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Commercial Banking In India An Overview


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Provides an overview about the evolution of commercial banking in India. Covers important concepts such as resident and different types of Non Resident Accounts. Also discusses the importance of KYC and anti Money Laundering procedures being followed by banks today

Published in: Economy & Finance, Business
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Commercial Banking In India An Overview

  1. 1. Session 1Commercial Banking
  2. 2. Banking Regulation Act 1949Section 5(c) :“A banking company is a company which transacts the business of banking in India”Section 5 (b) :Banking means “accepting , for the purpose of lending or investment , of deposits of money from the public, repayable on demand or otherwise , and withdrawable, by cheque, draft,order or otherwise”
  3. 3. 1. Maintaining deposit accounts2. Issue & Pay Cheques3. Collect cheques for the banks customers
  4. 4. Payments Financial Financial Intermediation Services • Take deposits • Forex• Traditional Options (Cheques, • Lend • Wealth Mgmt DD) • Address safety and • Insurance• Modern ( Wire liquidity, growth • Investment transfers, ECS) needs Banking
  5. 5. First known banks : Ancient Temples Safe Places : Gold, agricultural tools & implements Various Factors : Historical crusades shaped the methods &practicesGreeks: Used credit notes Egyptians : Used Grains Romans : Coins Years : 1100-1300 Large trade volumes in agricultural commodities, cloth, leather .Trade combines became powerful since specialization brought with it need for more investment
  6. 6. • General Bank of India1786 • Estb in Kolkatta • 3 Presidency Banks established1809-1843 • Banks of : Bengal, Bombay, Madras • 3 Presidency Banks amalgamated1921 • Imperial Bank of India – European control.
  7. 7. • Allahabad Bank1865 • Estb purely by Indians • Punjab National Bank1894 • Estb in Lahore • BOI, CBI, BOB, Can Bank, Indian Bank1906- established1913
  8. 8. • RBI established1935 • Banking Companies Act : changed to Banking Reg1949 Act • SBI formed1955- • SBI Act passed enabling SBI takeover 81959 subsidiaries
  9. 9. • 14 banks nationalized1969 • 6 more banks nationalized • Objective: Social & rural impetus better control1980 • Narasimhan Committee Reforms1990’s • Entry of new Pvt sector, Foreign banks
  10. 10. Financial System Capital Markets Insurance andCentral Banking Regulatory Pension Authority Authority Regulators RBI SEBI IRDA
  11. 11. RBI Small NationalIDBI Industries Dev NABARD Exim Bank Housing Bank Bank of India
  12. 12. RBI Co-Operative Commercial Banks Banks Schld Non State Foreign Public Private RRB’s District Sector Banks Sector Primary Credit Soc Nationalized SBI & Other PSU Old Age New Age Banks AssocScheduled Banks : Those listed in 2nd Schedule of RBI Act 1934.Banks need to fulfill Sec 42 (6)(a) to be incld in schedule
  13. 13.  PSU Banks:  GOI is the majority stakeholder  27 PSU banks (19 + SBI & 6 subsidiaries)  Have taken a lead role in branch expansion – rural areas  SBI : “Banker to every Indian”
  14. 14.  Regional Rural Banks(RRB’s):  Established 1976-1987: Develop rural economy.  Jointly owned by Central Govt + State Govt +sponsor PSU  Target customers : Farmers, artisans etc  Decline in numbers : 196 in March 2005 81 as on date.  Examples: Maharashra Gramin Bank, Saptagiri Grameena Bank
  15. 15.  Private Sector Banks  Majority share capital is held by corporates/pvt parties  Banks not nationalized 1969/1980 : “Old age-Pvt sector”  Post 1992-93 reforms (Narasimhan Committee) entry permitted  7 “New age” banks & 15 “Old age” banks : March 2009  Examples: Yes Bank, Jammu &Kashmir Bank
  16. 16.  Foreign Banks:  HO: outside India but operate through branches or rep offices  As on June 30 2009: 28 foreign banks operating in India.  Target customers : Corporates, HNI’s, urban middle class  Examples : Standard Chartered,HSBC
  17. 17.  Co-operative Banks:  Governed by Co-operative Society’s Act & Banking Regulation Act.  Eg: Abhudaya Co-Operative Bank, Saraswat Co-Op Bank
  18. 18.  Co-Operative Banks:  Comprise of UCB’s: operations lmtd across one state or stretch across states  Rural Co-Operative Banks  State Co-Operatives  District Co-Operatives  SCARDB’s: State Co-Op Agricultural & Rural Development Banks  PCARDB’s : Primary Co-Operative Agricultural & Rural Development Banks  Large Network:  53 scheduled UCB’s as per RBI website  30 State Co-Operative Banks  Target customers : Farmers, self employed businessmen/traders  Examples : UCB’s –Rupee Co-Operative Bank, Cosmos Co-Operative Bank SCB’s: Sikkim State Co-Operative Bank
  19. 19. • Approx Rs 4000 Crores involvedHarshad Mehta Scam • Banking System misused • Small Investors wiped outLiberalization of the • Rajiv Gandhi Govt“Banana Republic” • Propogates liberalization Narasimhan • Banking Sector Reforms Committee • Stage set for major Recommendations overhaul
  20. 20. •Borrowing Bank gives securities to the lending bankReady Forward in return for funds Txns •Typically was used for short term loans (15 days) and against govnt securities •Supposed to be used issued against Govt securities and given by the borrowing bank to the lending bankBank Receipts •Harshad Mehta :Broker/Fee •Misused the system and involved Bank of Karad •Fake BR’s used to borrow funds BR’s purchase &Metropolitan Co-Op Bank: Fake and shares and drive up prices Banks •BR’s repaid by sale proceeds •Once the scam broke banks left with worthless BR’smanipulated •Small savings wiped out(Approx Rs 4000 crores involved)
  21. 21. 1st Wave: Post nationalization -1969 19th July 1969 Govt nationalized 14 banks Saraiya Commission appointed to examine the banking system Recommend ways to make it work with Govt’s plan of economic development Sec 19 of BR Act ammended to allow formation of subsidiaries.
  22. 22. 2nd Wave: Narasimhan Committee Report #1 Commissioned on August 14, 1991 Set-Up to address the need for the fortification of system Report #1 submitted on 16th November 1991 Masterprint : “First Phase” of banking reforms 1992-93 Theme : Operational Flexibility & Functional Autonomy Country reeling under the aftermath of the Harshad Mehta scam
  23. 23. Main Recommendations: Glimpse SLR to be to 25% over a period of 5 years CRR component to be reduced progressively No bar to open banks in the private/foreign category Bifurcation of Banks Investment Portfolio. Categorization& Provisioning of loan assets  Standard Assets (0.25%)  Sub-Standard (10% of total outstanding)  Doubtful(100%+ 20/30/50%depending upon age  Loss Assets : 100% outstanding
  24. 24.  Gradual Approach: RBI-Committees Banks have expanded their product offerings: Insurance/Wealth Mgmt etc Lead to a healthy competition: Transformation of some PSU banks (Eg BOB,SBI) Encouragement to do something novel:  Refinance of MFI loans  Factoring/Forfaiting Modern Banking Products : Internet Banking/Mobile Banking Infusion of Capital into Banks : Capital Adequacy
  25. 25. Type of Bank 1969 2004 2009 Rural Branches Rural Branches on June 30, 2009 as % age of all branches on June 30,2009SBI & Assoc 2462 13621 16294 5619 34.4Nationalize 4553 33359 39703 13425 33.8d BanksRRB - 14486 15199 11644 76.6Tot PSU 7015 61466 71196 30688 43.1BanksOth Schld 900 5807 8979 1126 12.5CommBanksForeign 130 218 295 4 1.4BanksNon Schld 217 32 44 11 25CommBanksGrand 8262 67523 80514 31829 39.5TotalSource:Economic
  26. 26.  Commenced operations on April 1 1935 in Kolkatta. Constituted to take over activities being performed by the Imperial Bank & Comptroller of Currency.  Regulate the issue of bank notes  Maintain reserves to secure monetary stability  To operate the credit and currency system efficiently Served country’s agenda : Rural development I nstitutional development Bank Supervision &Regulation Financial Markets
  27. 27.  Acts as the currency authority Controls money supply Manages foreign exchange Banker to the Government Banker to banks Supervises banks
  28. 28.  Holds part of the cash reserves of banks Provides them with centralized clearing Safe and economic remittance facilities Controls licensing, branch expansion, amalgamation etc Inspection: Seeks information through returns, inspections /meetings
  29. 29. Intermediaries that compete /complement banks NBFC’s Mutual Funds Insurance Companies Term Lending Institutions
  30. 30.  NBFC’s: Compete aggressively for business with banks Cannot  Accept demand deposits  Issue cheques - not part of the payment system  No deposit insurance cover Main activities include loans, leasing, hire purchase
  31. 31.  NBFC’s: Need to be registered with the RBI. Set-up : Companies Act 1956 NBFC’s registered with other regulators exempted:  Merchant Banking Co’s-SEBI  Insurance Company-IRDA  Housing Finance Co’s-NHB
  32. 32.  NBFC’s: Classified under 3 categories by the RBI  Asset Finance Companies (AFC) : Birla Global Asset Finance  Investment Company (IC) :  Loan Company (LC) Only NBFC’s holding a valid Certificate of Registration – Accept deposits
  33. 33.  NBFC’s: Min / Max tenure for Dep Acceptance:12 months / 60 months Cannot offer > 12.5% p.a – current celing. NBFC’s (except certain AFC’s- CRAR of 15% +) – minimum investment grade rating.  FA- from CRISIL, MA- from ICRA , CARE BBB, FITCH tA-) NRE/FCNR funds out of bounds (April 2004).Only NRO funds Default : Law, Company Law Board Prepayment of Deposits :  Not encouraged  Minimum 3 month lock-in  Possible :Death of Depositor
  34. 34.  NBFC’s:Examples :Deposit Taking : Mahindra &Mahindra Financial Services-Mumbai Bajaj Auto Finance – PuneNON Deposit Taking Citicorp Finance (India)Ltd-Mumbai IDBI Gilts-Mumbai SKS Microfinance Ltd-Hyderabad
  35. 35.  Insures deposits in all ◦ Commercial banks ◦ Foreign banks functioning in India, ◦ Regional Rural Banks ◦ Cooperative Banks Maximum of Rs.1,00,000 (Rupees One Lakh) across all branches Deposits across different branches of the same bank are aggregated Deposits across banks are covered individually.
  36. 36.  Deposits have to be held in same capacity. Sole Proprietorship clubbed with individual account . Deposit Insurance coverage compulsory
  37. 37.  Term Lending Institutions: Provide loans : Medium to Long Term maturities Customers : Companies operating in industry, service& infrastructure sectors State Level:  SFC’s: State Finance Corp  SIDC’s: State Industrial Development Corporation  NEDFI : North Eastern Development Financial Institution Ltd
  38. 38.  Term Lending Institutions: All India Level:  EXIM Bank  SIDBI  PFC  IFCI Typically specialize-catering to specific sectors (Refer handout)
  39. 39. Central Board of Directors Governor ( Mr D Subbarao) Deputy Governor Deputy GovernorDeputy Governor Deputy Governor (K.C (Shyamala(Ms Usha Thorat) (Mr S Gokarn) Gopinath) Chakrabarty)
  40. 40.  National Housing Bank (NHB) National Bank for Agriculture & Development (NABARD) Deposit Insurance & Credit Guarantee Corp (DICGC) Bharatiya Reserve Bank Note Mudran Pvt Ltd (BRBNMPL)
  41. 41. RBI Umbrella Acts *RBI Act:1934 *Banking Reg Act : 1949 Specific Functions Banking Operations *Indian Coinage Act *Companies Act 1956 *FEMA *Banking Co (Acq & Transfer of Undert) *Public Debt Act *Bankers Book Evidence*Securities Contract Act 1956 *NI Act 1881
  42. 42.  Dept of Currency Mgmt Urban Banks Dept Rural Planning &Credit Dept Foreign Exchange Dept Financial Supervision Dept of Banking Supervision
  43. 43.  Dept of Non Banking Supervision Dept of Banking Operations & Development Dept of IT Legal Dept Monetary Policy Dept Internal Debt Mgmt Dept
  44. 44.  Dept of External Investments & Operations Dept of Govt & Bank Accounts Dept of Economic Analysis & Policy Dept of Statistical Analysis & Computer Services Dept of Payment & Settlement Systems
  45. 45. Funds Bank Allocationmobilization (Financial (Lending) (Deposits) Intermediation)
  46. 46. • FD’s Time • CD’s • Savings A/C’sDemand • Current A/C’s
  47. 47. Demand Deposits: Payable on demand : Cheque /Cash No fixed term/lock-ins Eg: Current/Savings AccountTime Deposits: Fixed term : Eg –Term Deposits
  48. 48. Functions of Various Business Units
  49. 49. Example – Raising & Deployment of Funds Inform BSMG abt Decides about deployment - the receipt of funds tenure, currency and rate for fresh lending and asks business group abt the availability of funds Bank Branch BSMG Decides about funding strategy Sales Team gets in touch with its clients to deploy the funds Cust. 1 Cust. 2 Cust 3 Cust. 1 Cust. 2 Customer approaches bank to Cust 3 deposit funds in the form of CA/SA/Term deposits
  50. 50. Bank Group 2003 2008 2009PSU Banks 79.6 73.9 76.6•Nationalized 50.8 48.4 49.1•SBI Group 28.8 23.8 24.8•Others - 2.2 2.8Private Sector 15.3 20.3 18.1•Old Pvt Sector 6.7 5.0 4.9•New Pvt Sector 8.5 15.3 13.2Foreign Banks 5.1 5.8 5.3Total SCB’s 100 100 100Note : Data as at March31 2010 (in percent)
  51. 51.  RBI License required Conditions to be satisfied:◦ Ability to financially service clients◦ Management◦ Company Conduct◦ Capital Structure and Earning Prospects◦ Impact and justification vis a vis alternates◦ Public Interest (Foreign Banks)◦ Compliance with BR Act ( Foreign Banks)◦ Non discrimination ( Foreign Banks)
  52. 52. KYC: Involves checking identity :PAN Sources of income Location Rural inclusion : some relaxation
  53. 53. KYC:Essence is to know the true profile and the genuineness of the users of the banking channel.
  54. 54. KYC:Method: • Screening and verifying customers identity • Accepting only genuine customers • Avoid introduction of unaccounted money at all costs into the banking system
  55. 55. Relaxation in KYC norms • At bank officials discretion • Subject to satisfactory introduction by existing account holder ( > 6 months old) • Bal in all accounts not to exceed Rs 50K • Total credits in all accounts not to exceed Rs 100000
  56. 56. KYC:Method: • Screening and verifying customers identity • Accepting only genuine customers • Avoid introduction of unaccounted money at all costs into the banking system
  57. 57. • Designation of a senior officer to monitor risk compliance• Employee Orientation and training of employees
  58. 58. Avoid ……
  59. 59. • Records to be maintained for cash transactions of Rs 10Lacs or more in INR or equivalent in foreign currency•Series of cash txns connected to each other of below Rs10 Lacs or its equivalent in fx within a month and wherethe aggregate value exceeds10 Lacs•Cash transactions in forged or counterfeit notes andsuspicious transactions
  60. 60. • Property derived from money laundering can beconfiscated(Eg : Satyam )•Records pertaining to money laundering need to bepreserved for a period of 10 years•FIU ( Financial Intelligence Unit) set up to track andcurb such offences•Banks/FI’s/Brokers :Report non cash trxs over Rs 1Crore and cash txns of Rs 10 lacs
  61. 61. • Property derived from money laundering can beconfiscated•Records pertaining to money laundering need to bepreserved for a period of 10 years•FIU ( Financial Intelligence Unit) set up to track andcurb such offences•Banks/FI’s/Brokers :Report non cash trxs over Rs 1Crore and cash txns of Rs 10 lacs
  62. 62. Eligibility Current A/C’s : ◦ Individuals ◦ Firms ◦ HUF’s ◦ Societies ◦ Public/Pvt Ltd Companies
  63. 63. Minimum Balance: Requirements vary from bank to bank Charges levied for not meeting criteria “No-frills Account”: special S/B Account
  64. 64. Account Operation Mode of Operation POA Nomination
  65. 65. Minor’s Accounts: Opened under guardianship of parents/legal guardian Minor : Decide upon attaining majority Contract with minor : Void “ab initio” Under NIA-can bind others except self Can be admitted to benefits of partnership-can repudiate his liability within 6 months.
  66. 66. Savings Accounts (3.5% p.a) Till March 31 2010-calculation on minimum balance between 10th to last date(30/31st)of the month Effective April 1 interest will be calculated on daily balance Credited twice a year :31st March / 30th Sepetmber
  67. 67. Dhanalaxmi- HDFC- 15% 24% Axis- Fed 22% SBI-27% Bank- 20% Cup of Cheer!Percentage of total customer liabilities
  68. 68. Date Deposit Withdrawal Balance10th July 50,000 Nil 50,00018th July Nil 48,000 2,000 Used in the “Old” Method”25th July 25,000 Nil 27,00031st July Nil 2,000 25,000 Calculation in the Old Method: Calculation in the New Method 2000*3.5%*1/12=Rs 5.83 a) 50,000*3.5%*1/365=Rs 4.79 b) 2,000*3.5%*1/365= Rs 0.19 c) 27,000*3.5%*1/365= Rs 2.58 d) 25,000*3.5%*1/365= Rs 2.39 Total accrued –July Rs = 9.95. Will be applied = Sept 30 Incremental Gain = Rs 4.1
  69. 69.  Minimum tenor: 7 days Banks free to decide interest rates Discrimination on rates : Not possible on dep< Rs 15 lacs Above Rs 15 Lacs : Differential rates ok
  70. 70. Savings Accounts (3.5% p.a) Till March 31 2010-calculation on minimum balance between 10th to last date(30/31st)of the month Effective April 1 interest will be calculated on daily balance Credited twice a year :31st March / 30th Sepetmber
  71. 71.  Tool for deposit mobilization Minimum amount Rs 1 Lac and multiples Can be issued by scheduled commercial banks except RRB’s and Local Area Banks (LAB’s) Issued only in Demat form : Negotiable instrument No loan possible against CD’s Premature withdrawal : Not allowed Interest Rate : At bank discretion
  72. 72.  Due Diligence Process: ◦ Compliance with KYC guidelines ◦ Involves the bank having adequate knowledge about a customers :  Identity  occupation  sources of income  address / location ◦ KYC norms have been “relaxed” to promote financial inclusion in rural /BPL areas
  73. 73.  Minimum Balance : ◦ Usually stipulated as part of terms & conditions of opening a bank account ◦ “No Frills” accounts are special savings bank accounts where no minimum balance reqd ◦ Banks may place restriction on number of withdrawals, transactions during a period
  74. 74.  Satisfactory Conduct :Customer &Bank ◦ Customer should ensure that the account is conducted as per the banks specifications ◦ Bank should safeguard the customers interest and any information used for cross selling etc must be with express consent ◦ Operation of the accounts must be as per mandate specified
  75. 75. Types : Non-resident Ordinary account (NRO) Non-resident External account (NRE) FCNR-B
  76. 76. As per FEMA 1999 an NRI means : Non-Resident Indian National (i.e Non-resident holding Indian passport.Eg: 1) Mr X working in the USA on a Green card. 2) Ms Y deputed to Infosys USA from the Indian office. Working on a work/business visa.
  77. 77.  Persons of Indian Origin ( Non-residents holding foreign passports)Eg: 1) Mr X is born in the USA. His parents moved to the USA from Haryana twenty years ago. 2) Mr Y moved to the USA after his B.Tech. After living there for nearly 10 years, he applied for and is a naturalized US citizen .
  78. 78.  The definition includesa) Indians going abroad for business/work /vocation indicating an indefinite period of stay.b) Indian citizens working abroad on assignment with Foreign Governments, Govt. agencies or in UNO and its affiliates IMF,IBRD etc.c) Govt. officials (both central and state) and other officials of PSUs deputed abroad on assignments or posted abroad including Diplomatic Missions
  79. 79. PIO (Person of Indian Origin)is defined as a citizen of any country except Bangladesh or Pakistan if :a) He/she has, at any time held an Indian passport. ORb) He /she or either of his parents or any of his grand parents was a citizen of India ORc) The person is a spouse of an Indian citizen or a person referred to in a) or b)
  80. 80. NRE Accounts : ( held in INR) Need to be opened with funds remitted from abroad Fully repatriable : P+I Minimum Tenor: 7 Days Transfer to another NRE Act/FCNR Local payments can be made Local credits not permissible (eg: rental income) Interest rates on NRE accounts(Savings+Term Dep) : RBI controlled Exchange Risk
  81. 81. FCNR(B) Accounts : ( held in FX) USD,GBP,CAD,AUD,EURO,JPY Fully repatriable : P+I Transfer to another NRE Act/FCNR and vice-versa. Opened only as term deposits No Exchange Risk since deposits held/repaid in Fx. Tenor: 1 -3 years
  82. 82. NRO Accounts : ( held in INR) When a resident becomes a non resident-account converted into NRO account. Legitimate Credits accrued in India-Rent, Income from investments Can be opened as Savings, Current,Term Deposit Principal non repatriable. Interest earned is repatriable Upto US$ 1 million per financial year can be repatriated.
  83. 83.  Permissible Credits/Debits: Credits: • Proceeds of inwards remittance into India through normal banking channels • Legitimate income in India : Rent, pension, interest etc • Sale proceeds of assets (including immovable property)acquired out of rupee/foreign currency funds or any inheritance.
  84. 84.  Credits: • Any foreign currency which is freely convertible tendered by the account holder during his/her temporary visit to India • Foreign currency exceeding USD 5000 or its equivalent in cash should be supported by a CDF (Currency Declaration Form) • Rupee funds should be supported by an encashment certificate , if they represent funds brought from outside.
  85. 85.  Debits: All local payments in rupees including payments for investments in India (s.t compliance with RBI) Remittance outside India of current income like rent, dividend, pension , interest in India of the account holder Remittance upto USD 1 million per financial year (April-March)for all bonafide purposes s.t approval by the AD.
  86. 86.  Remittance of Assets By NRI/PIO: • Can remit an amount not exceeding USD 1 million per financial year out of balances held in NRO account/sale proceeds of assets/assets in India acquired by way of inheritance • Document Required : Paperwork supporting the acquisition or any inheritance along with an undertaking by the remitter duly certified by a C.A in the format prescribed by CBDT(Central Board of Direct Taxes)
  87. 87.  Remittance of Assets By NRI/PIO: • Can remit an amount not exceeding USD 1 million per financial year from the sale proceeds of immovable property purchased as a resident or as an NR/PIO without any lock-in period • This facility not available to citizens of Pakistan, Bangladesh,SriLanka,China,Afghanistan,Iran,Nepal and Bhutan
  88. 88.  Foreign nationals on a visit to India (non-Indian origin) • NRO ( Current/Savings) account can be opened • Funds to open the account can be remitted from outside India through banking channels or sale of foreign exchange brought to India. • The funds in such accounts can be converted back into foreign currency at the time of departure of the foreign national ( provided account less than 6 months old) and no local funds have been credited • If account tenure > 6 months –RBI approval required
  89. 89.  Resident to Non-Resident: • When a individual leaves the country(except Nepal/Bhutan) for an overseas job business etc indicating intention to stay outside – account to be converted to NRO. • If the destination is Nepal/Bhutan : The account will continue as resident • When such a person working abroad, carrying on business etc comes to India:  temporarily – account remains NRO  For good : Re-designate account to resident
  90. 90.  Resident to Non-Resident : • Loans Given: While resident but becomes non resident.  Bank discretion and judgement to continue the arrangement  Can allow payment of interest and loan either through local sources or through inward remittance
  91. 91.  Non resident nominee : Credit NRO Account of nominee Resident nominee: Credit resident account of nominee
  92. 92.  POA holder can be a resident. POA holder can make following payments: • All local payments including payments for eligible investments • Remit outside India the current income of the NR after taxes • POA can remit only to account holder and cannot repatriate funds to any other account
  93. 93. • POA holder cannot gift any funds from NR account to a resident on behalf of the NR.• Cannot transfer funds to another NRO account.
  94. 94.  Can be issued to NRI/PIO without RBI approval Payments can be settled by inward remittance or out of balances in NRE/NRO/FCNR accounts
  95. 95.  Domestic/NRO Accounts: • Minimum tenor is 7 days NRE/FCNR(B) Term Deposits: • Minimum tenure is 1 year • Maximum tenure is 3 years • Banks can accept NRE deposits of tenure greater than 3 years but the rate of interest will be capped at the rate for 3 years
  96. 96.  NRE term deposit into FCNR (B) and vice versa before maturity subject to penalty NRSR/NRNR into NRO deposit before maturity subject to penalty
  97. 97.  If NRE term deposit withdrawn prematurely for conversion into RFC Account – NO PENALTY. If such a deposit has remained with the bank for a period less than 1 year , interest can be paid at savings bank rate provided such a request is made by the NRE account holder immediately on return to India.
  98. 98.  Since NRNR / NRSR schemes have been discontinued effective April 1 2002,maturity proceeds of NRNR deposits can be credited to NRE Accounts on maturity but not FCNR(B) accounts Maturity proceeds of NRSR deposits to be credited to NRO accounts only. Premature withdrawals of NRNR / NRSR deposits to be credited to NRO accounts only
  99. 99.  Satisfied : Growth of the Bank Dissatisfied : Look for a resolution  Internal : Complaint to the Bank  External : RBI
  100. 100. Banking Ombudsman
  101. 101. •Came into effect on Jan 1 2006•The aggrieved customer or his representativecan file a complaint• Written or via E mail
  102. 102. • A complaint was made to the bank and no responsereceived within a month• Non satisfactory response received•Complaint should not pertain to the a matter pending ordealt by the Ombudsman or which proceedings are pendingbefore a court•Complaint is within the limitation period under the IndianLimitation Act 1963
  103. 103. Process • Aggrieved customer contacts ombudsman • Ombudsman sends the complaint to the bank for redressing • If not settled within a month of receipt, ombudsman awards / rejects • Customer can appeal to the Appellate (Dy Governor) if dissatisfied • Banks can appeal after taking consent from CMD