MANTRA FOR SUCCESS:
BESIDES READING CONTENT OF THIS POST,VISIT 136 PREVIOUS POST ON THIS SUBJECT ALSO AND LEARN /READ INFORMATION GIVEN THERE. THIS WILL HELP YOU IMMENSELY IN PRELIMINARY AS WELL AS MAIN EXAMS.
Q:What are Components of Capital in Banks.
A:Capital funds: The capital funds would include the components Tier I capital and Tier II capital.
Q:What are Elements of Tier I Capital.
A:The elements of Tier I capital include:
Paid-up capital (ordinary shares), statutory reserves, and other disclosed free reserves, if any;
Perpetual Non-cumulative Preference Shares (PNCPS) eligible for inclusion as Tier I capital - subject to laws in force from time to time;
Innovative Perpetual Debt Instruments (IPDI) eligible for inclusion as Tier I capital; and
Capital reserves representing surplus arising out of sale proceeds of assets.
Q: What are Elements of Tier II Capital.
A:The elements of Tier II capital include undisclosed reserves, revaluation reserves, general provisions and loss reserves, hybrid capital instruments, subordinated debt and investment reserve account.
(a) Undisclosed Reserves
They can be included in capital, if they represent accumulations of post-tax profits and are not encumbered by any known liability and should not be routinely used for absorbing normal loss or operating losses.
(b) Revaluation Reserves
It would be prudent to consider revaluation reserves at a discount of 55 per cent while determining their value for inclusion in Tier II capital. Such reserves will have to be reflected on the face of the Balance Sheet as revaluation reserves.
(c) General Provisions and Loss Reserves
Such reserves can be included in Tier II capital if they are not attributable to the actual diminution in value or identifiable potential loss in any specific asset and are available to meet unexpected losses. Adequate care must be taken to see that sufficient provisions have been made to meet all known losses and foreseeable potential losses before considering general provisions and loss reserves to be part of Tier II capital. General provisions/loss reserves will be admitted up to a maximum of 1.25 percent of total risk weighted assets.
'Floating Provisions' held by the banks, which is general in nature and not made against any identified assets, may be treated as a part of Tier II capital within the overall ceiling of 1.25 percent of total risk weighted assets.
Excess provisions which arise on sale of NPAs would be eligible Tier II capital subject to the overall ceiling of 1.25% of total Risk Weighted Assets.
(d) Hybrid Debt Capital Instruments
Those instruments which have close similarities to equity, in particular when they are able to support losses on an ongoing basis without triggering liquidation, may be included in Tier II capital. At present the following instruments have been recognized and placed under this category:
Debt capital instruments eligible for inclusion as Upper Tier II capital ; and
Perpetual Cumulative Preference Shares (PCPS) / Redeemable Non-Cumulative Preference Shares (RNCPS) / Redeemable Cumulative Preference Shares (RCPS) as part of Upper Tier II Capital.
The guidelines governing the instruments at (i) and (ii) above, indicating the minimum regulatory requirements are furnished in Annex 3 and Annex 4 respectively.
(e) Subordinated Debt
Banks can raise, with the approval of their Boards, rupee-subordinated debt as Tier II capital, subject to the terms and conditions given in the Annex 5.
(f) Investment Reserve Account
In the event of provisions created on account of depreciation in the ‘Available for Sale’ or ‘Held for Trading’ categories being found to be in excess of the required amount in any year, the excess should be credited to the Profit & Loss account and an equivalent amount (net of taxes, if any and net of transfer to Statutory Reserves as applicable to such excess provision) should be appropriated to an Investment Reserve Account in Schedule 2 –“Reserves & Surplus” under the head “Revenue and other Reserves” in the Balance Sheet and would be eligible for inclusion under Tier II capital within the overall ceiling of 1.25 per cent of total risk weighted assets prescribed for General Provisions/ Loss Reserves.
(g) Banks are allowed to include the ‘General Provisions on Standard Assets’ and ‘provisions held for country exposures’ in Tier II capital. However, the provisions on ‘standard assets’ together with other ‘general provisions/ loss reserves’ and ‘provisions held for country exposures’ will be admitted as Tier II capital up to a maximum of 1.25 per cent of the total risk-weighted assets.
Q: What is minimum capital required.
A:Minimum Required Capital is 9 percent of risk weighted assets.
Q:What are Money Market Instruments?
A:By convention, the term "Money Market" refers to the market for short-term requirement and deployment of funds. Money market instruments are those instruments, which have a maturity period of less than one year. The most active part of the money market is the market for overnight call and term money between banks and institutions and repo transactions. Call Money / Repo are very short-term Money Market products. The below mentioned instruments are normally termed as money market instruments:
Certificate of Deposit (CD)
Commercial Paper (C.P)
Inter Bank Participation Certificates
Treasury Bills
Call/ Notice/ Term Money
Q: What is CD.
A:Certificates of deposit (CD):
CDs are short-term borrowings in the form of Usance Promissory Notes having a maturity of not less than 15 days up to a maximum of one year.
CD is subject to payment of Stamp Duty under Indian Stamp Act, 1899 (Central Act)
They are like bank term deposits accounts. Unlike traditional time deposits these are freely negotiable instruments and are often referred to as Negotiable Certificate of Deposits
Features of CD
All scheduled banks (except RRBs and Co-operative banks) are eligible to issue CDs
Issued to individuals, corporations, trusts, funds and associations
They are issued at a discount rate freely determined by the issuer and the market/investors.
Freely transferable by endorsement and delivery. At present CDs are issued in physical form (UPN)
These are issued in denominations of Rs.5 Lacs and Rs. 1 Lac thereafter. Bank CDs have maturity up to one year. Minimum period for a bank CD is fifteen days. Financial Institutions are allowed to issue CDs for a period between 1 year and up to 3 years. CDs issued by AIFI are also issued in physical form (in the form of Usance promissory note) and is issued at a discount to the face value.
A:Capital funds: The capital funds would include the components Tier I capital and Tier II capital.
Q:What are Elements of Tier I Capital.
A:The elements of Tier I capital include:
Paid-up capital (ordinary shares), statutory reserves, and other disclosed free reserves, if any;
Perpetual Non-cumulative Preference Shares (PNCPS) eligible for inclusion as Tier I capital - subject to laws in force from time to time;
Innovative Perpetual Debt Instruments (IPDI) eligible for inclusion as Tier I capital; and
Capital reserves representing surplus arising out of sale proceeds of assets.
Q: What are Elements of Tier II Capital.
A:The elements of Tier II capital include undisclosed reserves, revaluation reserves, general provisions and loss reserves, hybrid capital instruments, subordinated debt and investment reserve account.
(a) Undisclosed Reserves
They can be included in capital, if they represent accumulations of post-tax profits and are not encumbered by any known liability and should not be routinely used for absorbing normal loss or operating losses.
(b) Revaluation Reserves
It would be prudent to consider revaluation reserves at a discount of 55 per cent while determining their value for inclusion in Tier II capital. Such reserves will have to be reflected on the face of the Balance Sheet as revaluation reserves.
(c) General Provisions and Loss Reserves
Such reserves can be included in Tier II capital if they are not attributable to the actual diminution in value or identifiable potential loss in any specific asset and are available to meet unexpected losses. Adequate care must be taken to see that sufficient provisions have been made to meet all known losses and foreseeable potential losses before considering general provisions and loss reserves to be part of Tier II capital. General provisions/loss reserves will be admitted up to a maximum of 1.25 percent of total risk weighted assets.
'Floating Provisions' held by the banks, which is general in nature and not made against any identified assets, may be treated as a part of Tier II capital within the overall ceiling of 1.25 percent of total risk weighted assets.
Excess provisions which arise on sale of NPAs would be eligible Tier II capital subject to the overall ceiling of 1.25% of total Risk Weighted Assets.
(d) Hybrid Debt Capital Instruments
Those instruments which have close similarities to equity, in particular when they are able to support losses on an ongoing basis without triggering liquidation, may be included in Tier II capital. At present the following instruments have been recognized and placed under this category:
Debt capital instruments eligible for inclusion as Upper Tier II capital ; and
Perpetual Cumulative Preference Shares (PCPS) / Redeemable Non-Cumulative Preference Shares (RNCPS) / Redeemable Cumulative Preference Shares (RCPS) as part of Upper Tier II Capital.
The guidelines governing the instruments at (i) and (ii) above, indicating the minimum regulatory requirements are furnished in Annex 3 and Annex 4 respectively.
(e) Subordinated Debt
Banks can raise, with the approval of their Boards, rupee-subordinated debt as Tier II capital, subject to the terms and conditions given in the Annex 5.
(f) Investment Reserve Account
In the event of provisions created on account of depreciation in the ‘Available for Sale’ or ‘Held for Trading’ categories being found to be in excess of the required amount in any year, the excess should be credited to the Profit & Loss account and an equivalent amount (net of taxes, if any and net of transfer to Statutory Reserves as applicable to such excess provision) should be appropriated to an Investment Reserve Account in Schedule 2 –“Reserves & Surplus” under the head “Revenue and other Reserves” in the Balance Sheet and would be eligible for inclusion under Tier II capital within the overall ceiling of 1.25 per cent of total risk weighted assets prescribed for General Provisions/ Loss Reserves.
(g) Banks are allowed to include the ‘General Provisions on Standard Assets’ and ‘provisions held for country exposures’ in Tier II capital. However, the provisions on ‘standard assets’ together with other ‘general provisions/ loss reserves’ and ‘provisions held for country exposures’ will be admitted as Tier II capital up to a maximum of 1.25 per cent of the total risk-weighted assets.
Q: What is minimum capital required.
A:Minimum Required Capital is 9 percent of risk weighted assets.
Q:What are Money Market Instruments?
A:By convention, the term "Money Market" refers to the market for short-term requirement and deployment of funds. Money market instruments are those instruments, which have a maturity period of less than one year. The most active part of the money market is the market for overnight call and term money between banks and institutions and repo transactions. Call Money / Repo are very short-term Money Market products. The below mentioned instruments are normally termed as money market instruments:
Certificate of Deposit (CD)
Commercial Paper (C.P)
Inter Bank Participation Certificates
Treasury Bills
Call/ Notice/ Term Money
Q: What is CD.
A:Certificates of deposit (CD):
CDs are short-term borrowings in the form of Usance Promissory Notes having a maturity of not less than 15 days up to a maximum of one year.
CD is subject to payment of Stamp Duty under Indian Stamp Act, 1899 (Central Act)
They are like bank term deposits accounts. Unlike traditional time deposits these are freely negotiable instruments and are often referred to as Negotiable Certificate of Deposits
Features of CD
All scheduled banks (except RRBs and Co-operative banks) are eligible to issue CDs
Issued to individuals, corporations, trusts, funds and associations
They are issued at a discount rate freely determined by the issuer and the market/investors.
Freely transferable by endorsement and delivery. At present CDs are issued in physical form (UPN)
These are issued in denominations of Rs.5 Lacs and Rs. 1 Lac thereafter. Bank CDs have maturity up to one year. Minimum period for a bank CD is fifteen days. Financial Institutions are allowed to issue CDs for a period between 1 year and up to 3 years. CDs issued by AIFI are also issued in physical form (in the form of Usance promissory note) and is issued at a discount to the face value.
For written exam/ interview guidance , you may contact:
ANIL AGGARWAL SIR ( P.O. 1982 BATCH)
EX CHIEF MANGER ,PUNJAB NATIONAL BANK.
Mobile: +91 9811340788
E-mail ID: anilakshita@yahoo.co.in
Office: Flat #49, Trilok Apartments, Patparganj, I.P. Extension, Delhi-110092.
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Website: http://bankinterview.in/
KNOW ABOUT MR ANIL AGGARWAL ( P.O. 1982 BATCH):
UNDER ABLE GUIDANCE OF MR ANIL AGGARWAL(09811340788), HUNDREDS OF CANDIDATES ARE
ABLE TO GET BANK JOB IN LAST 4 YEARS.
HE IS GUIDING CANDIDATES/ASPIRANTS SINCE DEC 2012. A WELL KNOWN NAME
AMONG ASPIRANTS.
PRESENT:
GUEST FACILITY MEMBER TO VARIOUS BANK TRAINING COLLEGES AND MANAGEMENT INSTITUTES.
PROVING GUIDANCE FOR BANK INTERVIEWS (SBI/SBI GROUP/IBPS/RRB/PVT SECTOR BANKS/FOR P.O./CLERK/ASSISTANT/TECHNICAL OFFICER/ I.T/HRD OFFICER )
PAST:
HE JOINED PUNJAB NATIONAL BANK AS MANAGEMENT TRAINEE ( P.O.) IN 1982.HEWAS ALSO SELECTED AS P.O. IN STATE BANK OF INDIA,BANK OF BARODA AND UNITED BANK OF INDIA IN 1983, BUT CONTINUED WITH PNB.
HE REACHED THE POSITION OF CHIEF MANAGER IN 2005. HE GOT ALL PROMOTIONS UP TO THIS RANK IN ONE GO.
HE SCORED HIGHEST MARKS IN WRITTEN EXAM OF PROMOTION FROM OFFICER CADRE TO MANGER CADRE IN 1991. HIS SCORE REMAINED UNBROKEN RECORD FOR MANY YEARS
HE RESIGNED FROM THE BANK IN 2012 AFTER SERVING 30 YEARS IN VARIOUS CAPACITIES IN PUNJAB NATIONAL BANK.
HE HAS RICH BANKING EXPERIENCE.
HE WAS MEMBER OF VARIOUS INTERVIEW BOARDS MEANT FOR INTERNAL PROMOTIONS.
HE WAS ONE OF THE MOST RENOWNED FACULTY MEMBER OF PUNJAB NATIONAL BANK DURING 1986 TO 1991.
FOR, INDIAN INSTITUTE OF BANKERS, DELHI CHAPTER, HE CONDUCTED CLASSES OF BANKING LAW AND PRACTICE PART TWO OF CAIIB DURING 1988 to 1997.
HE WAS AWARDED BY VARIOUS INSTITUTIONS WE LIST A FEW:
*BEST FACULTY MEMBER AWARD BY BANKER'S TRAINING COLLEGE , RBI- 1986
*BEST FACULTY MEMBER AWARD BY BANKER'S TRAINING COLLEGE , RBI- 1986
*BEST BRANCH MANAGER AWARD BY PUNJAB NATIONAL BANK -1991
*BEST BRANCH MANAGER AWARD BY PUNJAB NATIONAL BANK - 2007
*BEST CHIEF MANAGER MARKETING IN PUNJAB NATIONAL BANK -2007 ,2008,2009 AND 2010.
ACADEMIC & PROFESSIONAL QUALIFICATION
M.Sc Physics
CAIIB FROM INDIAN INSTITUTE OF BANKERS
POST DIPLOMA IN BUSINESS MANAGEMENT FROM THE INSTITUTE OF CHARTERED FINANCIAL ANALYSTS OF INDIA
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