Pradhan Mantri Jeevan Jyoti Bima Yojana

In the budget for the financial year 2015-16, finance minister announced for three security schemes in Non life insurance, Life insurance and pension, together covering to take Jan Dhan to next level of Jan Suraksha. These schemes have been rolled out from 01.06.2015.

Pradhan Mantri Jeevan Jyoti  Bima Yojana will be an Insurance Scheme offering life insurance cover for death due to any reason.

Highlight:

Ø  It would be a one year cover, renewable from year to year.

Ø  The scheme would be offered and administered through LIC and other Life Insurance companies willing to offer the product on similar terms with necessary approvals and tie ups with Banks for this purpose.

Ø  Participating banks will be free to engage any such life insurance company for implementing the scheme for their subscribers.

Ø  In case of multiple bank accounts held by an individual in one or different banks, the person would be eligible to join the scheme through one bank account only.

Ø  Aaadhar would be the primary KYC for the bank account.

Eligibility Conditions:

 Individual bank account holders of the participating banks aged between 18 years (completed) and 50 years (age nearer birthday) who give their consent to join / enable auto-debit, as per the above modality, will be enrolled into the scheme.

Enrolment period:

 For the cover period 1st June 2016 to 31st May 2017, subscribers are required to enroll and give their auto-debit consent by 31st May 2016.

 Enrolment Modality:

Ø  The cover shall be for the one year period stretching from 1st June to 31st May for which option to join / pay by auto-debit from the designated individual bank account on the prescribed forms will be required to be given by 31st May of every year.

Ø  Delayed enrolment with payment of full annual premium for prospective cover is possible.

Ø  Subscribers enrolling for the first time on or after 1st June 2016, insurance cover shall not be available for death (other than due to accident) occurring during the first 45 days from the date of enrolment into the scheme (lien period) and in case of death (other than due to accident) during lien period, no claim would be admissible.

Ø  Individuals who exit the scheme at any point may re-join the scheme in future years. The exclusion of insurance benefits during the lien period shall also apply to subscribers who exit the scheme during or after the first year, and rejoin on any date on or after 01st June 2016.

Benefits:

 Rs.2 lakh is payable on member’s death due to any cause.

 Premium:

Ø  Rs.330/- per annum per member.

Ø  The premium will be deducted from the account holder’s bank account through ‘auto debit’ facility in one installment, as per the option given, on or before 31 st May of each annual coverage period under the scheme.

Ø  Delayed enrolment for prospective cover after 31st May will be possible with full payment of annual premium.  

Master Policy Holder:

 Participating Banks will be the Master policy holders. A simple and subscriber friendly administration & claim settlement process shall be finalized by LIC / other insurance company in consultation with the participating bank.

Termination of assurance:

The assurance on the life of the member shall terminate on any of the following events and no benefit will become payable there under:

Ø  On attaining age 55 years (age near birth day) subject to annual renewal up to that date (entry, however, will not be possible beyond the age of 50 years).

Ø  Closure of account with the Bank or insufficiency of balance to keep the insurance in force.

Ø  In case a member is covered under PMJJBY with LIC of India / other company through more than one account and premium is received by LIC / other company inadvertently, insurance cover will be restricted to Rs. 2 Lakh and the premium paid for duplicate insurance(s) shall be liable to be forfeited.

Ø  If the insurance cover is ceased due to any technical reasons such as insufficient balance on due date or due to any administrative issues, the same can be reinstated on receipt of full annual premium, subject however to the cover being treated as fresh and the 45 days lien clause being applicable.

Ø  Participating Banks shall remit the premium to insurance companies in case of regular enrolment on or before 30th of June every year and in other cases in the same month when received.

Appropriation of Premium:

Ø  Insurance Premium to LIC / insurance company: Rs.289/- per annum per member

Ø  Reimbursement of Expenses to BC/Micro/Corporate/Agent: Rs.30/- per annum per member

Ø  Reimbursement of Administrative expenses to participating Bank: Rs.11/- per annum per member

The date of commencement of the scheme is 1st June 2015.The Annual renewal date shall be each successive 1 st of June in subsequent years.

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NRI Banking

NRI ( Non Resident Indian)

As per the FEMA 1999, a Non-Resident Indian means-

A.      A person resident outside India who is a citizen of India, i.e  –

Ø  Indian citizens who proceed abroad for employment or for carrying or for carrying on any business or vocation or for any other purpose

Ø  Indian citizens working abroad

Ø  Officials of Central and State Government and Public Sector Undertaking deputed abroad on assignment with Foreign Govt

B.      A person of Indian origin who is a citizen of any other country other than Bangladesh or Pakistan, if

Ø  He, at any time, held the Indian Passport

Ø  He or either of his parents or any of its grandparents was a citizen of India.

Ø  The person is a spouse of an Indian citizen or a person referred in sub clause b(i) or (ii) above  

Thus, an NRI is a person of Indian nationality or origin, who resides abroad for business or vocation or employment, or intention of employment or vocation, and the period of stay abroad is infinite.

A person is of Indian origin if he has held an Indian passport, or he/she or any of his/hers parents or grandparents was a citizen of India.

NRIs have been provided with various schemes to open accounts and invest in India. The types of account facilities available at present are –

1.       Non-Resident (External ) Rupee Account  {NRE}

2.       Non-Resident Ordinary  Rupee Account  {NRO}

3.       Foreign Currency (Non-Resident) Account (Bank) { FCNR (B) }

Non-Resident (External ) Rupee Account  {NRE}

Ø  Accounts are maintained in Indian rupees.

Ø  Can be opened and maintained by NRI during the temporary visit to India.

Ø  Account can be as Saving Bank Account, Current Account, Recurring Account or term deposit with a minimum period of one year.

Ø  Account can be opened as Joint Account, in the name of two or more non-resident individuals

Ø  Jointly with a person resident in India is not permitted

Ø  Nomination facility is permitted either resident or non-resident

Ø  Income by way of interest on balance held in NRE account is exempted from income tax, gift tax and wealth tax.

Ø  Allowing temporary overdrawing up to Rs 50,000 in NRE saving account however such overdraft must be cleared within two week by remittance from abroad or from any other NRE account

Ø  NRE term deposits can be made for a minimum period of one year, with a maximum up to 3 years.

Non-Resident Ordinary Rupee Account { NRO}

Ø  Account are maintained in Indian rupees.

Ø  Open and maintained by any person resident outside India and also by Foreign Tourists, who visit to India on tourist visa.

Ø  When a resident becomes a Non-Resident, his domestic Rupee account has to be re-designated as an NRO account

Ø  NRO account can be opened as Joint Accounts, with resident Indians

Ø  An amount up to USD 1 million can be repatriated out of funds held n NRO account for permissible transactions, subject to payment of income tax at applicable rates.

Ø  Nomination facility is available in NRO account.   

Foreign Currency (Non-Resident) Account (Bank) { FCNR (B) }

Ø  These are foreign currency account

Ø  Opened and maintained by Non-Resident Indians in designated currencies only viz. US Dollor, EURO, Great Britain Pounds and Japanese Yen, CAD and AUD.

Ø  NRI can open these account only in the form of Term Deposit, with minimum period of one year and maximum period of five years.

Ø  Joint account can be opened in the name of two or more non-Resident Individuals, who are persons of Indian nationality or Indian origins.

Ø  Interest paid on the basis of 360 days to a year, cumulative on half-yearly intervals of 180 days

Ø  Income earned by way of interest is exempted by income tax .

Ø  Nomination facility is available.

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Answer Key of CAIIB-BFM-02

Now I am providing you the Answer Key of CAIIB-BFM-02. You can leave a massage and also comment on these Question -Answer so we provide you a better discussion platform that can help you to crack the CAIIB.

The Answer Keys are -

Q1 – C. Both

Q2 – C. Liquidity risk

Q3 – C. Liquidity risk

Q4 – C. Gap limit

Q5 – D. Dealer limit

Q6 – B. Settlement risk

Q7 – A. Deal size limit

Q8 – B. Stoploss

Q9 – B. Swap

Q10 – C. Future

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CAIIB-BFM-02

Q1. Risk arises due to adverse movement of interest rates or interest rate differential is called –

A.      GAP risk

B.      Interest rate risk

       C.      Both
       D.      Adverse risk

Q2. When a party to a foreign exchange transaction is unable to meet its funding requirement or execute a transaction at a reasonable price, it create-

A.      Country risk

B.      Soverign risk

C.      Liquidity risk

D.      Settlement risk

Q3. The mismatches in the maturity patterns of assets and liabilities give rise to -  

A.      Country risk

B.      Soverign risk

C.      Liquidity risk

D.      Settlement risk

Q4. Maximum inter period/month exposures which a bank can keep, are called –

A.      Overnight limit

B.      Daylight limit

C.      Gap limit

D.      Dealer limit

Q5. Maximum amount a dealer can keep exposure during the operating hour

A.      Deal size limit

B.      Daylight limit

C.      Gap limit

D.      Dealer limit

Q6. Maximum amount of exposure to any entity, maturity on a single day called

A.      Deal size limit

B.      Settlement risk

C.      Gap limit

D.      Dealer limit

Q7. Highest amount for which a deal can be entered is called

A.      Deal size limit

B.      Daylight limit

C.      Gap limit

D.      Dealer limit

Q8. A risk limit, which triggers,  on adverse movement of exchange rate is called

A.      Deal size limit

B.      Stoploss

C.      Gap limit

D.      Dealer limit

Q9. An exchange of specific streams of payments over an agrees period of time is called –

A.      Premium

B.      Swap

C.      Futures

D.      Option

Q10. A contract traded on an exchange to make or take delivery of commodity is called

A.      Premium

B.      Swap

C.      Futures

D.      Option

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Mobile banking

Mobile banking means the using of a mobile phone to offer banking services. Banks have introduced two different products in mobile banking. One is a personal/retail banking product and the other is a product to promote financial inclusion. As a personal banking product it is offered to every savings/current account holder and provides anytime anywhere banking. The mobile banking initiatives were started by foreign and private banks followed by public sector banks.

Mobile banking service is primarily available over SMS (Short Messaging Service) or through GPRS (General Packet Radio Service) or sometimes through USSD (Unstructured Supplementary Service Data).

The services available are:

Ø  Funds transfer (intra and interbank)

Ø  Balance enquiry services/mini statements

Ø  Request services (cheque book)

Ø  Utility bill payments and credit card payments

Ø  Demat account services

Ø  Mobile top up

Ø  Merchant payment, life insurance premium

Ø  Stop payment instructions

Why Mobile Manking

The rationale for using mobile banking as a product to promote financial inclusion is that even 63 years after independence, the majority of Indians do not have access to banking services. The poor are not able to access banking facilities because of illiteracy, gender, age, low and irregular income, regulating factors like identity documentation, non availability of bank branches etc.

To overcome these problems RBI permitted Banks to open basic bank accounts with nil or low minimum balances called No Frills accounts and simplified Know Your Customer (KYC) norms.

Customers can operate their account through a Business Correspondent outlet that only needs a mobile phone, a finger print scanner and a small printer to provide banking facilities and financial security to the customer.

The salient features of the account are:

Ø  It is a No Frills saving account

Ø  Opened by individuals only

Ø  No joint accounts are permitted

Ø  It is available at Customer Service Points(CSP) of bank appointed Business Correspondents/Business Facilitators

Ø  The initial deposit and minimum balance to be maintained is NIL

Ø  Rate of interest is as applicable to normal savings accounts

Ø  Cash withdrawals and funds transfer will be permitted at the CSP, subject to satisfactory biometric verification of the card holder

Ø  KYC norms will be done as per RBI guidelines for No Frills accounts

Ø  Nomination is made compulsory by some banks as the smart card is in single name only

The core banking (CBS) branch closest to the CSP of the Business Correspondent will be the link branch. The smart card accounts will have the link branch as their home branch
Banks normally designate an official to attend to any grievances of the card holders

Latest Trends In Mobile banking

Since it is not feasible to open bank branches to cater to every individual and in order to reach the maximum number of people, Banks have adopted mobile based channels as delivery channels, because of their reach and low cost service delivery platform. The mobile phone market is growing at 20% p.a. with mobile connectivity in almost every part of India. Mobile phone penetration is set to reach 60% of India’s population in 2011. It is felt that mobile banking is going to be the next revolution in the telecom and banking sectors. To enable wide coverage of mobile banking services, major telecoms and banks are entering into deals and MOUs. The telecom companies will act as Business correspondents and provide a range of financial products and services offered by the bank through the mobile operator’s retail outlets.
A mobile account will have to be opened by every user for doing mobile banking transactions. The present focus of the banks and telecom companies will be on the unorganized sector like migrant labourers who need money remittance services. A remitter in one city of India can send money back to his home in another city or village either by account transfer or instant money transfer module. The account transfer method is where money is transferred from the account of the remitter to that of the beneficiary when they both have accounts with the same bank. The second method is by the instant money transfer module, whereby, the remitter with an account with a particular bank remits money to the beneficiary who has a registered mobile connection but does not have a bank account. I thin PNB mobile banking is more secure because in this bank, your internet banking and mobile banking user id is same.

Advantages of Mobile Banking

Ø  Providing banking service to unbanked areas and to those customers who otherwise would not have got the banking service.

Ø  The wage earners staying away from their homes and finding it difficult and expensive to remit money to their families, can send money instantly through mobile banking

Ø  All non cash banking requirements can be carried out using mobile phones.

Ø  Genuine concerns about security aspects of mobile banking have to be addressed.
Different mobile operating systems and diversity of devices. Banks and telecom companies have to launch mobile apps. WAP sites that will run on all handsets and operating systems.
Reluctance of customers to learn new technology and lack of incentives for customers to use a new channel. As most of the customers would be first time banking users, they would need to be made aware of the mobile banking platform and the best way to use this platform.

Ø  The target group is the urban middle and high income individual customers 

Ø  There are no intermediaries. The customer is dealing directly with the bank. It is basically a self service where the customer is making payments himself, or requesting the bank for issue of a cheque book directly. All instructions are carried out by self

Ø  Security is by PIN

Sources...iibf.org.in

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Answer Key CAIIB-BFM-01

Now I am providing you the Answer Key of CAIIB-BFM-01. You can leave a massage and also comment on these Question -Answer so we provide you a better discussion platform that can help you to crack the CAIIB.
The Answer Keys are -

Answer Key CAIIB-BFM-01

Q1 – D. Swap rate

Q2 – D. Movement in exchange rate

Q3 – C. Direct exchange rate

Q4 – D. Indirect exchange rate

Q5 – C. Global markets

Q6 – B. Delivery of fund is on the second working day from date of deal

Q7 – A. Value Date.

Q8 – B. Ready

Q9 – C. Tom

Q10 – A. Spot

Thanks.

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Floating rate Term Deposits

Floating rate Term Deposits is a relatively new product and was introduced in September 2010 by a leading public sector bank. It means that the product will offer no guarantee on returns as the interest rate will change in tandem with the base rate, as and when a revision in the benchmark rate takes place. If a depositor wants flexibility in returns he can go in for the floating option. Floating rate term deposit will allow the investor to take advantage of any interest rate changes even in the short term.

Rationale:

Fixed deposits/term deposits should match fluctuating interest rate cycles. The change in the nature of term deposits should move in line with the change in movement of the market of the whole economy. Retail investors borrow at floating rates, but invest at a fixed rate, and are therefore exposed to high interest rate risk. Since retail investors cannot hedge their interest rate risk, investing in floating-rate products appears to be the only alternative to lower this asset-liability mismatch. The advantages of commercial banks offering floating rates on deposits along with fixed rates can be better understood with an example.

Housing loan typically figures as the single largest component of an individual's liability. For most middle-income individuals, fixed deposits are the major investment. This naturally leads to an asset-liability mismatch, because housing loans have floating rate of interest while deposits have fixed rate of interest. If interest rates were to move up, an individual would have to pay more on the housing loan because the benchmark rate would have moved up too. The interest earned on the fixed deposits would, however, remain unchanged. This leads to negative cash flows for the individual. This is because of the difference in the interest rate sensitivity of the asset-liability portfolio. This difference in sensitivity can be lowered if the individual is able to partially immunize his asset-liability portfolio.

If banks were to offer floating rate deposits, individuals can partially immunize their asset-liability portfolio. An individual may have taken a housing loan for Rs 25 lakh at, say, the 10-year government bond yield plus one per cent with a six-month reset. The same individual may choose to invest Rs 5 lakh in a 10-year floating-rate deposit with or without the same reset and benchmark. When interest rate increases, the outflow on the housing loan will be higher, but so will the inflow from the floating rate deposit.

Banks normally do not offer such products, as they do not have the technology to support them. The reason that floating rate of interest is now being offered by banks is that floating-rate deposits may also improve their asset-liability maturity gap. If banks continue to push individuals to borrow at a floating rate and invest at a fixed rate, the customers over a period of time will move to short-term deposits, if they perceive interest rates moving up as short-term deposits carry low reinvestment risk. Retail investors can easily switch to higher interest bearing deposits should interest rates increase in the future. When more individuals move to short-term deposits, the asset-liability maturity gap of banks will widen. This is because banks would have lent money for the long-term, but borrowed for the short-term. If interest rate moves up, banks' borrowing cost will also increase. Of course, if their assets earn floating rate, the asset-liability maturity gap may not necessarily result in negative cash flows but would certainly mean lower spreads.

Banks have to also contend with the cost of maintaining deposits. Employee time could be better served in core banking operations such as lending rather than on continual renewal of short-term fixed deposits. There is also a secondary positive effect of offering floating rate deposits. Typically, interest rates on fixed deposit rate will be higher than the floating rate deposit, as the former bears higher interest rate risk. Professional money managers can extract the banks' perception of interest rate movements by modeling a cross-section of the rate differentials.

Eligibility: Any individual can open the account singly or jointly

Minimum amount: The minimum amount of deposit is Rs 1000 and multiples thereof. Maximum amount is Rs.15lakhs

Period of deposit: 1, 3 and 5 years

Interest rate: The interest will be reset every time that the base rate is changed with an upper cap of 200 base points above the fixed term deposit rate. Interest will be paid quarterly/monthly discounted

Liquidity: Loan/overdraft can be availed against the FRTD (Floating rate term deposit) up to a maximum of 90% of FRTD amount at 1.5% interest above the interest paid on the deposit.

Automatic renewal: The deposit will be renewed automatically for same period as that of matured deposit at the interest rate prevailing at the time of maturity, unless instructed otherwise by the depositor

Premature withdrawal: Interest to be paid on premature withdrawal of term deposits is at 1.00% below the term deposit rate applicable for the period the deposit has remained with the Bank.

Disadvantages: It is a complicated procedure. The customer has to be aware which way interest rate is going to go in the future and accordingly has to take an informed decision. Otherwise he may end up getting lesser returns than fixed rate products. If the base rate is revised upwards, the customer is benefitted but in case of downward revision, the customer stands to lose vis-a-vis a fixed rate product.

sources..iibf.org.in

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