Vol 3 Issue 1

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Gyan Vahini
 EDITOR’S DESK
Dear Unionites,
Happy New Year 2020…..
New Year signifies that the time has arrived to bid farewell to the by-gone year and things too and to
welcome the New Year along with lots of hope and enthusiasm to change our self and work for better
tomorrow. By welcoming New Year on a positive note it is essential that we let go all the negativity
accumulated in the year gone by. Thus we need to celebrate the New Year with a fresh beginning.

Happy New Year 2020…..

Celebrations are integral part of our life. Whether it is New Year Celebration or the rich and vibrant festivals
of India which are testimony to our diverse tradition and culture. They are celebrated irrespective of religion
or caste in the country, bringing people closer and creating a strong bond of humanity. Our bank has always
been deep rooted in Indian Culture always wanting to be part of customer’s joy and employee’s aspirations.
We want to be more than a Bank to them, we want to be choice of customer in every area of banking service
for that we keep on introducing new products and upgrading our existing products as per banking industry
standards. Moreover for optimum utilization of bank’s products by customers we, as employees should update
and upgrade our knowledge on an on-going basis and for that we are bringing out yet another issue of
“Gyan Vahini” Vol 3 Issue 1
This issue throws light on
 Monitoring of Sundry Deposit Accounts.
 Effective Profitability Measurement Tool: MFTP
 Responsibilities of Aadhar Enrolment Centres
 External Benchmark Lending Rate
 Role of SWIFT in International banking
 Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest.
 Union Standby Line of Credit (Union SLC)
 Special Interview Quiz are also covered in this issue for our Promotion Aspirants along with
new series on Leadership-Lessons from Indian Festivals-Diwali

These may groom your innate qualities which will help you climb rungs of Leadership.

As anonymous says
“This year there will be new knowledge to gain, new concepts to take in, new skills to learn,
new people to meet, new friends to enjoy, new sights to see, and new thrills to experience”
So inculcate the habit of reading useful things, keep your surroundings Green & Clean and never
forget to follow

LEARN UNLEARN & RELEARN

Happy Reading …
Sheshachal Hegde
Staff College Bengaluru
 EDITORIAL
BOARD
To Promote a Culture Editor:
of Continuous Mr Sheshachal Hegde
Learning for the Editorial Committee: Layout Design:
Mr S K Shukla Mrs Eesha Vashishtha
Development of Mr B S Rao
Individual and the Mr D Surendra Nath
Mr Keshav More
Bank

INDEX
Sr Page
Contents
No No.

1. Monitoring of Sundry Deposit Accounts 01

2. Effective Profitability Measurement Tool: MFTP 03
3. Responsibilities of Aadhar Enrolment Centres 05
4. External Benchmark Lending Rate 07

5. Role of SWIFT in International banking 09

Securitization and Reconstruction of Financial Assets and
6. Enforcement of Security Interest 13

7. Interview Quiz for Promotion Aspirants 14

8. Union Standby Line of Credit (Union SLC) 16

9. Leadership Lessons from Indian Festivals-Diwali 18

10. Banking Snippets 20
 Monitoring of Sundry Deposit Accounts
This is the third in the series of articles on
monitoring Impersonal accounts. First issue gave
introduction to different type of Office accounts
and Heads of Accounts and discussed about
impersonal accounts under Bills Payable Account.
Second article in this series dealt with Interest
Accrued on Deposits. Both articles dealt with the
concept, certain anomalies and gave suggestions to
improve the control measures.
Continuing the series of “Monitoring of Office
Accounts”, this edition deals with Sundry Deposit
accounts.
Most of the impersonal accounts are meant for
parking on temporary basis and are to be reversed
to the appropriate head of account. There are two
type of Impersonal accounts viz., OAB (Office
Account Basic) and OAP (Office Account Pointing).
Office Account Basic (OAB) will NOT provide the
breakup of the balance outstanding through any
Finacle menu. This has to be done manually.
Hence, if for any reason the entry could not be
reversed within 2-3 days, it has to be transferred
from OAB account to an appropriate OAP account
with details.
The major concerns in keeping the entries in office
accounts are:
 If it pertains to Income or Expenditure, our
Profit/Loss is over/under-stated.
 If it pertains to Customer accounts, then our
Deposits / Advances is over/under-stated.
 Scope for Fraud &
 Deficiency in service due to non-remittance to
Govt. authorities or Customer accounts.
Non-reversal of entries to Customer or Other
Organisation’s account will result in Customer
Complaint and will affect the confidence of the
customer and image of the Bank.
Summary of Entries outstanding in Sundry Deposit
accounts are captured in Annexure V to Balance
Sheet.
Sundry Deposit Accounts are controlled under 5 GL
Subhead Codes viz., 28100, 28200, 28300, 28400,
28500 and 28600. Sundry Deposit Account is Credit-
First in nature. It is not out of place to mention that
many branches are having Debit balances in these
accounts.
Sundry Deposit – Margin (28100)
Balance under this head is on account of Margin on
LC/LG, Import/Export Bills, etc. and these are OAB
accounts. Branch has to ensure that they are having
the break up details of the outstanding
amount.
Anomaly: Some branches not having Bullion
business are having Balance in 281/9000 -
SUNDRY DEP A/C MARGIN ON SALE OF BULLION
account - Mallial & Overseas, Kolkata branches
have entries dated 28-04-2017 and 13.03.2019
respectively. This has to be rectified.
Sundry Deposit – Claim Received (28200)
Balance under this head is on account of ECGC /
DICGC / CGFSI Claims received and these are OAB
accounts. Branch has to ensure that they are
having the break up details of the outstanding
amount.
Impact: Balance in this head impacts Provisioning
requirements of the Bank. Branch to ensure that
only ECGC / DICGC / CGFSI Claim received are
controlled in this account.
Sundry Deposit – Subsidy (28300)
Balance under this head is on account of Subsidy
received from State / Central Government,
Reserved Fund IRDP and these are OAB accounts.
Branch has to ensure that they are having the
break up details of the outstanding amount.
Running Account / Term Loan account on account
of subsidy to be opened under ODSUB / TL012
Scheme Codes respectively. Users may refer
Circular No.DIT:CBS:771:2014 dated 31.07.2014
on "Crediting Subsidy amount to Loan account".
Caveat: To keep balance in this account, only
when it is not required to be kept as Term
Deposit with “Pay Interest Flag” as “N”.
Sundry Deposit – Government Collection
(28400)
Balance under this head is on account of
collection in Government Schemes such as PPF,
NPS, KVP, SSY, Bonds; Taxes such as Direct Taxes,
Customs Duty, State Tax ; Ministries such as
Labour, Science & Technology. Many of these
accounts are OAB accounts and branch has to
ensure that they are having the break up details
of the outstanding amount.
Anomaly: Some branches are having Debit
Balance in these accounts and this has to be
rectified.
Sundry Deposit – OTHERS (28500)
This is the major head in Sundry Deposit.
Whatever precaution that has been prescribed for
the Heads of accounts cited hereinabove holds
good for this GL Subhead Code as well.
1
Transfer of Balance from OAB to OAP accounts
Attention is invited to Circular
No.DIT/CBS/1468/2014 dated 03.01.2015 on
"Conversion of Office Account Basic type (OAB) to
Pointing type (OAP)", wherein all outstanding
entries in Sundry / Suspense heads presently
controlled under OAB type of accounts that are
outstanding for more than six months should be
transferred to the OAP type account.
If controlled as advised above, Summary of
Transactions older than 6 months in Annexure V to
Balance Sheet will show the correct picture.
285-77000 - SUNDRY . A/C PARK PRIOR TO TDS
Branches are aware that on completion of TDS
Calculation process, the balance in this account
should become NIL. However, due to some
exceptional condition, sometimes all entries are
not reversed automatically and some balance is left
out in this account. This has to be reversed to the
party's account or as per mandate and at the end of
day.
What to do? Balance in the account to be made
“Nil” at the end of day.
Excess / Shortage in Cash at ATM
Attention is invited to IC No.177-2015 dated
04.08.2015, wherein the opening of the following
two new accounts to control excess and shortage in
Cash at ATM was introduced:
285-185000 - Sundry A/c Excess in ATM
825-433000 - Suspense A/c Shortage in ATM
Entries outstanding more than 2 years
Hitherto, old entries outstanding for more than 2
years in Sundry Deposit and Bills Payable accounts
were transferred to Central Office, after obtaining
approval from competent authority. This process of
transferring of entries to Central Office has been
discontinued.
In order to have a proper control over Impersonal
Accounts which are prone to fraud w.e.f
03.10.2017, a debit freeze is put in all Office
Account Pointing (OAP) type Sundry Deposit and
Bills Payable accounts at the system level itself.
No manual debit will be permitted where the date
of originating entry is more than 2 years old in case
of OAP type Sundry Deposits and Bills Payable
Accounts.
Finacle Menu 'SUNREF' is developed to seek
reversal/refund of entries outstanding for more
than 2 years in Sundry Deposit and Bill payable
Account where debits has been freezed in the
system.
In order to get the refund of the amount of entries
outstanding at branches, they will have to enter
above details in the SUNREF menu which should
be verified at branch level using maker checker
concept. Once the entry is verified at branch
level, the same will be available to RO Users for
its Approval/Rejection. Once the entry is
approved in the system at RO level, the branch
will be able to generate transaction. In case of
Sundry Deposit, the refund will be made through
HTM menu, to complete the refund process. In
case of DD/PO refund, the branches have to use
HDDC menu to cancel the DD/PO to complete
refund process.
Buyback Value of Assets:
It is observed that the Buyback value or disposal
value of Office Furniture and Fixture items
disposed off or written off are outstanding in
Sundry Deposit. When an OFF item is disposed off
or written off during the year, the profit/loss on
such sale / disposal should be transferred to CO
along with statement as per format prescribed in
Circular Letter CAD:FPSS:PVS:1080 dated
22.12.2008.
Please refer to the following sections in
Expenditure Policy 2019-20:
i. Depreciation on Bank’s properties (Point
No.24.2.9) &
ii. Delegated Authority for writing off / disposal
of capital items – Annexure VI.
Anomaly: By keeping buyback value in Sundry
and not writing off the asset value, Office
Furniture & Fixture figures wrongly reflected in
Balance Sheet and its Annexure II.
Useful Finacle menus: MSGOIRP, BRACMIS,
UBIDDBAL, SUNREF, HACLPOA, HBR, HGR1.
Suggestion:
Similar to the process introduced to capture
Breakup of Expenses in Annexure I to P&L Account
through CWEE menu, menu to capture details of
Sundry Deposit OAB accounts during Quarter-end
may be introduced.
Day end check for Debit Balance in Sundry Deposit
accounts may be introduced.
Centralized storage of documents pertaining to
all entries older than 3 months can be
undertaken, so that the details of such entries are
available when required.
Mr V Lakshmanan
Staff College Bengaluru
2
 Effective Profitability Measurement Tool:MFTP
MFTP (Matched Fund Transfer Pricing) unit and TP for deposit is the interest rate
received from internal money market. For
Banking is highly competitive industry, so it has
deposit it is referred to as the transfer credit and
become important for banks to have robust
for loan/asset it is referred to as the transfer
performance measurement system and profitability
charge.
driven to stay afloat & to maintain competitive
edge. In this backdrop, Matched Fund Transfer Asset: Interest Income – Transfer Charge = Net
Pricing (MFTP) is an analysis tool that can be used
margin or contribution
to measure performance for each branch/RO. It is
needless to mention that performance necessarily Liabilities: Transfer Credit – Interest Expenses
be measured under both dimensions i.e. volume as = Net margin or contribution
well as profitability. Earlier bank was using single
Net interest income (NII): Net margin
rates for deposits and advances, which was not as
(contribution) from assets + Net margin
objective in its assessment of true profitability (NII)
(contribution) from liabilities
of the branch and not discriminating between
different type of branches and their business mix. Bank has migrated from existing fund transfer
pricing to Matched Fund Transfer Pricing (MFTP)
There are branches with different business mix,
mechanism with effect from 01.04.2013, the new
some are deposit oriented and some advance
system is capable of calculating Net interest
oriented and surplus funds from deposit oriented
Income at most granular level i.e. account level.
branches are deployed in deficit branches for the
To compute transfer pricing as per Matched Fund
purpose of advances. Bank majorly depends on its
Transfer Pricing System, Bank has purchased a
branches for low cost funding as well as profitable
software solution called "Oracle Financial
high quality deployment in terms of loan and
Services Analytical Application (OFSAA)" from
advances, therefore, these kinds of branches to be
Oracle.
incentivized compared to others.

This tool is useful for Branch managers and

Thus, Transfer rates are market driven rates which
Regional office level staff, who can take business
are assigned for notional internal transfer of funds
decisions on the basis of NII earned in the
between surplus branches to deficit branches.
account/customer. Accordingly, it can decide
Through this innovative concept branches become
whether the account deserves to get an interest
immune to adverse interest rates movements; for
or other concessions or not.
example branches have mobilsed/renewed deposits
for longer tenor in scenario when interest rates are Limitations of Matched Fund Transfer
falling or vice versa. Pricing System
In simpler terms, Transfer Pricing (TP) for loans is  Account wise data is being sourced from the
Finacle without any manual intervention;
the interest rate representing cost of funds to a

3
 therefore transfer pricing results will depend on strategic goals by focusing on profitable
the accuracy of data in Finacle. segments. MFTP can be quite useful at branch
 It does not clean legacy data in Finacle. level, as they can analyse profit trends, segments
 For Transfer price calculation purposes, new and drive business accordingly.
system will apply only on accounts originated on
Net Interest Income (NII) which contributes to
or after 01 April 2011.
almost 80% of the profits of the branch can be
 MFTP system is not considering effects of
measured account wise through an effective
embedded optionality such as prepayment
Transfer Pricing Mechanism. This will help the
closure of loans, pre mature closure of deposits.
Branch Managers to re-align their business mix
These option costs are not provided for at
and concentrate on more profitable business.
present in MFTP system.

Matched Fund transfer pricing is important tool

which will help the management to achieve the

HOW TO USE MFTP IN YOUR EVERYDAY BANKING & IMPROVE PROFITABILITY?

There is link available in our intranet (UBINET), which is shown in screens highlighted with oval below:

Now click on FPIR, Which will take you to screen depicted below: Now click on left side tab
‘profitability’ and download the xls
sheet, which should be enabled for
editing content, now you are
required to just punch your
branch/RO solid in cell ‘D9’
highlighted in yellow colour, this will
give you complete profit summary of
your branch computed on the basis of
MFTP.

Mr Dinesh Mishra
Staff College Bengaluru

4
 Responsibilities of Aadhar Enrolment Centres
Responsibilities of Aadhar Enrolment  However Operator / Supervisor can be

Centres managed by Union Bank of India outsourced.

Unique Identification Authority of India (UIDAI)  Verifier should conduct 'Know Your Resident'

directed all Scheduled Commercial Bank in the year (KYR) based on original proof of identity and

2017 that they need to provide Aadhar enrolment & proof of address documents as per the list of

updation facilities by opening Aadhar Enrolment UIDAI.

Centres (AEC) at least 10% of their branch network.  Verifier must ensure correctness of the
Our Bank has selected an agency. M/S Vakrangee Enrolment Form submitted by the resident
Ltd., to provide Aadhar Enrolment Kits & certified from original Proof of Identity & Address
Operators / Supervisors at all selected branches. documents and should put signature as

Operational guidelines for the AEC: verifier on the form

 Branch should provide necessary space, seating  Verifier should collect appropriate fees, if

arrangement and electric power supply for applicable, from the resident to the credit of

successful set-up for visiting for operator / specified branch income account. (Aadhar

supervisor from M/s Vakrangee Ltd., Updation Charges - SOLlD4260088000)

 AEC should be established inside branch premise  Operator should carry out enrolment /

under CCTV coverage and branch Official should updation on specific UIDAI package as per

be able to monitor the operations done by enrolment form signed by the Verifier

operator / supervisor of AEC.  Supervisor has to approve under his hand and

 Basic facilities like waiting area, drinking water, seal the data entry made by operator after

notice board, schedule of charges should be ensuring correctness and quality of the work

provided. of the operator by cross checking with

enrolment form signed by verifier
 AEC Name board, banner, posters etc. in
prescribed format must be displayed at  Supervisor should ensure upload of daily

prominent places outside the branch enrolment/update data to UIDAI

 Designated Bank Officer must perform the duties  Verifier should advise the Operator to print

of verifier. Selected staff to get them certified the report at the end of the day to verify

through certification exam conducted by NSEIT activities done by the Operator.

as per procedure described during the  Aadhar services should be provided during
workshops. Certified staff is eligible for a one business hours of the branch.
time incentive of Rs.2,000/ - as well as exam
 Aadhar enrolment/update services may be
fees of Rs.365/-
provided to non-customers/ residents also.

5
 Officer overseeing functions of Financial  Any packet with data error, if uploaded, will
Inclusion at RO / FGMO will be the 'Nodal attract penalty.
Officer' for Aadhar Enrolment project and will
Don’ts
coordinate with FID, CO
 AEC counter should not be in an isolated place
 Branches are advised to ensure that operator
 Operator should not collect any charges / fees
maintains register of daily activities and
or any money from the resident.
should be verified by branch staff on regular
 Regional Heads should not transfer the services
basis. Format of the register is as of certified staffs of a branch at a time without
Date No. of No. of No. of Sign of Initials
the concurrence of Financial Inclusion
Enroll update Aadhar Operator of Department, Central Office.
ment prints Verifier
 All enrolment / updated forms having customer
and verifier's signature need not be preserved.
 Deficiencies in enrolment by Operator/
 Enrolment kit including laptop used for
Supervisor shall attract financial disincentives enrolment / updating data by operator should
and eligible administrative actions. not be moved outside the branch.

 Branch staff working as Verifier / Supervisor

should verify each packet before uploading to Mr D Surendranath
ensure data quality as per guidelines. Staff College Bengaluru

BRAIN TEASER Answers P No 19

6
 External Benchmark Lending Rate
Data of the last 5 years shows that on an average,
despite RBI cutting REPO (its benchmark interest
for banks) by 2 percent, less than 1% of it have
been passed to the customers where the RBI
wanted the full benefit to be passed on to
customers.
If you have a home, you may think that today's
RBI rate cut will ease your monthly installment or
EMI. Ideally, you are right, but it will depend on
whether the bank passes on the interest rate cut
to you or not.
The Data Intelligence Unit (DIU) of India Today
analysed the base rate changes in response to RBI's
repo rate cut of the last nine years and it shows
that the major challenge for the economy is not
RBI's rate cut but its transmission to the customer.
Despite the RBI reducing policy rate, banks did not
adjusted their lending rate accordingly. Instead,
most banks raised their deposit rates to collect
funds.
Analysts say that at the core of this mismatch
between the RBI action and banks' inability to pass
on the benefit to their borrowers is the slowdown
in household savings. It has been observed that
despite reduction in repo rates by RBI in various
reviews, the mortgage interest rate has remained
sticky. As a result, the required benefit of the rate
cut has not reached buyers.
Banks are in a trap with bad loans whereas non-
banking institutions are facing solvency issue.
RBI rate cut transmissions are blocked by these
traps and customers are postponing their demands
and purchase plan.
However, though the banks were having cheaper
funds available with REPO rate cut, the customers
were still paying the same EMI without or with very
less interest rate reduction.
With a view that the rate cut benefits must be
passed on to the customer, the RBI came out with
the view that the banks must fix their floating
interest rates related to the REPO rate so that the
benefits are passed on to the customers as soon as
the RBI reduces interest rates.
Subsequently, RBI vide circular
no.DBR.DIR.BC.No.14/13.03.00/2019-20 dated
September 4, 2019 directed all Banks to move to
External Benchmark Based Lending Rate (EBLR) for
all retail and Micro & Small Enterprises (MSEs)
loans. RBI stated that Banks should link all new
floating rate personal or retail loans (housing, auto,
etc.) and floating rate loans to Micro and Small
Enterprises to External benchmark. RBI also
permitted switchover of existing loans linked to
different internal benchmarks to EBLR.
SBI was the first bank to adopt EBLR. Union Bank of
India implemented External Benchmark Lending
Rate w.e.f 1st October, 2019 for the following
category of loans:
 Micro & Small Enterprises (MSE): Floating Rate
General and Term Loan and / or Working Capital
Facilities under Schematic Lending.
7
 Personal/Retail: Floating Rate / Retail Loan Schemes.
 The interest rate on rupee credit to exports and imports.
 All facilities granted to the categories of loans as mentioned above – be it Working Capital, Term
Loans, Bills, Packing credit etc shall be linked to EBLR.

Effective rate of interest under EBLR (Components of effective Interest Rate):Applicable Interest
Rate = EBLR(*) + Premium(#)
Whereas:
(*)EBLR = RBI Policy Repo Rate + Spread (means Operating Cost + Capital Charge)
(#)Premium = Credit Risk Premium + Additional Credit Risk Premium (to be added as per tenor
of the loan given in Annexure) ± Strategic Premium / Discount

Reset of Interest Rate Components for customers:

Repo Rate : At least once in 3 months or as prescribed by RBI.
Spread : Every 3 years from the date of sanction.
Premium : Premium will be fixed for the entire period of loan. In case of MSE borrowers
(working capital loan) the prevailing premium will be applicable at the time of review/renewal
of credit facilities.

Applicability of EBLR to existing loans:

 Apart from the new sanctions, RBI has also permitted existing loan accounts linked to different
internal benchmark rates EBLR for above mentioned categories of loans with the following two
conditions:
 take written request from the customer for switchover
 Loan account should be regular.

 At the time of renewal of working capital facilities to MSE, the interest rate will be linked to EBLR.
 Once opted for EBLR, the borrower shall have no option for reversion to MCLR / Base Rate / BPLR
till maturity of the loan.
 Once shifted to External Benchmark Lending Rate (EBLR), all the provisions of EBLR will be
applicable. Accordingly, new loan documents applicable for EBLR should be executed by the
borrower.
 Delegation for permitting switchover shall be vested with the respective sanctioning authority.
Now, with implementation of External benchmark lending rate, it is ensured that benefit of any rate
cut in REPO by RBI will be passed on to the customer without any hiccups and delay, thus meeting the
objective of the rate changes.

Mr. Tanweer Ahmad Chowdhary

STC Powai

8
 Role of SWIFT in International banking
“Technology changes the quality of
life. Technology cannot replace
human intelligence”
Dr. T.P.Chia
Transfer of money to overseas for the various purpose
like trade related payments, travel expenses,
emigration fee etc. Today, it is easy to walk into a
bank and transfer money anywhere around the globe,
but how does this happen? Behind most international
money and security transfers is the Society for
Worldwide Interbank Financial Telecommunications
(SWIFT) system. SWIFT is a vast messaging network
used by banks and other financial institutions to
quickly, accurately, and securely send and receive
information, such as money transfer instructions.
Prior to SWIFT, Telex was the only available means of
message confirmation for international funds
transfer. Telex was hampered by low speed, security
concerns, and a free message format--in other words,
Telex did not have a unified system of codes like
SWIFT to name banks and describe transactions. Telex
senders had to describe every transaction in
sentences which were then interpreted and executed
by the receiver. This led to many human errors.
Why Swift established:
To circumvent these problems, the SWIFT system was
formed in 1973, Swift is a cooperative society under
Belgian law and the world’s leading provider of secure
financial messaging services. SWIFT provides its
community with a platform for messaging, standard
for communicating. it is owned and controlled by its
shareholders, having head office in Brussels.Seven
major international banks formed a cooperative
society to operate a global network that would
transfer financial messages in a secure and timely
manner. Customers using the SWIFT network can
connect to it in a variety of ways; directly through
permanently leased lines, through the Internet, or
through SWIFT’s own cloud started to establish
common standards for financial transactions. Swift
messages are used for various types of wire transfers
of information; buying and selling of securities,
corporate actions notifications and instructions,
foreign exchange and international currency transfers
and more.
SWIFT does not facilitate funds transfer,
rather, it sends payment orders, which must be
settled by Banks through correspondent
accounts that the institutions have with each
other. The SWIFT provides a network that
enables financial institutions/Banks worldwide
to send and receive information about financial
transactions in a secure, standardized and
reliable environment. As per data, SWIFT more
than 10,500 financial institutions in more than
215 countries and territories, who were
exchanging an average of over 15 Million
messages per day. Swift network is open round
the clock with 24 hrs support system. The
broader Swift community also encompasses
Corporates as well as market infrastructures in
payments, securities, treasury and trade.
Wire transfer?
Wire transfer is method of fund transfer by
means of electronic from one individual or
organization to another, either from one bank
account to another or transfer of cash at a cash
office. Wire transfer services are in different
categories like retail money transfer,
International money transfer, international
debit card etc. ‘Western union money
transfer’ is a good example for transfer of cash
electronically who operates worldwide.
Fedwire system is more likely to be RTGS (Real
Time Gross Settlement) in USA.
Mechanism of the Swift:
SWIFT is a messaging network that financial
institutions use to securely transmit
information and instructions through a
standardized system of codes. SWIFT assigns
each financial organization a unique code that
has either eight characters or 11 characters.
The code is interchangeably called the bank
identifier code (BIC), SWIFT code, SWIFT ID, or
ISO 9362 code.
To understand how the code is assigned, let’s
take the SWIFT code of Union Bank of India,
treasury branch Mumbai. It has the 8-character
SWIFT code UBININBBXXX.
First four characters: the institute code (UBIN
for Union Bank of India)
Next two characters: the country code (IN for
the country India)
9
Next two characters: the location/city code (BB for BOMBAY)
Last three characters: optional, but organizations use it to assign codes to individual branches. (BIC
address of our UBI M.S. Marg branch in Mumbai usethe Swift code UBININBBBSM).
Type of Payment and Non-Messages:
All the messages are standardized and formatted, accordingly. Some of the message Types (MT)
generally used, are as under:
Type of
Message Particular Type of Message Particular

Single Customer Credit

MT 103 Transfer MT 202 General Financial Institution Transfer

Multiple General financial Institution

MT 110 Advice of cheque MT 203 Transfer

Foreign Exchange
MT300 Confirmation MT400 Advice of Payment

Fixed Loan/Deposit
MT320 Confirmation MT410 Acknowledgement

- -- MT412 Advice of Acceptance

Issue of a Documentary Amendment to an authorization to

MT700 Credit MT747 Reimburse

MT707 Amendment to DC MT750 Advice of discrepancy

Authorization to Pay, Accept or

MT734 Advice of Refusal MT752 negotiate

MT740 Authorization to Reimburse MT760 Letter of Guarantee Amendment

MT742 Reimbursement Claim MT767 Guarantee Amendment

MT940 Customer Statement message MT99 General messages

MT950 Statement message

Pre-requisite to transmit the messages:

Each financial institution, to exchange financial messages, must have a banking relationship to their
correspondent bank through RMA (Relationship Management Application). It is prerequisite to exchange
authenticate payment and non-payment related messages. All the message type(s)are authentic
messages except MT999. It is free format message which may be transmitted without establishing RMA
which is used by financial Institutions/Banks for sending the general information.

10
RMA (Relationship Management
Application):
SWIFT’s RMA plays an important part in supporting
communication between different financial
institutions. The RMA is a SWIFT-mandated filter that
enables financial institutions to define which
counterparties can send them FIN messages. Any
unwanted traffic is blocked at the sender level,
reducing the operational risks associated with
handling unwanted messages and providing a first
line of defence against fraud.
RMA Plus, the more granular version of RMA, goes one
step further by letting institutions specify which
message type(s) they want to receive from, and send
to, each of their counterparties. Financial
institutions should incorporate RMA due diligence
standards into their Financial Crime/AML/KYC
Diligence, citing a number of principles which should
be considered both for customer and non-customer
RMA relationships. Banks/FIs do enhance due
diligence through screening updated “Anti Money
Laundering and Certification under USA Patriot Act”
before establishing the RMA to prevent themselves to
be victim of any unsolicited transactions. Mostly
Banks has provided these documents on their official
website.
Nostro Accounts with Correspondents
Banks:
Correspondent banking works through an agreement
between a foreign and domestic bank where a
correspondent account, usually referred to as a
Vostro or Nostro account, is established at one bank
for the other. A correspondent bank is a bank that
provides services on behalf of another financial
institution. It can facilitate to conduct business
transactions, accept deposits, and gather documents
on behalf of another financial institution.
Correspondent banks are most likely to be used by
domestic banks to servicing its clients as a domestic
bank's agent abroad. Generally speaking, the reasons
domestic banks employ correspondent banks to
access to foreign financial markets and to serve the
client without opening branches abroad.
Process of transmitting the Swift Massage:
Swift provides the facility to transmit financial and
Non-financial messages as per the instruction of
client. For an understanding, the flow of processing
has shown hereunder:
Customer Payment (MT103)
Assume a customer of Union Bank of India wants
to send money to his relative who banks with a
Bank of America branch in New York.
The UBI bank’s customer can walk into his
Bank with his friend’s account number and
Bank of America’s SWIFT code for its New
York, branch. Union Bank of India will send
a payment transfer SWIFT message to the
Bank of America branch over the secure
SWIFT network. Once Bank of America
branch receives the SWIFT message about
the incoming payment, it will credit the
amount to the beneficiary account.
When banks are having the correspondent
relationship, Financial Institution/Banks may
execute the transactions upon the instruction of
its client. The flow standard payment financial
message of the individual customer payment
has shown in below diagram:
UBI BANK BANK OF
AMERICA
Following field to be entered while preparing
the swift message type 103
Originating bank has to fill the require details on
the swift platform in the standard format.
Before transmitting the swift message from
swift to further receiving bank, it will be passed
through the ‘Office of foreign asset Control
(OFAC)” scrutiny which is mandatory check at
the originating and beneficiary bank’s end.
OFAC (Officer of Foreign Assets
Control):
The Office of Foreign Assets Control (OFAC) of
the US Department of the Treasury administers
and enforces economic and trade sanctions
based on US foreign policy and national security
goals against targeted foreign countries and
regimes, terrorists, international narcotics
traffickers, those engaged in activities related
to the proliferation of weapons of mass
destruction, and other threats to the national
security, foreign policy or economy of the
United States. OFAC acts under Presidential
national emergency powers, as well as authority
granted by specific legislation, to impose
controls on transactions and freeze assets under
US jurisdiction. Many of the sanctions are based
on United Nations and other international
mandates, are multilateral in scope, and involve
close cooperation with allied governments.
11
Swift in our Bank:
On 01 January, 2007, our bank shifts to a new
SWIFTNet Fin Interface Software name GFX Turbo
SWIFT which had discontinued the DOS based PC
Connect application in India. GFX Turbo SWIFT was
a web based application. It was easy to use, user
friendly and having the interface with capability to
screen the message with OFAC list. U.S. Treasury’s
Office of Foreign Assets Control (OFAC) administers
a series of laws involving transactions between U.S.
and certain foreign banks. In case there is any OFAC
matching with OFAC parameters OFAC queue, it
used to land in separate error queue. For executing
the instructions landed in the said queue requires
enhance due diligence for further execute the
instructions through SWIFT. In case it is executed
without due care, amount of the payment
instruction will be hold by the US treasury and will
not be execute till satisfactory explanation.
However, it was having the following limitation:
 No day end facility
 It was not updating Swift’s standard
parameters in real time i.e. OFAC List
 Less secure
Swift Alliance:
Our bank has migrated to Swift Allance 7.2 version
from 7.1 on 07.09.2018. The latest version are
having the enough capability to resolve the
shortcoming of GFX Turbo SWIFT i.e. Day end
facility, compatible window based application,
enhance security features.
Swift Alliance terminal has been provided to ‘B”
category branches which are authorize to carry
out forex transactions. In view of enhance
security features; All Swift users must have
“TOTP” application installed on their mobile
devices to get the OTP take the login in SWIFT.
User may take the login through OTP only. All the
SWIFT messages will be passing through “OFAC
checks” and “KYC &AML”. OFAC clearance is to
be done after final verification of the SWIFT
messages by SWIFT’s users. In SWIFT Alliance,
OFAC screening is to be carried out with Sanctions
Screening module to check suspicious swift
messages. For this, Swift users are required to
access Sanctions Screening portal using a
hardware token to login for further releasing or
block incoming and outgoing swift messages. All
outbound Swift Financial and Non-Financial
Messages verification and their screening have to
carried out at Centralized Swift Back Office
(CSBO).
Mr Preveen Kumar
Staff College
12
 SARFAESI
Securitization and Reconstruction of
Financial Assets and Enforcement of
Security Interest
Basic Check List for initiating
action under SARFAESIA:
Ensure that:
 Security interest is supported by proper
documentation
 The account where SARFAESIA is proposed to
be initiated should be that where borrower has
made a default and as a consequence, the
account is classified as NPA by the secured
creditor as per RBI Guidelines
 Ascertain the exact whereabouts of the
property and necessarily carry out physical
inspection
Initiate Action:
Proceed against only that security on
which charge is created as per
procedure by way of documentation.
 Exercise Caution while preparing
Demand Notice: Demand Notice under
Section 13(2), requires the borrower to
discharge his liability within 60 days from the
date of receipt of notice. While preparing
please note the following:
 Determination of liability and
reflection in the Demand Notice:
o Total Ledger Outstanding and Interest
held in Dummy Ledger
 The correctness of all the details regarding
property/assets have to be doubly checked
 Remember when Notice under Section 13(2)
is sent, action under SARFAESIA has
commenced
 Ensure that Section 13(2) notice represents
only those dues of the borrower which are
covered by the security mentioned in the
Notice.
 The documents should be within limitation
period as on the date of sending the demand
notice (Action under RDDB & FI Act 1993, or
a suit/claim in civil court does not save
limitation for SARFAESIA) Please verify the
Mortgage documents lying in our records.
 Understand that Action initiated under
SARFAESIA will not save limitation for filing
claim for recovery under other legal forums,
for the residual amount.
 In case of Decreed accounts, RC issued cases
and Lok Adalat Awards, we may treat the
money due under such decrees as “debt” and
SARFAESI action can be initiated within 12
years from the date of decree/RC/Award.
Even preliminary decree is valid for this
purpose
 Note the changes of address of
borrower/guarantor before sending the
notice. Obtain in writing. Oral information is
not reliable
Mr B S Rao
Staff College Bengaluru
13
 Interview Quiz
For Promotion Aspirants
Important aspects of EASE (Enhanced
Access & Service Excellence) Reform
Agenda
 The EASE reforms agenda evolved from recommendations
made in PSB Manthan, organised in November 2017, by
around 250 Whole Time Directors and senior executives of
PSBs formed the basis for a common PSB Reforms Agenda,
which are covered in six themes. Within these themes 31
Action points are indicated, which are to be implemented
by PSBs. Further, within these action points, around 107
performance metrics are being evaluated by IBA for
quarterly Performance Ranking of PSBs.
 In Jan2018, GoI launched a common PSB reform agenda
popularly known as EASE 1.0, comprising 30 action points
and 140 metrics across six themes. With 1 year of
implementation experience in place, the reform agenda has
shifted gears with launch of EASE 2.0 applicable for FY 19-
20.
The six themes of EASE Reform agenda are
as under:
1) Responsible Banking– Robust credit processing &
monitoring framework, Tie-ups with Agencies for
Specialised Monitoring (ASMs) for big ticket advances,
rationalization of overseas advances.
2) Customer Responsiveness – Branch pleasant
ambiance and basic amenities for customers, priority
service to Senior citizens/differently abled, banking
from mobile and home.
3) Credit Off-take – End to end IT enabled Loan
origination & Management IT solution for
retail/personal loans processing as well as tracking.
No manual intervention in personal unsecured loan
segment, reduction in decision making layers.
4) UdyamiMitra for MSMEs – utlisation of TReDS platform
for faster bills discounting, single point relationship
managers for top 20 MSMEs in branch/region, bank
specific revival framework for stressed MSMEs and
implementation of the same.
5) Deepening Financial Inclusion &Digitalisation –
Utilization of Bank mitra/BCs and mobile ATMs,
penetration of PMJDY, PMSBY, PMJJSBY, higher usage
of Aadhaar enabled payment system.
6) Developing Personnel for brand PSBs – Rewarding
top performers through PMS system, Mandatory roll
based E-learning modules and training, Job family
concept.
Current scenario: PSBs reform Agenda
 IBA is monitoring the progress of implementation of PSB
reform agenda and based on that ranking of banks will be
declared
 IBA has entrusted Boston Consulting Group (India) pvt ltd
(BCG) to conduct customer & branch survey for 21 PSBs.
 BCG has on boarded reputed market research firm –
IMRB for this exercise who will be going on field to
survey 2.5% of the branch network of each bank and
survey 4-5 customers in these branches
 Corporate governance reforms 2.0 will start soon and
include diversified board structure, stronger board
level committees, and robust performance
management system for employees.
 Finance ministry want to bring government stake up to
52% in PSBs.
The Monetary Policy Committee (MPC)
of RBI - 05.12.2019:
“Inflation control is the prime objective of RBI’s
money policy - Shaktikanta Das RBI Governor
 All members of the MPC – Chetan Ghate, Pami Dua,
Ravindra H Dholakia, Michael Debabrata Patra, Bibhu
Prasad Kanungo and Shaktikanta Das – Unanimously
voted to keep the rates and stance unchanged.
 Keeps repo rate unchanged at 5.15 %, the rate at which
it lends to banks, recognizing the rise in inflation
caused by soaring food and vegetable prices and the
reverse repo rate under the LAF remained unchanged
at 4.90 per cent, and the marginal standing facility
(MSF) rate and the bank rate at 5.40 per cent.
GDP projection cut sharply
 The MPC revised down real GDP growth for 2019-20
from 6.1 per cent in October policy to 5 per cent, a cut
of 110 basis points.
 “Based on the early results, the business
expectations index of RBI’s industrial outlook
survey indicates a marginal pickup in business
sentiments in Q4,” MPC noted.
D-SIBs:Domestic systemically Important
Banks (D-SIBs)
 SIBs are perceived as ones that are ‘Too Big to Fail
(TBTF)’.
 Hence SIBs should be subjected to additional policy
measures to deal with the systemic risks and moral
hazard issues posed by them.
 The banks having size as a percentage of GDP beyond,
2% will be selected in the sample of banks. Banks
classified as D-SIBs will be subjected to additional
Common Equity Tier 1 (CET1) capital requirement
ranging from 0 to 2.5%,
 Three banks namely SBI, ICICI Bank and HDFC bank are
identified as D-SIB
14
NeSL :first such Information Utility (IU) WHY?
 Credit Growth to Take-off: PSBs having 70% market
As per Section 215 of IBC, a financial creditor shall share in the banking space will be geared for
submit financial information and information relating greater growth and to contribute through enhanced
to assets in relation to which any security has been credit off-take.
created to Information Utility. For the purpose our  To Clean Up Legacy of NPAs
Bank has entered into an agreement with National e-  Banks to Give Big Push to MSMEs for Jobs and
Governance Services Limited (NeSL), first such Growth : The stage has been set with a ‘MUDRA
Information Utility (IU) for submission of financial Protsahan’ campaign across the country
information of the borrowers.  Saddled with high non-performing assets
TReDS: Trade Receivables Discounting System (NPAs)
 Facing the prospect of having to take haircuts
 It is a digital platform to help MSMEs to get their on loans stuck in insolvency proceedings.
trade receivables financed (without recourse) at a
competitive rate through an auction mechanism  twin-balance sheet problem” afflicting corporate
where multiple financiers can bid on invoices India and public sector banks reflected in slow bank
accepted by PSUs / Corporate Buyers. credit growth
 Factoring transactions taking place through TReDS IMPORTANT RATES:
shall be eligible for classification under priority
sector. Policy Rates : [12.12.2019]
RATES %
 Bank has till now entered into agreement with
three TReDS Fintech Companies having TReDS 5.15
portal with web address as rxil.com,  Policy Repo Rate
invoicemart.com and M1xchange.com for operating 4.90
 Reverse Repo Rate
on TReDS.M1xchange.com is the new addition.
 Marginal Standing Facility Rate 5.40
CRILC: Central Repository of Information on Large
Credits  Bank Rate 5.40
 Threshold of Total Exposure (TE) for reporting to 4.0
CRILC is Rs.5.00Cr & Above.  CRR
 Apart from exposure details, other credit  SLR 18.50
parameters such as Asset Class Special Mention
Account (SMA 0, 1, 2), FRAUD / RFA, Current MARGINAL COST OF FUNDS BASED LENDING RATE
account balance etc are available with CRILC. (MCLR) effective from 11th December 19 to 10th
January 2020.
 The reports submitted under CRILC are
TENOR MCLR %
 CRILC Main: (Monthly Reporting)
 RLC (Return on Large Credit): (Quarterly Overnight MCLR 7.75
Reporting)
 Defaulted Borrower Report (DBR): (Weekly- 1 Month MCLR 7.80
Every Friday)
3 Months MCLR 7.95
 RFA / FRAUD: (As and when basis)
What is Large Exposure Framework? 6 Months MCLR 8.05
 All aspects of the Large Exposure Framework
(LEF) have been implemented from April 1, 1 Year MCLR 8.20
2019 and the extant exposure norms applicable
2 Year MCLR 8.35
to single/group of connected counterparties
are no longer applicable from that date. 3 Year MCLR 8.40
Why Recapitalization of PSBs: Base Rate and Bench Prime Lending Rate [BPLR]
Mobilization of capital : Rs.2,11,000 crore through
budgetary provisions of Rs. 18,139 crore, Our Base Rate- Bench Prime EBLR-01/10/19
30/12/19 Lending Rate
recapitalisation bonds to the tune of Rs. 1,35,000
[BPLR]-17/04/18
crore, and the balance through raising of capital by
banks from the market while diluting government 8.80% 13.40% 8.25%
equity (estimated potential Rs. 58,000 crore).
Mr S K Shukla
Staff College Bengaluru

15
 Union Standby Line of Credit (Union SLC)
Banking in India has undergone a lot of changes  It addresses the temporary liquidity mismatch arising
since inception. The PSBs were more focussed to out of delayed realisation of debtors up to 270 days
traditional form of banking with special focus on due from Government/ Government
organisations/PSUs, delay in receipt of GST input tax
social service, the entry of private players in
credit and other business requirements.
banking industry has forced the scenario to move  Flexibility in disbursement of loan is available as the
towards more customer friendly approach. Since borrower can avail the same in tranches.
1990, the private banks have grown their advances  Margin requirement is NIL.
at around 40% as against PSBs which is less than 20%.  Simplified assessment as per ES-12.
Despite PSBs are having more than twice the  Extended validity of sanction specifically for
advances of that of their private peers, their market disbursement in tranches.
 No restriction in number of withdrawals during
capitalisation is almost 1/4th of that of private
validity of sanction and facility to reapply in case of
banks. early repayment.
(Rs in Crores)  No processing charges and no commitment Charges.
1800000
Purpose:
1600000
1400000 This facility is given as an additional limit in addition to
1200000 the regular limits of customers. Finance under the scheme
1000000 can be provided to meet temporary liquidity mismatch
800000 arising out of
600000
a. delayed realisation of receivables,
400000
200000 b. delayed receipts of GST input tax credits (including
0 for exports) and
Market capitalisation as on 18-12-2019 c. other business requirements.
Top 5 Private banks Top 5 PSBs
This scheme permits finance against debtors for more
Source: www.moneycontrol.com than 90 days up to 270 days, provided that the debts are
Unlike PSBs, the success of private banks in due from Government/Government organisations/PSUs.
acquiring more business compared to PSBs is mainly Any receivable due for more than 90 days, from anyone
due to their nature of flexibility in products other than above is subject to approval from competent
according to the need of customer. But the pace of authority. Further, the drawing power in main limit is to
change in operations of PSBs is noticeable now-a- be arrived at after deducting outstanding in limits availed
days with the introduction of EASE agenda of under Union SLC. Branches to ensure that in no case
Government of India. Entire banking industry in double financing is available to borrowers against the
India is witnessing revolutionary changes and PSBs same debtors under both the limits. Regarding other
are in the race to beat competition from their business requirement, branch to ensure that the
peers. The modus operandi of Indian banks requirement is purely of temporary nature and limit is
(specifically PSBs) is moving from traditional utilised for liquidity mismatch in working capital flow
banking to practical banking with special focus on only.
Standardisation and customisation of banking CA certificate regarding age wise break up of outstanding
products and services. debtors and amount of pending GST dues is to be obtained
Our bank has developed many such products which with valid UDIN (Unique Document Identification Number)
are customer friendly and have required elasticity and the authenticity of the same has to be verified from
catering to varying need of customers. Union SLC is UDIN portal (https://udin.icai.org).
one of such product that provides an additional Eligibility:
support to all existing MSMEs customers who are
All existing MSME customers of our bank enjoying
stuck in temporary liquidity crunch. It aims at
aggregate working capital limits up to Rs 5 crores, having
handholding the existing MSME customers of our
credit rating up to CR-5, are eligible under the scheme.
bank during their difficult times and revitalizing
As the scheme aims to help the MSME customers in their
them to get out of sickness.
difficult times, the accounts which are standard but under
Some salient features of this scheme are stressed category (SMA) are also eligible.
 PAN India coverage of the scheme.

16
However proper due diligence has to be conducted in order
to avoid mis-utilisation/diversion of funds.
Enterprises engaged in speculative activities and Real
estate activities are not eligible under this scheme.
Quantum of Finance: The limit in the form of demand
loan/ WCDL can be fixed at 25% of existing working capital
limit (both FBWC and NFBWC limit) subject to maximum
of Rs 1.25 crore.
Validity of Sanction and repayment: The sanction
under this scheme is valid up to 3 months from the date
of sanction of SLC or if availed in tranches, sanction is
valid up to 12 months from the date of first disbursement.
However in case of availment in tranches, first
disbursement should happen within a period of three
months from the date of sanction.
The limit can be disbursed any number of times within
validity period. Any unavailed limit will expire after
validity period.
Repayment has to be fixed as per cash flow of the unit.
Repayment of all disbursements, whether in one go or in
tranches, has to be done within a maximum period of 12
months from the date of first disbursement or validity of
sanction, whichever is earlier.
In case of early repayment, borrower can be permitted to
reapply again to drawdown in one go or in tranches within
validity period but the repayment of such withdrawal is
subject to above stated norms.
Margin & Drawing Power:Margin under Union SLC is NIL.
However the margin for calculation of drawing power in
original limits will continue as per sanction terms.
Further, calculation of DP in original limit is to be done
after giving effect to the outstanding in Union SLC account.
The DP in original limits will be calculated as under.
Particulars Amount
Amount of Stock and Book Debts** declared by the
borrower as per stock statement dated ....
Less: Outstanding in the proposed DL /WCDL under Union
SLC
Residual value of Stock & Book Debts
Less: Margin on stock and book debts as per original
sanction
Drawing power for regular CC limit (D=A-B-C)
Outstanding in the regular CC limit
** including book debts up to 270 days considered under
SLC
Disbursement under the scheme is to be done only
after getting formal request from the borrower.
Rate of Interest:
0.50% above the applicable ROI on original WC limit.
Charges & Commission: No processing charges
applicable
Delegation: Delegation under the scheme will be
as per policy on delegation of loaning power based
on total exposure on the borrower/group including
the proposed SLC limit.
Security & Guarantee: All assets created out of
bank finance are to be hypothecated in favour of
bank. Extension of charge to be done on the primary
security and collateral security. Further personal
guarantee in original limit is to be extended for the
additional limit under this scheme.
Important points:
 Customer who has availed facility under Union
SME plus has to close the same before availing
limit under this scheme.
 No excesses / Adhoc to be granted to the
borrower during the currency of the standby
limit under the scheme.
 The facility not to be utilized for
adjustment/takeover of borrowings availed
from other Banks/FIs.
 CPA is to be conducted as per extant guidelines.
 Account to be opened in scheme code “TL001”
and labelled as “Union SLC”.
 All accounts are to be internally rated as per
extant guidelines of Bank.
 Deviations under the scheme are to be approved
by CAC-II on case to case basis.
 For further clarification please refer IC 1780-
2019 dated 05.12.2019.
MSME sector contributes in a significant way to the
growth of Indian economy and the growth prospects
are enormous. Hence the product like Union SLC
with its attractive features helps our existing
customers in availing additional credit conveniently
and in a hassle free manner. It will help not only in
retaining our existing customer base but also
attracting quality business.
Mr Kalicharan Das
STC Bhopal
17
Leadership Lessons from Indian Festivals-Deepawali
Diwali is celebrated in grandiose style across the length
and breadth of India. It is a festival of triumph of good
over evil and of Rama the great king conquering the
forces of Ravana the demon king.

It is all about overcoming the darkness of ignorance and

propagating the light of knowledge.

So let us delve into the leadership learning from festival

of lights- Deepawali
Lord Rama Breaking the Sacrificial bow to marry Sita
Lesson:
Differentiation of products, services and talent
capabilities is very important to rise above the
competitors. Lord Rama used his unique
talents and skills effectively to win Swayamvar
to marry Sita.
Lord Rama,Lakshmana and Sita leave for 14 years of exile
Lesson:
Leaders thrive in challenges. They are
willing to take risk and help organizations
venture in the unknown where they can
create new blue oceans. Rama could have
stayed back and fought for his right. But he
chose to go away and forge a new path in
the unknown which helped him to make
things easier.
Lakshmana cuts Ravana’s sister Surpanaka’s nose
Lesson:
Crisis handling is very important that can
make or break leader’s reputation.
Visionary leaders solve crisis keeping in
mind the long term impacts. Temporary
solutions should never be encouraged.

Hanuman enters Lanka in search of Sita and sets Lanka ablaze and warns Ravana to
release Sita.
Lesson:
Visionary leaders have the ability to interpret
small clues that mark the arrival of big
disruption. They accordingly steer their
organizations to brace up for the change and
prepare it for the next wave.

18
Lord Rama wins the war, rescues Sita and return to Ayodhya to be coronated as the king
again.
Lesson:
Organizational fortunes always follow a sinusoidal curve
with good and bad times complementing each other. A
leader never rests on his laurels and always makes sure
that the organization is ready and prepared for the next
onslaught.

Mrs Eesha Vashishtha

Staff College Bengaluru

Answers to Brain Teaser

19
 Govt set to close loss making PSUs
The centre has taken political call to accelerate strategic
sale of loss making PSUs as some them have been waiting
for years to get a buyer. The Govt will recommend loss
making PSUs identified for strategic sale for closure and will
Top Score for Fino Payments Bank while SBI , not wait endlessly.
BoM are “good” performers among PSBs.
As per the monthly ranking by Ministry of Electronics Centre to launch first bond ETF this month
and Information Technology, SBI and BoM are the Centre will soon have its first exchange traded fund (ETF)
only PSBs that have shown good performance in for bonds comprising debt of state-run companies. This idea
digital transactions in October, while Fino Payments is to give retail investors an option to buy Govt debt while
Bank has topped in the Ranking list. creating an additional source of funding for Central Public
Sector Enterprises (CPSEs)
LIC makes over Rs.14000 crore profit from
markets till mid Nov this fiscal. Net FDI rises 23% in first half of FY20
LIC the country’s largest financial institution with a Net Foreign Direct investment (FDI) in India role 23% to
corpus of over Rs.31 lakh crore, has booked a profit $20.9 billion in the first half of the current fiscal, compared
over Rs.14000 crore from the stock market during with $17 billion in the year ago period.
the April1-November 15 period of the current
New card for transcations up to Rs.1000
financial year.
To promte digital payments RBI proposed introduce a
Govt to put Rs.100 trn investment in infra prepaid payment instrument (PPI) only for goods and
Govt will soon announce a set of projects as part of service transctions worth upto Rs. 1000/-
the Govt’s plan to invest Rs.100 trillion in
RBI throws open fin bank doors to lenders.
infrastructure over the next five years.
Non banking finance companies and co-operative banks and
NCLT admits DHFL for insolvency payments banks can now convert into small finance banks
The Mumbai Bench of the NCTL insolvency plea (SFBs) which will help to improve their reach and access to
moved by the RBI against DHFL for defaulting on funds.
interest payments for ECBs availed by it from SBI.
Payments bank with 5-year experience can now
LIC waives off credit card payments fee convert to small finance banks.
To promote digital transactions LIC waived off the RBI allowed payment banks which have been in operation
convenience fee on all payments to itself.Any credit for atleast five years, to convert to small finance banks.
card originated payements toward renewal
Indian Banks to write off more loans
preminum, new premium or repayment of loan and
According to Fitch ratings Indian Banks are likely to take
interest on loan against the policies will not attract
significantly more loan write offs to reduce bad loans
any additional charges or convenience fee from
against a backdrop of rising provisions and weak recovery
Dec-1
prospects.
PSBs told to outline insurance JVs future
Bank can’t fund sale of their NPAs to bad loan recovery
IRDA written to PSBs that are merger candidates to
provide a road map on what they propose to do with
Cos.
their stakes in insurance companies after the The RBI has barred asset reconstruction companies from
merger come into effect. buying bad loans through deals where there is scope for
banks or lenders to fund the purchase.
Union Bank of India observes international Day
of persons with Disabilities. Banks need $7 bn additional capital
UBI observed International Day of Person with According to Fitch rating Indian Banks need additional $7
Disabilities at its Head Office in Mumbai, as an billion (Rs.50000 crore) equity by 2020-21 to support loan
extension of equal opportunity policy, this year UBI growth and cover for bad loans.
carried out activities to spread awareness among all
NEFT to be available 24*7 from 16th December 2019
employees about the difficulties faced by such
RBI informed that NEFT facility should be made available
people.
by member banks on all days of the year from 16th
December 2019 including holidays.

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RBI urges Govt to cut rates on small savings
schemes.
RBI has urged Govt to reduce the interest rates on
small savings schemes such as public provident and
post office deposits to help banks pare rates on
deposits and loans lead to a better transmission of
the central banks rates cuts.
Total Govt liabilities rise to Rs.91 lakh Crore for
Q2
The Centre’s total liabilities including those under
the public account increased to Rs.91.01 lakh crore
at the end September from Rs.88.18 lakh crore at
end June this year.
Net Banking & card frauds up 50%, Delhi is ATM
con capital
Instances of unlawful transactions involving internet
banking, ATM, Debit and credit cards shot up over
50% to cross 52000 in 2018-19 with Delhi being the
ATM fraud capital, accounting for nearly 27% of the
reported cases of siphoning off of cash.
Small finance Banks see 130% growth in deposits
Small finance banks (SFBs) recorded a deposit
growth of 130 per cent in FY19.They are expected to
continue to see increased transaction in deposits on
the back of higher interest rates, focused marketing
strategies and maturing branches.
Banks recover Rs.6000 crore in Prayagraj Sale
A consortium of 18 lenders led by SBI have
successfully recovered Rs.6000 crore from the sale
of the debt-laden Prayagraj Power Generation Co in
the second such onetime settlement deal outside of
the bankruptcy mechanism.
Sebi tightens bad loan norms for listed banks.
Seccurities and Exchnage Board of India (SEBI)
directed all listed banks to disclose any divergence
in bad loan provising withing 24 hours of receving
RBI’s risk assessment report.Disclousre in respect of
divergence and provisioning are in the nature of
material events which necessitate immediate
disclosye.Further, this information also proce
sensitive, requireing prompt disclosue by a listed
entity.Banks should not wait for publising the details
in their annual financial statements for disclosure.
Union Bank of India accolade by Govt. of Odisha.
Union Bank of India has been accoladed by the Govt
of Odisha for the contribution to blood bank of 555
units blood on its 100 anniversary.
RBI looking to harmonise provisioning by all Banks
The RBI is looking to harmonize provisioning done by
banks. The central bank is doing this so that if an account
is stressed for one bank, then all other banks with
exposure to that entity should declare it as a non-
performing asset.(NPA)
Patanjali completes transfer of funds for Ruchi Soya
Patanjali Ayurveda had completed the transfer of the
equity and debt portion for its acquisition of Ruchi Soya
through proceedings under insolvency and bankruptcy
resolution.
RBI to simultaneously buy, sell bonds under OMO
RBI will simultaneously buy and sell Govt bonds worth
Rs.10000 crore each on December 23. Through open
market operations (OMO) The move signals ites intent to
lower yields on long term bonds.
RBI caps lending on P2P platforms at Rs.50 lakh.
To protect consumer’s interest, the RBI said on a peer to
peer lending (P2P) platform the permissible exposure of
lender to all borrowers should not exceed Rs.50 lakh at
any point of time.
RBI warns banks over focus on retail loans.
RBI has red flagged banks reliance of retail loans over
slowing economic activity and negative consumer
sentiment. The regulator called for granular lending
strategy to offset risk concentration in its annual
publication.
Gross NPA falls in FY19 for first time in seven years.
After rising for seven years in a row the gross NPA ratio of
banks declined in the financial year 2018-2019 as
recognition of bad loans neared completion said RBI’
report.
RBI creates new verticals for supervision and
regulation
Two new departments, with specialized cadre on
supervision and regulation within the Reserve Bank of
India, will start functioning from November 1. It indicates
the changes in the central bank’s approach to these two
crucial issues of the financial system that has dominated
public discourse in recent times. These departments have
been created by merging the respective supervision and
regulation departments on banks, non-banks and
cooperative banks.
PSBs collect Rs.1996 crore in minimum balance
penalty in 2018-19
Public sector banks collected Rs.1994.46 crores from
customer for not keeping minimum monthly balance in SB
accounts in 2018-19.It was Rs.3368 crores and Rs.790.22
crores for 2017-18 and 2016-17 respectively.
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