union Govt. Budget 2017-18, to give boost to which of the following sectors, it has been given the status of infrastructure
activity? a def en ce b road building c affordable housing d public infrastructure building
31 For the purpose of calculation of capital gains, the base year for indexation is proposed to be shifted from 1.4.1981 to _____ for
all classes of assets including immovable property, as per Union Govt. Budget 2017-18?
a 01.04.2001 b 01.04.2002 c 01.04.2005 d 01.04.2011
32 As per Union Govt. Budget 2017-18, in order to make MSME companies more viable, income tax for companies with annual
turnover upto Rs.____ shall be 25%? a Rs.10 cr b Rs.25 cr c Rs.50 cr d Rs.100 cr
33 As per Union Govt. Budget 2017-18, the threshold limit for audit of business entities which opt for presumptive income scheme,
has been increased to Rs._____. a Rs.50 lac b Rs.100 lac c Rs.200 lac d Rs.500 lac
34 As per Union Govt. Budget 2017-18, the threshold for maintenance of books for individuals and HUF has been increased to
turnover of _____: a Rs.10 lac b Rs.25 lac c Rs.50 lac d Rs.100 lac
35 As per Union Govt. Budget 2017-18, the threshold for maintenance of books for individuals and HUF has been increased to
profit of ____ : a Rs.5 lac b Rs.3 lac c Rs.2.5 lac d Rs.2 lac
36 As per Union Govt. Budget 2017-18, rate of taxation for individual assesses for income of Rs.2.5 lakhs to 5 lakhs has been reduced
to? a 5% b 10% c 15% d 20%
37 As per Union Govt. Budget 2017-18, the tax credit for income up to Rs.5 lac has been reduced to ____ and it will be available for
income up to Rs.3.50 lac under Sec 87A of Income Tax Act?
a Rs .2000 b Rs.2500 c R s .500 0 d Rs .7500
38 As per Union Govt. Budget 2017-18, the surcharge on tax for taxable income of above Rs.50 lac, shall be:
a 5% b 10% c 15% d 20%
39 As per Union Govt. Budget 2017-18, the surcharge on tax for taxable income of above Rs.50 lac, shall be:
a 5% b 10% c 15% d 20%
As per Union Govt. Budget 2017-18, what is the rate of corporate tax, in addition to cess or surcharge, in respect of a company with
annual turnover above Rs.50 cr?
a 25% b 30% c 35% d 40%
41 As per Union Govt. Budget 2017-18, if amount of rent exceeds Rs._____ per month, the TDS @5% shall be mandatory when rent
is paid by an individuals and HUF.
a Rs.20000 b Rs.25000 c Rs.50000 d Rs.100000
42 As per Union Govt. Budget 2017-18, if a person delays filing his income tax return up to December, beyond the due date, he will
be required to pay a penalty of Rs.____ a R s .1000, b Rs.2500, c R s .5 00 0, d Rs.10000
43 As per Union Govt. Budget 2017-18, if a person files his income tax return after due date, beyond December, he will be
required to pay a penalty of Rs.____ a R s .1000 b Rs.2500 c Rs . 5000 d Rs.10000
44 As per Union Govt. Budget 2017-18, the rate of TDS is proposed to be reduced to ___ % from the existing 10% in respect of
deduction u/s 194J, for professional fee payments w.e.f 1.7.2017? a 1% b 2% c 3% d 5%
Answer
01 b 02 a 03 c 04 c 05 d
06 b 07 c 08 b 09 a 10 b
11 c 12 a 13 d 14 c 15 d
16 c 17 a 18 d 19 a 20 b
21 d 22 b 23 c 24 d 25 c
26 a 27 d 28 c 29 b 30 c
31 a 32 c 33 c 34 b 35 c
36 a 37 b 38 b 39 c 40 b
41 c 42 c 43 d 44 b
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TEACH YOURSELF - CAIIB

SMALL & QUICK BOOK FOR CAIIB-III

Sanjay Kumar Trivedy

Date: 16.12.2017 Sanjay Kumar Trivedy

3. THEORY PART ( MODULE – A, B, C & D ) 08-70

4. MEMORY BASED QUESTIONS 71-79

5. TEST YOUR SELF : MCQs ON RURAL BANKING 80-120

6. LATEST ON RURAL BANKING 120-133

(Please send Memory based questions on sktrivedycan@gmail.com; sktrivedyiibf@gmail.com )

TypeofQuestions–Basicallyfour types of MultipleChoiceQuestions askedinExamof WhichType –A:Knowledge/ConceptbasedStraight

QUESTIONS MODELS : TYPES OF QUESTIONS

CAIIB EXAMINATION –DEC 2017

Examination DATE TIME SUBJECTS

Module - A: Rural India

Module - C : Priority Sector Financing and Govt initiatives

Module - D: Problems and prospects in Rural Banking

MODULE – A : RURAL INDIA

• Total Population of the Country

GVA Growth in Various Sectors of the

 Population Growth % (2001-11)

NATIONAL. INCOME ESTIMATES

 Number of Industries Reserved for Public Sector 02

Minimum Support Prices for Kharif Crops

FOREIGN TRADE (In $ billion)

MONETARY AND CREDIT POLICY

India's Key External Debt Indicators

Panchayati Raj: It is a complex system of rural local self government.

NATIONAL RURAL LIVELIHOODS MISSION (NRLM)

 25 per cent of NRLM allocation is earmarked for skill development.

MAHILA KISAN SASHAKTIKARAN PARIYOJANA (MKSP)

PRADHAN MANTRI GRAM SADAK YOJANA (PMGSY)

INDIRA AWAAS YOJANA RURAL HOUSING

Capital formation: Connotes change in capital stock of an economy

MODULE B & C : FINANCING RURAL DEVELOPMENT & PRIORITY SECTOR ADVANCES

PRIORITY SECTOR ADVANCES

NPA & RECOVERY MANAGEMENT

Treatment of NPA Provisions

UPGRADATION OF LOAN ACCOUNTS CLASSIFIED AS NPAs

Notice before sale 30 days

MODULE – D PROBLEMS & PROSPECTS IN RURAL BANKING

97. PEMGP Subsidy to be kept as: 3 Years FDR without Interest

Test Your self -1 : Companies Act 2013

TEST YOUR SELF -2

6. MODULE –E: LATEST RBI POLCY -MCQs

BANKING LAW & RBI POLICY RELATED

MCQ ON KYC & CC

NPA & RECOVERY MANAGEMENT

6. LATEST ON RURAL BANKING

HIGHLIGHTS OF ECONOMIC SURVEY 2016-17

Changes in IT law that come into effect from 1-4-2017

Committee Date Headed by

10. TEST YOUR SELF

MCQs based on Budget 2017-18

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