Banking Awareness

List of Banks in India

Banks are of three types

(1)   Public Sector Banks

(2)   Private Sector Banks

(3)   Foreign Banks

Under Public sector banks

(1)   Nationalized Banks

(2)   State Bank of India and their subsidiaries

(3)   Regional Rural Banks

Important Details about Nationalized Banks in India

Sl.NO	Name of the Bank	Chairman	Head Office	Year of Commencement
1	Allahabad Bank	Shubhalakshmi Panse	Kolkata	1865
2	Andhra Bank	B.A. Prabhakara	Hyderabad	20th November, 1923
3	Bank of Baroda	S.S. Mundra	Baroda (Vadodara)	20th July, 1908
4	Bank of India	V R Iyer	Mumbai	7th September, 1906
5	Bank of Maharashtra	Narendra Singh	Pune	1935
6	Canara Bank	Rajiv Kishore Dubey	Bangalore	1906
7	Central Bank of India	Shri. Rajeev Rishi	Mumbai	21 December, 1911
8	Corporation Bank	Shri S.R. Bansal	Mangalore	1906
9	Indian Bank	T.M. Bhasin	Chennai	1907
10	Indian Overseas Bank	Shri M. Narendra	Chennai	February 10th, 1937
11	Oriental Bank of Commerce	Shri S.L. Bansal	New Delhi	February 19th, 1943
12	Punjab National Bank	Shri K.R Kamath	New Delhi	1895
13	Punjab & Sind Bank	SH. Devinder Singh	New Delhi	1908
14	Syndicate Bank	Shri Sudhir Kumar Jain	Mani pal	1925
15	UCO Bank	Shri Arun Kaul	Mumbai	6th January, 1943
16	Union Bank of India	Shri D. Sarkar	Kolkata	11th November, 1919
17	United Bank of India	Ms. Archana Bhargava	Kolkata	1950
18	Vijaya Bank	Shri. H.S. Upendra Kamath	Bangalore	1931
19	IDBI bank	Mr. M.S. Raghavan	Mumbai	July, 1964
20	Dena Bank	Shri. Ashwani Kumar	Mumbai	1938
21	ECGC	Shri N Shankar	Mumbai	30th July, 1957

Banking Terms

Repo Rate: Repo rate means a purchase and sale of agreement. It is a contract to buy securities and then sell them back at an agreed future date and price. It is thus revenue for short term investment of surplus funds. From RBI point of view it is called a short term lending and from banks point of view it is called short term borrowing.

Reverse Repo rate :  Reverse Repo Rate is an instrument of borrowing funds for a short period and involves selling a security and simultaneously agreeing to repurchase it at a stated future date for slightly higher price. From RBI point of view it is called a short term borrowing and from banks point of view it is called a short term lending.

Group Company : As per RBI for the purpose of FDI, two or more enterprise which , directly or indirectly , are in position to exercise 26% or more of voting rights in other enterprise or appoint more than 50% of the members of the board of directors in the other enterprises.

Branch Vs Subsidiary: A subsidiary is a separate legal entity from the parent company, although owned by parent company, has a same legal identity as its parent company , from liability , on the other hand branch is not a separate legal entity of the parent company and liability wise there is no limit to the parents company’s liability , RBI has permitted to Foreign Banks to change from Branch Mode to the Wholly Owned Subsidiaries.

NFS (National Financial Switch): It facilitates interconnectivity between banks’ switches and interbank payment Gateway for authentication & routing the payment details of various E-commerce & E-Govt. activities (Retail Banking). Now NFS has been overtaken by NPCI (National Payment Corporation of India).

SLR (Statutory Liquidity Ratio): This is a minimum Reserve which every bank has to maintain with itself in the most liquid form to meet any demand of the depositors. Normally Government securities are purchased to maintain SLR.

Prime Lending Rate (PLR): The term originally indicates the rate of interest at which a bank lends to favored customers, i.e. those with high credibility, though this is no longer always the case. Some variable interest rates may be expressed as a percentage above or below prime rate.

Sub Prime Rate: In India when money is lent below the PLR is known as Sub Prime Rate whereas in USA when money is lent at rate above the PLR is known as Sub Prime rate.

Base Rate: As per recommendation of Mr. Deepak Mohanty of RBI to bring a complete transparency in Bank’s lending system, in Indian Banking system the loan were sanctioned to the large corporate houses even below the PLR and some time it were fixed very low without any justification. A Base rate recommends that no bank will lend any money below the base rate. With this there shall be no extra benefits to the large corporate houses. Base rate will be beneficial for the regulator RBI. Now all Banks will either lend at Base rate or will park money with RBI, under LAF system. Base rate has been implemented from 1^st july, 2010.

Economic Terms in Banking

Interest Rate Swaps:  An interest rate swap is the transfer of contractually agreed between two counterparties of their respective interest rate obligation. Interest rate swaps are commonly used as a means of converting fixed rate to floating rate debt and vice versa.

 Operating Ratio: A ratio that shows the efficiency of a company’s management by comparing operating expense to net sales. Calculated as

Operation ratio = Operating expense/net sales

Wholesale Price Index (WPI): WPI is taken into consideration while calculating the inflation. A change has recently been made in the WPI. Its present base year will be taken as 2004-05 earlier it was 1993-34. Base year mean (2004-05 = 100). Total articles taken into consideration will be 676 earlier these were 435.676 include 102 Primary Articles, 19 fuel & power, and 555 of Manufacturing Products. Earlier WPI was calculated on Weekly basis but now it is calculated on Monthly Basis. First time inflation was calculated in August 2010 (on new system).

Consumer Price Index (CPI) : Most advanced nations base their policies on retail price inflation but India uses wholesale price inflation, CPI is largely a segmental and is superior to the WPI, CPI capture consumption price both at urban and rural centers, as in WPI 676 items are covered and base year is taken as – 2004-05 and for macroeconomic policies. Whereas in CPI 320 items are taken from (CPI-IW) CPI industrial workers and 260 items are taken from both CPR rural laborers and CPI agriculturallaborers and the base year for calculation is taken as 2010.

Coupon Rate: Specified interest rate on a fixed maturity security fixed at the time of issue. The coupon rate of a bond is the amount of interest paid per year as a percentage of the face value or principal.

NRO (Non Resident Ordinary a/c) : In this account , a person cannot repatriate income without RBI approval but can remit Interest thereof.

NRNR (Non Resident Non Repatriable A/c ) : Under this account Principal amount in not permissible to repartriate but interest can be.

NRE (Non Resident External) : In this account Funds and interest both can be remitted without RBI permission. On NRE deposits the maximum ceiling is Libor rate + 175 basis points (Now there is no such Ceiling).

NPA (Non Performing Assets) : Interest or Installment of Principal remains overdue for a period of more than 90 days in respect of a Term Loan/ overdraft/ Cash credit.

Teaser Rate of Interest : This rate is typical low then the prevalent rate in the market. This is just to allure the customer. This rate is charged only for a little time. And after that it gradually touch the index rate or even more than that. This is a technique to attract customers.

GENERAL AWARENESS WITH SPECIAL REFERENCE TO THE BANKING INDUSTRY

Q.1. Which of the following financial institutions has introduced the ‘Know Your Customer’ guidelines for Banks ?
(1) IDBI (2) RBI (3) NABARD 4) SIDBI (5) Other than those given as options

Q.2. Which of the following sectors contributes the maximum in deciding the growth in income of the states in India ?
(1) Energy (2) Tourism (3) Service (4) Transport (5) Agriculture

Q.3. Headquarters of which of the following nationalised Banks is not situated in Maharashtra state ? (1) Dena Bank (2) Central Bank of India (3) Bank of India (4) Union Bank of India (5) United Bank of India

Q.4. Who among the following is the current Prime Minister of India ?
(1) Dr. A. P. J. Abdul Kalam (2) Narendra Modi (3) Mrs. Sonia Gandhi (4) Shri Atal Bihari Vajpayee (5) Other than those given as options