About Digitalisation Of Banks ,Special types of banking customer, priority sector lending, banking ombudsman Scheme, Basel three accord, Narasimham committee Reform, non performing asset, financial market integration

1. Financial Market Integration
 Financial matters include all functions
which involve financial matters.
Integration means all acts or activities
combining into one important unit. So
according to this Financial Integration
means it is a process in which
financial markets of neighbouring,
regional or global economies are
closely linked together.

2. Various forms of actual
financial integration
 Sharing of best practices
among financial institutions
 Information sharing among different
financial institutions
 Sharing of
best technologies among financial
institutions
 Firms borrow and raise funds directly in
the international capital markets
 Investors directly invest in the
international capital markets

3. Benefits of Financial
Integration
 Efficient capital allocation,
 Better governance, higher investment
and growth and share risk.
 It can also help predict consumption
volatility.
 It can also provide great benefits for
international risk-sharing.

4. Non Performing Assets
 A Non-performing asset is defined
as a credit facility in respect of which
the interest and/or instalment of Bond
finance principal has remained ‘past
due’ for a specified period of time.

5. Non-performing assets further
into the following three
categories
 Sub-standard assets: a sub standard
asset is one which has been classified
as NPA for a period not exceeding 12
months.
 Doubtful Assets: a doubtful asset is one
which has remained NPA for a period
exceeding 12 months.
 Loss assets: where loss has been
identified by the bank, internal or
external auditor or central bank
inspectors. But the amount has not been

6. The Problems caused by NPAs
 Bank shareholders are adversely
affected.
 Depositors do not get rightful returns
and many times may lose unsure
deposits.
 Banks may begin charging higher
interest rates on some products to
compensate Non-performing
loan losses.
 Bad loans imply redirecting of funds

7. Narasimham Committee
Reform
 Narasimham committee was formed by two
experts committee under the chairmanship of
Narasimham. They submitted their
recommendations in the 1990s in reports widely
known as the Narasimham Committee-I (1991)
report. From the 1991 India economic crisis to its
position of third largest economy in the world by
2011, India has grown significantly in terms of
economic development. So has its banking.
During this period, to evolve needs of the sector,
the Finance Ministry of Government of India set
up various committees with the task of analysing
India's banking sector and recommending
legislation and regulations to make it more
effective, competitive and efficient.

8. The 1998 report of the Committee to the GOI
made the following major recommendations:
 Autonomy in Banking
 Reform in the role of RBI
 Non-performing assets
 Stronger banking system
 Capital adequacy and tightening of
provisioning norms
 Entry of foreign banks

9. Basel Three Accord
 Basel III Accord is a global, voluntary
regulatory framework on bank capital
sufficiency, stress testing, and market risk.
The basic meaning of accord is agreement so
it was agreed by the members of the Basel
Committee on Banking Supervision in 2010–
11, and was scheduled to be introduced from
2013 until 2015. The third instalment of
the Basel Accords was developed to give
response to the lacking in financial
regulation disclose by the financial crisis of
2007–2008. Basel III is introduced to
strengthen bank capital requirements by
increasing bank liquidity and decreasing
banking purchase.

10. Key principles
 Capital requirements
The original Basel III rule from 2010 required banks to hold 4.5%
of common equity and in Basel it was 2.5%, of risk-weighted assets.
Therefore since 2015, a minimum Common Equity ratio of 4.5% must be
maintained by the all banks.
 Leverage ratio
Basel III introduced a minimum "leverage ratio". This is a non-risk-based
leverage ratio and is calculated by dividing Tier 1 capital by the bank's
average total consolidated assets ,sum of the exposures of all assets and
non-balance sheet items.
 Liquidity requirements
 The "Liquidity Coverage Ratio" was supposed to require a bank to hold
sufficient high-quality liquid assets to cover its total net cash outflows over
30 days.
 The Net Stable Funding Ratio was to require the available amount of

11. Banking Ombudsman Scheme
 Banking Ombudsman is a quasi judicial
authority functioning under India’s Banking
Ombudsman Scheme 2006, and the authority
was created pursuant to a decision made by
the Government of India to enable resolution
of complaints of customers of banks relating
to certain services rendered by the banks.
The Banking Ombudsman Scheme was first
introduced in India in 1995, and was revised
in 2002. The current scheme became
operative from 1 January 2006, and replaced
and superseded the banking Ombudsman
Scheme 2002. From 2002 until 2006, around
36,000 complaints have been dealt by the
Banking Ombudsmen.

12. Type of complaints resolved by
banking ombudsman
 Non-payment or inordinate delay in the payment
or collection of cheques, drafts, bills, etc.
 Non-acceptance, without sufficient cause,
of coins tendered and for charging of commission
for this service.
 Non-payment or delay in payment of inward
remittances .
 Failure to issue or delay in issue, of drafts, pay
orders or bankers’ cheques.
 Non-adherence to prescribed working hours.
 Failure to honour guarantee or letter of credit
commitments.

13. Priority Sector Lending
 Priority Sector refers to those sectors of the
economy which may not get timely and adequate
credit in the absence of this special dispensation.
Typically, these are small value loans to farmers
for agriculture and allied activities, micro and
small enterprises, poor people for housing,
students for education and other low income
groups and weaker sections.
 Priority Sector Lending is an important role given
by the Reserve Bank of India to the banks for
providing a specified portion of the bank lending
to few specific sectors like agriculture and allied
activities, micro and small enterprises, poor
people for housing, students for education and
other low income groups and weaker sections.

14. CATEGORIES OF PRIORITY
SECTOR
 The broad categories of priority sector
for all scheduled commercial banks
and Priority Sector includes the
following categories:
(i)Agriculture
(ii)Micro and Small Enterprises
(iii)Education
(iv)Housing
(v)Export Credit
(vi) Others and some of the categories

15. Special Type of Bank
Customers
 Opening of an account binds the banker and
customer into a contractual relationship.
Every person who is competent to contract
can open an account with a bank. The
capacity of certain classes of person, to make
valid agreement is subject to certain legal
restrictions, as is the case with minors,
lunatics, drunkards, married women,
undercharged insolvents, trustees, executors,
administrators etc. Extra care is also needed
for the banker while he deals with customers
like public authorities, societies, joint stock
companies, partnership firms etc.

16. Here are some types of
customers
Here are some types of customer are-:
 Minors
 Lunatics
 Illiterate persons
 Married women :
 Executors and administrators
 Trustees
 Partnership firm
 Joint stock companies

17. Banks – One Stop Financial Service
Solution
 Banking covers certain types of
areas-:
Asset Management
Investment Banking
Wealth Management
Data Warehousing
ExchangeBrokerage

18. Types of Management
 Asset Management
 Online portfolio valuation
 Performance management system
 Workflow management
 Investment Banking
 Internet banking
 Financial portal
 Wealth management
 Processing system
 Decision support system
 Aggregation portals

19. Contd.
 Exchange
 Order management system
 Document management system
 Transaction processing and reporting system
 Message format interface
 Brokerage
 E brokerage service
 Online interface to banks
 OATS implementation

20. Digitalisation of Banks
 Digitization is the process of
converting information into
a digital format . In this format,
information is organized into discrete
units of data (called bit s) that can be
separately addressed (usually in
multiple-bit groups called byte s). This
is the binary data that computers and
many devices with computing capacity
(such as digital camera s and digital
hearing aid s) can process.

21. Immersed in digital
 Digital communication is pervasive; from mobile phones to
tablet computers, we are immersed in digital. Recent
development of new digital features has led to-:
 Improvements in user-experience design through interactive,
game-like interfaces that are starting to merge the boundaries
between the real and the virtual and bringing data to life
through rich visualisations.
 Advances in mobile devices and networks, providing new
services such as enhanced digital security and the ability to
access the Internet from anywhere (partially limited by high
international roaming charges).
 The rise of social media and collaboration tools, empowering
customers and employees, and moving control of the ‘brand
message’ from businesses to consumers.
 New channel integration technologies, enabling a more
seamless end-to-end experience for customers with their