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Retail Bank Management

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(know your customer, Money Laundering, Anti Money Laundering, Banking Ombudsman & Basel Norms).

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Retail Bank Management

  1. 1. ASHA PRIYA GOUD GITAM INSTITUTE OF MANAGEMENT GITAM UNIVERSITY.
  2. 2. Vision Statement:  To be the leading financial services provider, partnering with our customers for a more prosperous and secure future Mission Statement  We are a team of committed professionals, providing innovative and efficient financial solutions to create and nurture long-term relationships with our customers. In doing so, we ensure that our shareholders can invest with confidence and trust in us.
  3. 3.  Know Your Customer – KYC enables banks to know/understand their customers and their financial dealings to be able to serve them better and prudently manage the risks of Money Laundering and Financing of Terrorism  CDD-CUSTOMER DUE DILIGENCE
  4. 4. KYC/Customer due diligence is an on-going process for prudent banking practices, therefore the banks are encouraged to:-  Set up a compliance unit with a full time Head.  Set up a system to monitor the accounts and transactions on a regular basis.  Update customer information and records at reasonable intervals.  Chalk out plan of imparting suitable training to the staff of bank periodically.  Maintain proper records of customer identifications and clearly indicate, in writing.  Monitor and check unusually large cash transactions, especially those which are out of character/ inconsistent with the history.
  5. 5.  Why kyc?  When does kyc apply?  Are kyc requirements new?
  6. 6.  Customer Identification  Customer Acceptance  Accounts & Transactions Monitoring  Risk Management
  7. 7. Individuals: (i) Attested photocopy of national identity card or passport of the individual. (ii) In case the NIC does not contain a photograph, the bank should also obtain, in addition to NIC, any other document such as driver’s license etc that contains a photograph. (iii) In case of a salaried person, attested copy of his service card, or any other acceptable evidence of service, including, but not limited to a certificate from the employer. (iv) In case of illiterate person, a passport size photograph of the new account holder besides taking his right and left thumb impression on the specimen signature card.
  8. 8. Partnership: Attested photocopies of identity cards of all partners.  Attested copy of “Partnership Deed” duly signed by all partners of the firm.  Attested copy of Registration Certificate with Registrar of Firms. In case the partnership is unregistered, this fact should be clearly mentioned on the Account Opening form.  Authority letter, in original, in favor of the person authorized to operate on the account of the firm.
  9. 9.  Money laundering is the process whereby the proceeds of crime are transformed into ostensibly legitimate money or other assets PLACEMENT LAYERING  INTEGRATION
  10. 10.  FATF-FINANCIAL ACTION TASK FORCE 31 Countries are involved INDIA being one among them. They came out with recommendation:  Good governance of financial institutions.  Integrity of financial institutions.
  11. 11. AML-ANTI MONEY LAUNDERING PML-PREVENTION OF MONEY LAUNDERING FIU-FINANCIAL INTELLIGENCE UNIT Set up by each government to keep the track of the suspicious accounts.(FINANCE MINSTRY) STR-SUSPICIOUS TRANSCATION REPORT SCC-SPECIAL CATEGORY CLIENTS NCCT-NON COOPERATIVE COUNTERIES & TERRITORIES
  12. 12.  HSBC Bank USA Failed to Provide Adequate Staffing and Other Resources to Maintain an Effective AML Program  HSBC Bank USA Failed to Conduct Due Diligence on HSBC Group Affiliates  HSBC Bank USA Failed to Adequately Monitor Wire Transfers
  13. 13.  Change in Leadership and increase in resources. The Bank hired a new leadership team. In 2011, the Bank spent more than $244 on its compliance program. The Bank substantially increased the personnel in its compliance function from 92 full time employees and 25 consultants in 2010 to 880 full time employees and 267 consultants as of May 2012  Exiting high risk business lines. The Bank exited the Banknotes business and ended 109 high risk business relationships.  Claw Backs. The Bank ‘clawed back’ compensation from senior company executives.
  14. 14. BANK Banking is defined as accepting for the purpose of lending and investment, deposit of money from the public repayable on demand and withdraw by cheque , draft order or otherwise. OMBUDSMAN An official appointed to investigate individual ‘s complaint against maladministration especially that of public authorities.
  15. 15.  Delay and failure in providing necessary banking services and products like debit cards.  Levying additional charges for the products without informing the customer  Refusal / delay in accepting payment towards the taxes  Non adherence to the RBI guidelines in the matter of credit and debit cards  Non compliance of interest rates as per guidelines of RBI  Non observance of any other directions or instructions of RBI from time to time  Non acceptance of loan application without furnishing valid reasons  Delays in sanction or non observance of prescribed time schedule for disposal of loan applications
  16. 16.  The BCSBI would plan, evolve, prepare, develop, promote and publish voluntary comprehensive codes and standards for banks for providing fair treatment to their customers.  The proposal for setting up the BCSBI was based on the recommendation made by the Committee on Procedures and Performance Audit on Public Services (Tara pore Committee), in its Report No.6 dealing with Benchmarking, ISO Certification and Performance Audit.  The BCSBI would function as an independent and autonomous watch dog to monitor and to ensure that the banking codes and standards voluntarily adopted by banks are adhered to, in true spirit by banks in delivering the services, as promised, to their customers
  17. 17. Basel is the round of deliberations by central bankers from around the world, and in 1988, the Basel Committee on Banking Supervision (BCBS) in Basel, Switzerland, published a set of minimum capital requirements for banks. This is also known as the 1988 Basel Accord, and was enforced by law in the Group of Ten (G-10) countries in 1992. A new set of rules known as Basel II was later developed with the intent to supersede the Basel I accords.
  18. 18. In 1988, the Basel I Capital Accord was created. The general purpose was to: 1. Strengthen the stability of international banking system. 2. Set up a fair and a consistent international banking system in order to decrease competitive inequality among international banks.
  19. 19. Basel – II norms are based on 3 pillars:  Minimum Capital – Banks must hold capital against 8% of their assets, after adjusting their assets for risk  Supervisory Review – It is the process whereby national regulators ensure their home country banks are following the rules.  Market Discipline – It is based on enhanced disclosure of risk
  20. 20. Basel – III norms aim to:  Improving the banking sector's ability to absorb shocks arising from financial and economic stress  Improve risk management and governance  Strengthen banks' transparency and disclosures
  21. 21.  In the Basel – II accord, Credit Risk, Market Risk and Operational Risks were recognized.  Under Basel – II, Credit Risk has three approaches namely, standardized, foundation internal ratings-based (IRB), and advanced IRB  Operational Risk has measurement approaches like the Basic Indicator approach, Standardized approach and the Advanced Measurement approach.  Better Capital Quality

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