http://www.sakshieducation.com/Bank_Exams/Banking_Awareness/BA_3.pdf
BANKING AWARENESS
BANKING OMBUDSMAN
Provides independent, expeditious and inexpensive forum to aggrieved bank
customers. RBI introduced this scheme under powers granted under Banking Regulations Act
1949. Chief General Manager or General Manager of RBI will be appointed as Banking
Ombudsman for a term not exceeding 3 years at a time. Banking Ombudsman takes care of
the grievances of SERVICE DEFICIENCIES IN BANK INDUSTRY like in delayed
collection of cheques, remittances, wrong debit/credit in deposit accounts and other ancillary/
advances area including fair practice code, credit card etc. and in loans- non- observance of
RBI directives, delay in sanction or disbursement ,time schedules are included.
The aggrieved customer can lodge his complaint in electronic mode also. Before lodging a
complaint with Ombudsman the Customer should complain to the concerned bank first and
wait for one month.
The period within which a customer can lodge a complaint with Ombudsman is one year
from the date of cause of action. The maximum award that will be given by Ombudsman is
up to Rs.10lac. Any party can file appeal within 30 days on receiving award or the
ombudsman rejecting his complaint to appeal authority. If the appeal is by the bank, it should
be made with approval of CMD or ED or CEO only. One of the Deputy Governors will be
appointed as Appellate Authority, in case the award given by the Ombudsman is not
acceptable to the parties.
KNOW YOUR CUSTOMER (KYC)
KYC guidelines issued by RBI to check money laundering i.e. using of banking channel for
conversion of illegal funds into legal funds and financial frauds.
Suitable Guidelines were issued based on the recommendations of FINANCIAL ACTION
TASK FORCE (FATF) on Anti money laundering (AML) standards and on combating
financing of terrorism.
Under KYC norms banks are expected to verify the identity proof and address proof like
Passport, Pan CARD, Voter card, Driving license, Identity card to bank’s satisfaction, Letter
from recognized public authority. Liberalized KYC Norms: Simplified criteria of identification and introduction to be
followed in small deposit accounts where the debits should not exceed Rs.50,000 and Credit
transactions should not exceed Rs 1.00 lakhs and total transactions in a year does not exceed
Rs. 2lac (credit transaction should not exceed Rs.1lac) In these cases, a/c can be introduced
by person having satisfactory accounts for 6months and self certification on address along
with photograph.
Concepts of PAN, GIR and TAN?
PAN is Permanent Account Number. PAN number is being allotted to the Individuals by
Income Tax Department. It is a TEN Digit Alphanumeric number. Now it is mandatory to
have PAN all the existing Income tax assesses and future assesses and those who enter into
financial transactions on behalf of self or on behalf of any others. Form for applying PAN is
Form 49A. For One there is only One PAN, if issued it is permanent even if the person
changes his/her profession or even change of address.
GIR is GENERAL INDEX REGISTER number was earlier being allotted by the Income
Tax department for assessees in olden days but ever since the PAN is in place GIR number
system is now obsolete.
TAN means TAX DEDUCTION & COLLECTION ACCOUNT NUMBER. This is also a 10
Digit Alphanumeric number. This number must be obtained by all the persons and
organization those who are responsible for deducting Tax or collecting tax and remitting the
same to the Income Tax department. All employers who deduct tax at source from
employee’s salaries also must obtain TAN number. Tan number shall be quoted in all
TDS/TCS returns. The applicants have to submit Form 49B for allotment of TAN. Even if
any Government Office deducting TDS it also shall apply for TAN, Hence all Bank branches
shall individually apply for TAN.
Concept of Form 15G and Form 15H ?
Form 15G & Form 15H. If a Depositor is not a Senior Citizen and his Taxable Income is
within the exempted limits then he has to submit Form 15G to the Bank for not deducting tax
at source. In the same case if the Depositor is a Senior Citizen then he has to submit Form
No.15H. In case of interest paid/payable amounts are exceeded the Tax exempted limited
then Form 15G and Form 15H shall not be accepted. As per the budget pronouncements w.e.f 01. 04. 2010 depositor must submit PAN number
otherwise the rate of TDS will be at 20%. If a Depositor submitted Form 15G & 15H but
PAN number not submitted the Bank has to deduct Tax at the rate applicable or at 20%
whichever is higher.
Need for Form 60 and Form 61 while opening accounts?
While opening an account the prospective customer do not have PAN number, then he has to
submit a declaration in Form 60, and incase the prospective customer whose income comes
from only Agriculture sources then he has to give a declaration in Form 61.
FEATURES OF NOMINATION ACT
Nomination is available for a) Deposit accounts b) Safe custody articles and Lockers.
Nomination is available only for deposit accounts and not for loan accounts.
Nomination is available for all types of deposit accounts irrespective of nomenclature.
Nomination is available for accounts which are in the name of individuals in their individual
capacity, i.e., it is not available for Partnerships, Trust, Ltd company, Club etc.
Nomination is available to a sole proprietor provided the sole proprietor is an individual.
Nomination is available for joint account of individuals.
Nomination can be made at any time during which the deposit is held with the bank. It can
also be made available for old account.
Nomination continues on renewal of term deposit unless it is cancelled or changed.
Nominee has to be an individual and hence a Firm, Club, Company, Trust etc cannot act a
nominee.
In nomination act the nominee is treated as an agent for receiving money. He is not the
owner. He is duty-bound to pass on the money to the legal heir. So the legal heir can claim
money from the nominee. But the bank on payment to nominee is fully discharged.
Nomination facility is obligatory for banks.
On death of a person, if six months lapse and no person turns up, the bank has to inform the
nominee about nomination in case of deposit account. This information is to be given within
three months in case of locker account.
Nomination is available in respect of both residents as well as nonresident accountsBanker-Customer Relationship
The relationship between banker and customer defers depending on the transaction.
Transactions Banker Customer
Acceptance of deposit Debtor Creditor
Loan Creditor Debtor
Collection of cherub/Sell of securities Agent Principal
On behalf of customer
Purchase of DD Agent Principal
Payee of DD and issuing bank Beneficiary Trustee
Safe custody of article Bailed Baylor
Safe deposit of locker Lesser Lessee
PRACTICE QUESTIONS
1. Banking Ombudsman is appointed by:
A. Reserve Bank of India
B. Government of India
C. Concerned State Govt, where RBI office is located
D. Finance Minister
E. None of the above
2. Before approaching Ombudsman what should the complainant do?
A. Take up the matter with State Government
B. Take up the matter with concerned Bank Branch within 30 days of cause of action
C. Approach Lok Adalat
D. Can directly approach Banking Ombudsman
E. Any of the above
3. What is the maximum period within which the aggrieved customer can approach
OMBUSAMAN?
A. Within 2 year
B. Within 1 year
C. Within one month
D. No such limitation period
E. None of the above
4. What is the maximum amount for which the Award Can be given by OMBUDSMAN
A. Rs 1,00,000
B. Rs 2,00,000 C. Rs 5,00,000
D. Rs 10,00,000
E. No limit
5. Who will be appointed as Banking Ombudsman?
A. CGM or GM of RBI
B. Deputy Governor of RBI
C. Governor RBI I is an ex-officio Ombudsman
D. Finance Secretary
E. None of the above
6. KYC norms are liberalized in case of following accounts:
A. Current Account
B. Savings Account
C. Term Deposit Account
D. No Frills Account
E. None of the above.
7. The KYC does not include obtaining the following :
A. Identity Proof
B. Address Proof
C. Customer Profile
D. Vehicle details of the customer
E. None of the above
8. AML Stands for
A. Anti Monitory Limit
B. Anti Money Laundering
C. Always money laundering
D. Anytime Money Laundering
E. None of the above
9. KYC –Know Your Customer is to identify the Customer, whereas AML- Anti Money
Laundering is to identify the Source of Income:
A. False
B. True
C. True only in case of small amounts
D. Not necessary in all cases
E. Any of the above 10. If a Depositor is not a Senior Citizen and his Taxable Income is within the exempted
limits then he has to submit ---------------- to the Bank for not deducting tax at source
A. Form 15G
B. Form 15 H
C. Form 61
D. Form 60
E. None of the above
11. In case the prospective customer whose income comes from only Agriculture sources
then he has to give a declaration in Form 61.
A. True
B. False
C. He has to submit form 60
D. No such requirement
E. None of the above
12. Nomination is available for
A. Deposit accounts
B. Safe custody articles
C. Lockers.
D. Partnership firms
E. Only A B C
13. Nomination can be given only for:
A. Individuals
B. Joint Individuals
C. Limited Companies
D. Only A, and B
E. None of the above
14. Money deposited at a bank that cannot be withdrawn for at fixed period of time is known
as a _____:
A. Term deposit
B. Checking Account
C. Saving Bank deposit
D. No Frills Accounts
E. Current deposit
15. With reference to a cheque which of the following is the ‘drawee bank’?
A. The bank that collects cheque. B. The payee’s bank.
C. The endorsee’s bank.
D. The bank of the Drawer of the Cheque
E. None of the above
16. Base Rate is the rate below which no Bank can allow their lending to anyone.
Who will fix this ‘Base Rate’ for Banks?
A. Individuals Banks Board
B. Ministry of Commerce
C Ministry of Finance
d) RBI
e) Interest Rate Commission of India
17. Expand NPA
A. No Provision Account
B. Non Performing Asset (An asset which ceases to generate income)
C. No Profit Account
D. Non-Personal Accounts
E. None of the above
18. Finance Ministry advised RBI to allow common ATMs to be owned and managed by Non
Banking Institutions. Such ATMs are called:
A. NBFC ATMs
B. Off Site ATMs
C. Third Party ATMs
D. White Label ATMs
E. None of the above
19. An ECS transaction gets bounced and you are unable to recover your money from your
customer. Under which Act criminal action can be initiated?
A. Indian Penal Code
B. Negotiable Instrument Act
C. Criminal Procedure Code
D. Payment and Settlement Act
E. Indian Contract Act
(Note: ECS used for Electronic Clearing of cheques– Debit ECS for Collection of loan
installments) and Credit ECS for payments like Dividends, Salaries etc.
20. What is CTS
A. Cash Transaction system (in banks)
B. Cheque Transfer SystemC. Cheque Truncation System
D. Cash Transfer System
E. None of the above
(CTS mean Cheque Truncation System – wherein instead of sending cheques physically
to clearing house, only scanned images will be sent. It is also called image based
clearing. This system already started in many states of India. This reduces the collection
of cheques time considerably and is advantageous to the customers)
ANSWERS
01 02 03 04 05 06 07 08 09 10
A B B D A D D B B A
11 12 13 14 15 16 17 18 19 20
A E D A D A B D D C
BANKING AWARENESS
BANKING OMBUDSMAN
Provides independent, expeditious and inexpensive forum to aggrieved bank
customers. RBI introduced this scheme under powers granted under Banking Regulations Act
1949. Chief General Manager or General Manager of RBI will be appointed as Banking
Ombudsman for a term not exceeding 3 years at a time. Banking Ombudsman takes care of
the grievances of SERVICE DEFICIENCIES IN BANK INDUSTRY like in delayed
collection of cheques, remittances, wrong debit/credit in deposit accounts and other ancillary/
advances area including fair practice code, credit card etc. and in loans- non- observance of
RBI directives, delay in sanction or disbursement ,time schedules are included.
The aggrieved customer can lodge his complaint in electronic mode also. Before lodging a
complaint with Ombudsman the Customer should complain to the concerned bank first and
wait for one month.
The period within which a customer can lodge a complaint with Ombudsman is one year
from the date of cause of action. The maximum award that will be given by Ombudsman is
up to Rs.10lac. Any party can file appeal within 30 days on receiving award or the
ombudsman rejecting his complaint to appeal authority. If the appeal is by the bank, it should
be made with approval of CMD or ED or CEO only. One of the Deputy Governors will be
appointed as Appellate Authority, in case the award given by the Ombudsman is not
acceptable to the parties.
KNOW YOUR CUSTOMER (KYC)
KYC guidelines issued by RBI to check money laundering i.e. using of banking channel for
conversion of illegal funds into legal funds and financial frauds.
Suitable Guidelines were issued based on the recommendations of FINANCIAL ACTION
TASK FORCE (FATF) on Anti money laundering (AML) standards and on combating
financing of terrorism.
Under KYC norms banks are expected to verify the identity proof and address proof like
Passport, Pan CARD, Voter card, Driving license, Identity card to bank’s satisfaction, Letter
from recognized public authority. Liberalized KYC Norms: Simplified criteria of identification and introduction to be
followed in small deposit accounts where the debits should not exceed Rs.50,000 and Credit
transactions should not exceed Rs 1.00 lakhs and total transactions in a year does not exceed
Rs. 2lac (credit transaction should not exceed Rs.1lac) In these cases, a/c can be introduced
by person having satisfactory accounts for 6months and self certification on address along
with photograph.
Concepts of PAN, GIR and TAN?
PAN is Permanent Account Number. PAN number is being allotted to the Individuals by
Income Tax Department. It is a TEN Digit Alphanumeric number. Now it is mandatory to
have PAN all the existing Income tax assesses and future assesses and those who enter into
financial transactions on behalf of self or on behalf of any others. Form for applying PAN is
Form 49A. For One there is only One PAN, if issued it is permanent even if the person
changes his/her profession or even change of address.
GIR is GENERAL INDEX REGISTER number was earlier being allotted by the Income
Tax department for assessees in olden days but ever since the PAN is in place GIR number
system is now obsolete.
TAN means TAX DEDUCTION & COLLECTION ACCOUNT NUMBER. This is also a 10
Digit Alphanumeric number. This number must be obtained by all the persons and
organization those who are responsible for deducting Tax or collecting tax and remitting the
same to the Income Tax department. All employers who deduct tax at source from
employee’s salaries also must obtain TAN number. Tan number shall be quoted in all
TDS/TCS returns. The applicants have to submit Form 49B for allotment of TAN. Even if
any Government Office deducting TDS it also shall apply for TAN, Hence all Bank branches
shall individually apply for TAN.
Concept of Form 15G and Form 15H ?
Form 15G & Form 15H. If a Depositor is not a Senior Citizen and his Taxable Income is
within the exempted limits then he has to submit Form 15G to the Bank for not deducting tax
at source. In the same case if the Depositor is a Senior Citizen then he has to submit Form
No.15H. In case of interest paid/payable amounts are exceeded the Tax exempted limited
then Form 15G and Form 15H shall not be accepted. As per the budget pronouncements w.e.f 01. 04. 2010 depositor must submit PAN number
otherwise the rate of TDS will be at 20%. If a Depositor submitted Form 15G & 15H but
PAN number not submitted the Bank has to deduct Tax at the rate applicable or at 20%
whichever is higher.
Need for Form 60 and Form 61 while opening accounts?
While opening an account the prospective customer do not have PAN number, then he has to
submit a declaration in Form 60, and incase the prospective customer whose income comes
from only Agriculture sources then he has to give a declaration in Form 61.
FEATURES OF NOMINATION ACT
Nomination is available for a) Deposit accounts b) Safe custody articles and Lockers.
Nomination is available only for deposit accounts and not for loan accounts.
Nomination is available for all types of deposit accounts irrespective of nomenclature.
Nomination is available for accounts which are in the name of individuals in their individual
capacity, i.e., it is not available for Partnerships, Trust, Ltd company, Club etc.
Nomination is available to a sole proprietor provided the sole proprietor is an individual.
Nomination is available for joint account of individuals.
Nomination can be made at any time during which the deposit is held with the bank. It can
also be made available for old account.
Nomination continues on renewal of term deposit unless it is cancelled or changed.
Nominee has to be an individual and hence a Firm, Club, Company, Trust etc cannot act a
nominee.
In nomination act the nominee is treated as an agent for receiving money. He is not the
owner. He is duty-bound to pass on the money to the legal heir. So the legal heir can claim
money from the nominee. But the bank on payment to nominee is fully discharged.
Nomination facility is obligatory for banks.
On death of a person, if six months lapse and no person turns up, the bank has to inform the
nominee about nomination in case of deposit account. This information is to be given within
three months in case of locker account.
Nomination is available in respect of both residents as well as nonresident accountsBanker-Customer Relationship
The relationship between banker and customer defers depending on the transaction.
Transactions Banker Customer
Acceptance of deposit Debtor Creditor
Loan Creditor Debtor
Collection of cherub/Sell of securities Agent Principal
On behalf of customer
Purchase of DD Agent Principal
Payee of DD and issuing bank Beneficiary Trustee
Safe custody of article Bailed Baylor
Safe deposit of locker Lesser Lessee
PRACTICE QUESTIONS
1. Banking Ombudsman is appointed by:
A. Reserve Bank of India
B. Government of India
C. Concerned State Govt, where RBI office is located
D. Finance Minister
E. None of the above
2. Before approaching Ombudsman what should the complainant do?
A. Take up the matter with State Government
B. Take up the matter with concerned Bank Branch within 30 days of cause of action
C. Approach Lok Adalat
D. Can directly approach Banking Ombudsman
E. Any of the above
3. What is the maximum period within which the aggrieved customer can approach
OMBUSAMAN?
A. Within 2 year
B. Within 1 year
C. Within one month
D. No such limitation period
E. None of the above
4. What is the maximum amount for which the Award Can be given by OMBUDSMAN
A. Rs 1,00,000
B. Rs 2,00,000 C. Rs 5,00,000
D. Rs 10,00,000
E. No limit
5. Who will be appointed as Banking Ombudsman?
A. CGM or GM of RBI
B. Deputy Governor of RBI
C. Governor RBI I is an ex-officio Ombudsman
D. Finance Secretary
E. None of the above
6. KYC norms are liberalized in case of following accounts:
A. Current Account
B. Savings Account
C. Term Deposit Account
D. No Frills Account
E. None of the above.
7. The KYC does not include obtaining the following :
A. Identity Proof
B. Address Proof
C. Customer Profile
D. Vehicle details of the customer
E. None of the above
8. AML Stands for
A. Anti Monitory Limit
B. Anti Money Laundering
C. Always money laundering
D. Anytime Money Laundering
E. None of the above
9. KYC –Know Your Customer is to identify the Customer, whereas AML- Anti Money
Laundering is to identify the Source of Income:
A. False
B. True
C. True only in case of small amounts
D. Not necessary in all cases
E. Any of the above 10. If a Depositor is not a Senior Citizen and his Taxable Income is within the exempted
limits then he has to submit ---------------- to the Bank for not deducting tax at source
A. Form 15G
B. Form 15 H
C. Form 61
D. Form 60
E. None of the above
11. In case the prospective customer whose income comes from only Agriculture sources
then he has to give a declaration in Form 61.
A. True
B. False
C. He has to submit form 60
D. No such requirement
E. None of the above
12. Nomination is available for
A. Deposit accounts
B. Safe custody articles
C. Lockers.
D. Partnership firms
E. Only A B C
13. Nomination can be given only for:
A. Individuals
B. Joint Individuals
C. Limited Companies
D. Only A, and B
E. None of the above
14. Money deposited at a bank that cannot be withdrawn for at fixed period of time is known
as a _____:
A. Term deposit
B. Checking Account
C. Saving Bank deposit
D. No Frills Accounts
E. Current deposit
15. With reference to a cheque which of the following is the ‘drawee bank’?
A. The bank that collects cheque. B. The payee’s bank.
C. The endorsee’s bank.
D. The bank of the Drawer of the Cheque
E. None of the above
16. Base Rate is the rate below which no Bank can allow their lending to anyone.
Who will fix this ‘Base Rate’ for Banks?
A. Individuals Banks Board
B. Ministry of Commerce
C Ministry of Finance
d) RBI
e) Interest Rate Commission of India
17. Expand NPA
A. No Provision Account
B. Non Performing Asset (An asset which ceases to generate income)
C. No Profit Account
D. Non-Personal Accounts
E. None of the above
18. Finance Ministry advised RBI to allow common ATMs to be owned and managed by Non
Banking Institutions. Such ATMs are called:
A. NBFC ATMs
B. Off Site ATMs
C. Third Party ATMs
D. White Label ATMs
E. None of the above
19. An ECS transaction gets bounced and you are unable to recover your money from your
customer. Under which Act criminal action can be initiated?
A. Indian Penal Code
B. Negotiable Instrument Act
C. Criminal Procedure Code
D. Payment and Settlement Act
E. Indian Contract Act
(Note: ECS used for Electronic Clearing of cheques– Debit ECS for Collection of loan
installments) and Credit ECS for payments like Dividends, Salaries etc.
20. What is CTS
A. Cash Transaction system (in banks)
B. Cheque Transfer SystemC. Cheque Truncation System
D. Cash Transfer System
E. None of the above
(CTS mean Cheque Truncation System – wherein instead of sending cheques physically
to clearing house, only scanned images will be sent. It is also called image based
clearing. This system already started in many states of India. This reduces the collection
of cheques time considerably and is advantageous to the customers)
ANSWERS
01 02 03 04 05 06 07 08 09 10
A B B D A D D B B A
11 12 13 14 15 16 17 18 19 20
A E D A D A B D D C
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