The document provides an overview of risk-based internal audit (RBIA) in banks, with a focus on its application at the bank branch level. It discusses the key aspects of RBIA including understanding the approach and methodology, identifying vulnerable control areas, and assessing various types of risks like business, credit, operational, and compliance risks. The document outlines the scope of RBIA and provides illustrative examples of risk scoring methodologies. It also examines specific risk factors for credit functions and non-credit functions that auditors should consider. Key regulatory compliance aspects for auditors related to the Banking Regulation Act are highlighted as well.
This presentation summarizes the major differences between Nepal Financial Reporting Standards and Nepal Rastra Bank (NRB) directives. The presentation was made on October 2015 to the CEO and Audit Committee members of commercial banks of Nepal in a joint program organized by central bank of Nepal and Institute of Chartered Accountants of Nepal.
Managing Credit Risk
• A major part of the business of financial institutions is making loans,
and the major risk with loans is that the borrow will not repay.
• Credit risk is the risk that a borrower will not repay a loan according
to the terms of the loan, either defaulting entirely or making late
payments of interest or principal.
• Concepts of adverse selection and moral hazard provides framework
to understand the principles that is used to minimize credit risk, yet
make successful loans.
The Credit Process: A Guide For Small Business OwnersAli Mohammed
This Power Point is talking about The Credit Process as guide for Small Business Owners containing
=Methodology
=Major deliverables
=5 C’s of Credit
=Credit Risk Management
=Management Approvals
=Future work processes
=Future Procedures Overview
=Information system support
=Functions of Credit Control Group & Marketing Division
=Way forward
This presentation summarizes the major differences between Nepal Financial Reporting Standards and Nepal Rastra Bank (NRB) directives. The presentation was made on October 2015 to the CEO and Audit Committee members of commercial banks of Nepal in a joint program organized by central bank of Nepal and Institute of Chartered Accountants of Nepal.
Managing Credit Risk
• A major part of the business of financial institutions is making loans,
and the major risk with loans is that the borrow will not repay.
• Credit risk is the risk that a borrower will not repay a loan according
to the terms of the loan, either defaulting entirely or making late
payments of interest or principal.
• Concepts of adverse selection and moral hazard provides framework
to understand the principles that is used to minimize credit risk, yet
make successful loans.
The Credit Process: A Guide For Small Business OwnersAli Mohammed
This Power Point is talking about The Credit Process as guide for Small Business Owners containing
=Methodology
=Major deliverables
=5 C’s of Credit
=Credit Risk Management
=Management Approvals
=Future work processes
=Future Procedures Overview
=Information system support
=Functions of Credit Control Group & Marketing Division
=Way forward
Level Setting and Peering Around the Corner— Tips for Success in Your Organiz...Aggregage
This pandemic has tested the foundation of banks and the strength of the dollar. With all of us facing the same crisis, we are left with the same key questions, "Where are we now?" "Where are we going?" "How are we going to get there?" and "What impediments must we overcome?" Join Steve Andrews, President & CEO of the Western Bankers Association, for CBB's groundbreaking webinar! This exclusive webinar will go over the insider information your bank needs for level setting and peering around the corner. Steve will provide actionable insights, best practices, and real-world examples of the changing landscape of community banking.
Overview of Southeastern Commercial Finance, LLCdbittner1
Overview of Southeastern Commercial Finance, LLC, a non-bank Asset Based Lender providing Working Capital Lines of Credit from $300,000 up to $3,000,000, lending against Accounts Receivable and Inventory.
Whereas, Commercial Bank of Ethiopia (CBE) has changed its strategic direction to customer centricity with the aim of making saving and credit products more customer centric based on customer value propositions;
WHEREAS, it has become necessary to improve customer experience by digitizing retail and micro business segment through Micro saving and loan products;
WHEREAS, it is necessary to set eligibility requirements, terms and conditions of saving and credit products and services to the retail and micro business segment in view of risk involved and customer’s demand;
WHEREAS, retail and micro business segments are viable and growing segments to be leveraged by the bank through designed products and services that can satisfy the segment’s demand;
WHEREAS, Commercial bank of Ethiopia intends to diversify its credit portfolio mix in terms of tenure through expanding the short-term financing to be availed to retail and micro business segments;
WHEREAS, it is necessary to attract the underserved segment of the society and enhance financial inclusion with low-cost financial services availed through mobile money platform;
NOW, therefore, this procedure is issued to enable implementation of bank’s DMSL policy.
1.2. Short Title
This procedure may be cited as” Digital Micro Saving And Loan Procedure of the Commercial Bank of Ethiopia.”
1.3. Definition of terms
“Credit policy” means a general framework approved by the board that spells out and guides the bank’s credit/financing strategic directions and credit /financing decisions.
“Credit Scoring” means judging/evaluating the creditworthiness of a customer based on basic characteristics and past performance in credit and other relationships with Bank.
“Digital Micro Credit” means micro loans that are requested, received and repaid all through mobile phones (or any other appropriate tools) via interaction with a computer system.
“Digital MSL Policy” means a policy document that governs the management of digital micro saving and credit services.
“Fixed Account” means a saving account locked for a certain period, a minimum of three months, based on the preference of the customers to fulfil their designated plan.
“Lending officials” means any person involved in MSL business of customer acquisition, Credit Worthiness evaluation, Credit operation, Collection, monitoring and decision-making as well as write off and post write off follow up process.
“Loan Pricing” means setting the interest rate, fees, commission, and others to be charged by the Bank on loans, advances, and guarantees extended to customers.
“Retail and Micro Business Segment” means a category of customers having less investible asset, trading transaction and return from business.
“Micro loan” means a small amount of loan availed to micro businesses and individuals for the purpose of supporting businesses and consumption.
“Micro Saving” means a saving scheme designed for small deposits from micro businesses and low income individ
Safeguarding Bank Assets with an Early Warning SystemCognizant
The recent global financial crisis underscored the impact of non-performing assets and caused banks' overhead to soar. An automated early warning system (EWS) can help these institutions avoid the risk of problem loans, better protect their assets and reduce the effects of delinquent payments.
Financial institutions face implementation of a new accounting requirement that was issued in June of 216 by the Financial Accounting Standards Board (FASB), Financial Instruments – Credit Losses (Topic 326) commonly referred to as “CECL.” This new standard will become effective in 2020 for SEC filers and 2021 for all other entities – but compliance requires significant review and potential change in many aspects of governance, risk management, credit models and other aspects of operations, so banks must prepare well before the implementation date to be ready by then. CECL, or current expected credit losses, represents a major change in how banks will be expected to estimate losses in the allowance for loan and lease losses (ALLL). This presentation, provided at a Kansas Bankers Association meeting in November 2016, gives an overview of CECL and how to prepare for compliance with it.
Level Setting and Peering Around the Corner— Tips for Success in Your Organiz...Aggregage
This pandemic has tested the foundation of banks and the strength of the dollar. With all of us facing the same crisis, we are left with the same key questions, "Where are we now?" "Where are we going?" "How are we going to get there?" and "What impediments must we overcome?" Join Steve Andrews, President & CEO of the Western Bankers Association, for CBB's groundbreaking webinar! This exclusive webinar will go over the insider information your bank needs for level setting and peering around the corner. Steve will provide actionable insights, best practices, and real-world examples of the changing landscape of community banking.
Overview of Southeastern Commercial Finance, LLCdbittner1
Overview of Southeastern Commercial Finance, LLC, a non-bank Asset Based Lender providing Working Capital Lines of Credit from $300,000 up to $3,000,000, lending against Accounts Receivable and Inventory.
Whereas, Commercial Bank of Ethiopia (CBE) has changed its strategic direction to customer centricity with the aim of making saving and credit products more customer centric based on customer value propositions;
WHEREAS, it has become necessary to improve customer experience by digitizing retail and micro business segment through Micro saving and loan products;
WHEREAS, it is necessary to set eligibility requirements, terms and conditions of saving and credit products and services to the retail and micro business segment in view of risk involved and customer’s demand;
WHEREAS, retail and micro business segments are viable and growing segments to be leveraged by the bank through designed products and services that can satisfy the segment’s demand;
WHEREAS, Commercial bank of Ethiopia intends to diversify its credit portfolio mix in terms of tenure through expanding the short-term financing to be availed to retail and micro business segments;
WHEREAS, it is necessary to attract the underserved segment of the society and enhance financial inclusion with low-cost financial services availed through mobile money platform;
NOW, therefore, this procedure is issued to enable implementation of bank’s DMSL policy.
1.2. Short Title
This procedure may be cited as” Digital Micro Saving And Loan Procedure of the Commercial Bank of Ethiopia.”
1.3. Definition of terms
“Credit policy” means a general framework approved by the board that spells out and guides the bank’s credit/financing strategic directions and credit /financing decisions.
“Credit Scoring” means judging/evaluating the creditworthiness of a customer based on basic characteristics and past performance in credit and other relationships with Bank.
“Digital Micro Credit” means micro loans that are requested, received and repaid all through mobile phones (or any other appropriate tools) via interaction with a computer system.
“Digital MSL Policy” means a policy document that governs the management of digital micro saving and credit services.
“Fixed Account” means a saving account locked for a certain period, a minimum of three months, based on the preference of the customers to fulfil their designated plan.
“Lending officials” means any person involved in MSL business of customer acquisition, Credit Worthiness evaluation, Credit operation, Collection, monitoring and decision-making as well as write off and post write off follow up process.
“Loan Pricing” means setting the interest rate, fees, commission, and others to be charged by the Bank on loans, advances, and guarantees extended to customers.
“Retail and Micro Business Segment” means a category of customers having less investible asset, trading transaction and return from business.
“Micro loan” means a small amount of loan availed to micro businesses and individuals for the purpose of supporting businesses and consumption.
“Micro Saving” means a saving scheme designed for small deposits from micro businesses and low income individ
Safeguarding Bank Assets with an Early Warning SystemCognizant
The recent global financial crisis underscored the impact of non-performing assets and caused banks' overhead to soar. An automated early warning system (EWS) can help these institutions avoid the risk of problem loans, better protect their assets and reduce the effects of delinquent payments.
Financial institutions face implementation of a new accounting requirement that was issued in June of 216 by the Financial Accounting Standards Board (FASB), Financial Instruments – Credit Losses (Topic 326) commonly referred to as “CECL.” This new standard will become effective in 2020 for SEC filers and 2021 for all other entities – but compliance requires significant review and potential change in many aspects of governance, risk management, credit models and other aspects of operations, so banks must prepare well before the implementation date to be ready by then. CECL, or current expected credit losses, represents a major change in how banks will be expected to estimate losses in the allowance for loan and lease losses (ALLL). This presentation, provided at a Kansas Bankers Association meeting in November 2016, gives an overview of CECL and how to prepare for compliance with it.
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
Know more: https://www.synapseindia.com/technology/mean-stack-development-company.html
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
2. How to leverage your testimonials to boost your sales 💲
3. How you can capture more CRM data to understand your audience better through video testimonials. 📊
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
1. RISK BASED AUDIT IN BANKS
(with relevance to bank branch)
(with relevance to bank branch)
2. Outcomes
• Understanding RBIA
• Understanding approach and methodology of RBIA
• Comprehending various vulnerable areas of control lapses to
be seen audit
3. Change in approach in concurrent Audit
Earlier- transaction testing Now Risk based auditing
• Reliability of
accounting
•Assessment of
Business risk in
• Integrity Timeliness of
control reports
• Adherence to
regulatory norms
•Transaction testing
Business risk in
activities undertaken
by bank.
•Evaluation of Control
Risk
4. Scope of RBIA
• It should report
– Proper recording and reporting of Major excess
and exceptions
• The extent of transaction testing would be
on the basis risk profile of the bank/branch.
on the basis risk profile of the bank/branch.
5. • Identification of risk in functions
• Evaluation of risk
• Evaluation of risk
• Making an assessment of level and direction
of various risk
• Drawing up Risk matrix of the branch.l
9. Risk score methodology(Illustrative)
Business Risk
Individual
Parameter
Risk Scale Risk score
Fresh slippage in
NPA’s (Amt wise %)
0%
>0% to 0.50%
>0.50% to 1%
>1%
0-20
21-40
41-60
61-70
Total Business Risk
score
xxx
score
Control risk
Parameter Risk weight
(1-5)
Marks
Scale
(2-10)
Risk
score
(WXM)
Adherence to
loaning power
5 5 25
Total control risk
score
xxx
10. Upto 30% Score Upto 30% Score
Low Risk
Business Risk Control Risk
Risk categories and Scale (Illustrative)
30-60% Score 30-50% Score
>60% Score >50% Score
Medium Risk
High Risk
11. BUSINESS
RISK
CONTROL RISK
Maximum Marks 1000 1000
Marks Obtained
Overall Risk Summary
Risk score
(Marks Obtained as %age
of max Marks)
Risk Category
DIRECTION OF RISK
13. CREDIT RISK
Portfolio Risk Default Risk
Internal Factors
•Deficient loan policies
•Deficient Administration
•Absence of Prudential Credit Policy norms
•Absence of Credit Concentration limit
•Inadequate lending limits to officers
•Deficiency in appraisal
•Excessive dependence on collaterals
•Inadequate risk pricing
•Absence of loan review
•Deficient Post Sanction Surveillance
External Factors
•Economy
•Price Swings of Commodities
•Foreign Exchange Rate
•Interest Rates
•Trade Restrictions
14. Business risk-Credit function
• Credit Growth
– No of new Accounts from earlier period
– Migration of Accounts
• Composition & credit concentration
– Segment/Industry
– Borrower wise
– Borrower wise
– Sensitive sectors
• Credit quality
– %Gross NPA to Total Advances
– Fresh Slipages
– Irregular Accounts to Total Advances
– Infant mortality
• Credit risk of off balance sheet Items
15. RECENT INDUSTRY OUTLOOK AS PER ICRA
(Valuable for auditors for identification of credit
(Valuable for auditors for identification of credit
risk)
16. Industry Outlook Key Issues
Real Estate &
Construction
Negative •No respite on raw material front
•Shortage of labour and funds
•Difficulty in accessing bank funding
•Increased reliance on Non-traditional
sources (NBFCs, Private Equity Funds,
etc.)
etc.)
Auto
Ancillaries
Stable •Increased focus on cost compression
•Slow demand recovery
Cement Positive •Increase in demand owing to recovery
in economy, low base effect, etc.
17. Industry Outlook Key Issues
Oil & Gas Stable •Favorable domestic demand-supply
scenario
•Proposed rise in natural gas price
•Downstream players expected to
witness fall in under-recovery levels
•Regulatory clarity on the powers of The
Petroleum and Natural Gas Regulatory
Petroleum and Natural Gas Regulatory
Board(PNGRB) is required.
Textiles Negative •Companies face risk emanating from
policy changes by China for cotton
procurement
•This might affect export demand of
Indian yarn
18. Industry Outlook Key Issues
Auto Positive •Recovery in volume of commercial
vehicles supported by replacement
demand, reduction in excise duty, low
base effect, etc.
•Increased focus on exports by OEMs
(Passenger Vehicles)
Telecom Positive •Restoration of pricing powers
•Continued uptick in the data services
•Leveraging of leading telcos increased
driven mainly by debt funding (auction-
determined payouts & sizeable capital
expenditure)
•Gradual organic de-leveraging is
expected
19. Earnings risk- Business strategy risk
• Low cost deposit target achievement
• Increase/Decrease in low cost deposit(SF+CA)
• Credit % budget achievement
• Priority sector advance (% Budget Achievement)
• Profit (% Budget Achievement)
• Disbursement in Retail lending (% Budget Achievement)
• Average cost of deposit
• Average return on advances
• Non Interest income growth
• Avg business per employee
• Revenue leakage(% to total profits during review period)
• Reduction in controllable expenses
20. Operational Risk
• Depositors with >1% share
• Non-Compliant A/c
• Instances of Window Dressing
• Alternate Delivery Channels(Mobile,
• Alternate Delivery Channels(Mobile,
Internet, POS, ATM, NEFT, RTGS, Credit/
Debit Card)
• Record maintaining & Loss Data
• Cases lodged to Ombudsman
21. • Penalties imposed in courts, IT, Consumer
forum, etc.
• Frauds detected & recovery made
• Outsourcing/ Other Service Providers
– Maintenance of ATM/ Computer
– Courier
– Courier
– Security Guard
– Maintenance of SFF lockers
– Recovery Agents
– Other services like Sweepers
23. Control Risk
Control Risk
Control Risk
Control Risk
Credit function
•Exercise of loaning power
•Pre sanction appraisal
•Documentation creation of charge
•Mortgages
•Mortgages
•Post sanction monitoring and follow-ups
•Bill purchased/ Discounted
•NPA management
•Revenue audit in credit
24. Non miss-out areas in credit audit
Credit:
• Pre sanction
• CIBIL not checked and Negative CIBIL settlement must be justified in
writing + NOC (FS)
• RBI default list, KYC, statement of Bank A/c, other returns like IT,VAT must
be confirmed.(FS)
• Assessment done on old B/s.
• B/s Sheet sensitive items
– Unsecured loans
– Unsecured loans
– No impairment of assets, No accounting policies , no bank name in B/s
disclosure for charges created.
– No justification of qualified audit reports.
– No disclosure/assessment of contingent liab.
– High variations in sales +sales not commensurate with Credit
summations.
– FD against BG to be considered as non current Asset.
– Proper calculation of NWC.
– Unmoved advances to supplier- Non current
•
25. Contd
• Credit report in current account is also required.
• Business cycle assessment not done.
• No justification obtained for sudden shift of figures
(sales, Profit, Debtors, stock) in projections given and
actual B/s submitted.
• Assigned LIC policies under sec.6 of Married women’s
Property Act.
Property Act.
• Guidelines of takeover of loans followed.
• Diversion of short term funds to long term assets must
be justified in writing.
• EMI’s to residual income in the hands of borrowers.
• Valuer’s qualification and approved jewelers.
26. Post sanction:
• End use of funds not checked with proof (ND)
• Original title deeds, valuation report to be kept on record.
Valuation may be done on renewal also.(ND).large accounts
vetting by advocate for validity of documentation
• Overdue renewals- No follow up , renewal on old balance
• Overdue renewals- No follow up , renewal on old balance
sheets, Provisional B/s and actual differs significantly.
• Adhoc limits given only in eligible cases with justification
from borrower in writing must be obtained. No loaning
power has been exceeded (ND)
27. • Stock statement not received/checked over 3 mnths
still operations are allowed.(FS)
• Limitation expired during next 12 months
• Acknowledgement of debts Balance confirmation
taken from borrowers and from legal heirs in case of
taken from borrowers and from legal heirs in case of
death of borrower regularly.(ND)
• Changes in partnership/director – deed must be
obtained on every review/renewal –change in internal
environment of the borrower
28. • Non claiming subsidy on eligible loan accounts
• Visit report: must address business risk of the
borrower ,
• Bill discounted : LR of only approved transporters+
Accomodation bills are not purchased
• BG’s are properly worded and recorded in Bank
registers + limitation clause must be entered .
29. • Delay in insurance -Un-insured period, all risks not
covered
• In case of staff veh.loan joint registration is
obtained+ in case of staff loan Int rate modified after
retirement or resignation.(FS)
• No process of balance confirmation from debtors at
borrowers level
30. • Diversification of funds
• Overdue accounts brought in limit temporarily and
subsequently allowed to be withdrawn.
• Creation of charge-latest documents must be obtained
and on renewal also it must be obtained.(FS)
• Limits to be adjusted especially when industry faces
problem or slowdown.
• Half yearly rating should be done for large borrowers,
so that upward/ downward movement can be tracked.
31. • If there is no variation in rating inspite of industry
issue, then financials of the borrower are not
correct.
• Take over case turning into NPA(Potential
weakness)
• Large no of cash withdrawals in CC account
which does not seems to be need based.
• Erosion of primary/collateral security is seen at
the time of visit and reported
32. Non credit function
• Cash Management
• ATM
• Suspense account
• Sundry Account
• Checking of Reports
• Checking of Reports
Morning checking
• Opening of a/c KYC norms
ACCOUNT OPENING
33. Non miss out audit areas
• Non generation and checking of Control reports , exception
report , statement of ALM,,DD purchased and returned
unpaid., loans sanctioned under BM’s power.(FS)
• Pendency in signature scanning(FS)
• Confirmation of actions of officiating manager by
permanent incumbent(ND)
• Proper registers are being maintained for cash and checked
at prescribed intervals.
at prescribed intervals.
• Proper control over tokens is being exercised.
• Daily reconciliation of Clearing Imprest account; Parking
difference in a dummy account not allowed.
• Timely clearance of sundry and suspense Accounts(FS)
• Overdependence on outsourced service.
• Failure /success report of interest application not checked.
•
34. Non miss-out areas
• Non implementation of KYC guidelines
• Nomination is signed by witness
• Correct risk classification of customer not done
– Very High Risk- Politically exposed person and relatives
– High risk – NRI’s, HNI’s, businessmen of antique dealers,
dealers in arms etc. firms with sleeping partners, Trusts,
charities, NGO etc
charities, NGO etc
– Medium risk- Current account having Dr/cr summation of
Rs.50 lakh pa, whom they do not provide enough
documentary proof etc.
– Low risk- salaried person, small accounts.
• Introducer’s procedure is prudently
• Risk fencing in case of doubtful or Non KYC compliant
customers . Ex, stopping chq book issue,ATM cards etc.
system also displays “Caution” while making payment.
35. • Conduct maintenance of a/c and Records
• Security Forms Inventory Management
• Bills for collection, DD Receivables Parcels
• Conduct of Govt. Business
• Safe Deposit Vault
40. Section Important clauses
20 Restriction on loans and advances:
No banking company shall-
• Grant loans or advances on security of its own
shares
• Enter into any commitment for granting any loan
or advance to-
I. Directors
II.Firm in which director is interested as
II.Firm in which director is interested as
partners, managers, employee or guarantor
III.Any director of banking company is a director,
managing agent, employee or guarantor, or in
which he holds substantial interest
IV.Any individual in respect of whom any of its
directors is a partner or guarantor
41. Section Important clauses
20 No cooperative bank shall:
I. Make loans and advances on security of own
shares
II. Grant un-secured loans or advances to-
• Directors
• To firms of private company in which any of its
• To firms of private company in which any of its
directors is interested as partner of managing
agent or guarantor
• To company in which chairman of BOD of co-
operative bank is interested
42. Section Important clauses
23 RBI permission required for:-
• Opening new place of business in India.
Temporary place of business allowed only for
1month be operated on occasion of mela,
Exhibition, conference
26 Returns of unclaimed deposits to be submitted for
accounts which are not operative for 10 years
RRB’s to furnish details to sponsoring bank
RRB’s to furnish details to sponsoring bank
45ZB No notice of claim of other person than depositor shall
be receivable by bank for payment except in case of
decree, certificate from court of jurisdiction
45ZC The bank shall return the articles in the safe custody to
the nominee, But in case of minor- any other person
appointed to receive the articles. Inventory must be
taken
43. Section
Number
Important clauses
45ZE •Hirer of locker may nominate a person to
have access to the locker in case of death of
hirer
•In case of joint owners it can be operated
under the joint signatory of owners only and
•In case of death of any one or both owners
then only -Nominee
then only -Nominee
47A(5) Power of RBI to impose penalty:
• Payment of penalty within 14 days from the
date on which notice by RBI is served on the
banking company
44. Vigilance risks
• AML
– Unusually large transactions
– Account is opened by customer far from his house without
acceptable reason
– The trend/pattern of transaction does not fit economic
rationale
rationale
– Unusually high value transactions other than cash
– Unexplained transfer between multiple accounts
– Customer often operates safe deposit locker immediately
before cash deposits
46. Securitisation And Reconstruction Of Financial Assets
And Enforcement Of Security Interest Act, 2002
• SARFAESI Act empowers secured creditors to recover their
dues without the intervention of court.
• Under this Act, banks, upon default, can seize the underlying
securities
• Preconditions:
Debt is secured and classified as NPA.
Debt is secured and classified as NPA.
O/s Dues = 1 Lakh and account for 20% of Principle and Interest
thereon.
Enforceable security can even be a Mortgaged house, but not an
agricultural land (Other exceptions include Personal
Belongings).
• Banks to give a notice to the defaulter for discharge of
liabilities within 60 days and on non-compliance, initiate
action.
47. AWARDING VALUE TO BUSINESS IS NEVER BY
MERE CHANCE, IT IS RESULT OF
KNOWLEDGE AND APPLICATIONS WORKING
KNOWLEDGE AND APPLICATIONS WORKING
TOGETHER
Nititn Alshi Associates
48. Nitin D.
Nitin D. Alshi
Alshi
B.com,
B.com, ACMA.,
ACMA., FCA, DISA(ICA),PGDERM.
FCA, DISA(ICA),PGDERM.