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This page will provide you a lot of information in detail on the Banking Awareness topics. Here we have added some tips on how to prepare banking awareness. Use the banking awareness pdf for your effective preparation. So go through the tips here on how to prepare for banking awareness, especially in bank exams.

The general awareness topic is the combination of banking awareness, current affairs, and static GK. Candidates have to focus on all the 3 parts.

Only then you can score good marks in the general awareness section. Utilize the free banking awareness pdf and follow the strategy to get good marks. Some of them are having an aim for insurance jobs. They have doubts about how to prepare financial awareness for the insurance exams. For that too we have covered here with suitable content. So, utilize the banking awareness pdf in an effective manner.

The Banking Awareness quiz is very important for the aspirants. The quizzes will make you sharp day by day. So, attend daily quizzes without fail. Hence you can easily master the banking awareness topics. This is an important strategy on how to prepare using banking awareness pdf and quiz. Banking awareness is an important part of the preparation of banking aspirants. So candidates first try to cover all the syllabus topics of banking awareness. Here some banking awareness preparation tips are available for you.

If you cover a topic per day, you can finish most of the topics within a month. So start your preparation without delay. By repetitive and periodic, it is meant that the transactions occur repetitively and after a fixed time interval.

ECS is used by institutions for making bulk payment of amounts or for bulk collection of amounts. Examples for bulk payment of amounts include paying of interest, salary, pension, etc.

ECS is used for faster payments and collections. It is used for either making bulk payment of amounts or for bulk collection of amounts. The institutions who apply for ECS can initiate the process, no need to go to bank branch again and again.

Under this scheme, a single account is debited and then multiple accounts are credited. Example: A company has 50 employees and at the start of month it gives salary to all the employees so instead of crediting each account separately, the company can use the ECS Credit Scheme.

Under this scheme, multiple accounts are debited and then a single account is credited. Example: Many people go for insurance policies and they have allowed the payment of their premiums from their account. Now it is possible that on a single day, many customer accounts are to be debited to have the premium from them. Here ECS Debit scheme can be used.

The usage of block chain technology simplifies the process and makes it almost instantto only a few minutes. Typically, this process takes a few days.

The block chain application co-created by ICICI Bank replicates the paper-intensive international trade finance process as an electronic de centralised ledger, that gives all the participating entities including banks the ability to access a single source of information.

There is no limit either minimum or maximum on RBI has not fixed the maximum amount. It has given the amount of funds that could be transferred using liberty to the bank to decide the maximum amount.

There is no upper ceiling for RTGS transactions. NEFT operates in hourly batches - there are twelve The RTGS service window for customer's transactions is settlements from 8 am to 7 pm on week days Monday available to banks from 9.

Immediate transfer 24 x 7 Upper limit : 50k per day. Total 2. UPI is a payment system that allows money transfer between any two bank accounts by using a smartphone. Andhra Bank Andhra Bank One 2. Allahabad Bank Allahabad Bank 4. Axis Bank Axis Pay 6. Bank of Bardoda Baroda MPay Bhartiya Mahila Bank Canara Bank Empower Central Bank of India DCB Bank Federal Bank Lotza HSBC Bank Dena Bank. The only inputs required for a customer to do a transaction under this scenario are:- 2.

IIN Identifying the Bank to which the customer is associated 3. Aadhaar Number 4. Fingerprint captured during their enrollment. This service was launched envisioning the potential of Mobile Banking and the need for immediate low value remittances which will help in financial deepening and inclusion of under banked society in the mainstream banking services.

This system has been launched for Banks, Financial Institutions, Corporates and Government a web based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature. Balance Sheet A balance sheet is a snapshot of a business' financial position on one particular day. It provides a summary of what a business owns or is owed. It states what assets the business owns and what liabilities it owes, at a particular date. The balance sheet is used to show how the business is being funded and how those funds are being used.

Why it is called Balance Sheet? Because there is a debit entry and a credit entry for everything, so the total value of the assets is always the same value as the total of the liabilities. Contents Fixed assets:: Long-term Current assets: Short-term Current liabilities: What the business owes and must repay in the short term Long-term liabilities: Owner's or shareholders' capital Fixed assets Tangible assets - e.

Intangible assets - e. Current assets e. How solvent the business is How liquid its assets are - how much is in the form of cash or can Be easily converted into cash, i. The important purpose of these tools are to recover the loan amount from borrower. These tools can because according to Loan amount. It also aims at Asset Reconstruction by securitization or Reconstruction Company. However, loan with balance below Rs. This process is undertaken with the assistance of the District Magistrate, and does not require the intervention of courts or tribunals.

The Bill provides that this process will have to be completed within 30 days by the District Magistrate. They acquire stressed assets from banking sector and use their expertise to resolve these cases.

They in-turn issue security receipts against acquired assets to Qualified Institutional Borrowers which also includes banks. Lok Adalats: LokAdalat is for the recovery of small loans. Debt Recovery Tribunals: The debt recovery tribunal act was passed by Indian Parliament in with the objective of facilitating the banks and financial institutions for speedy recovery of dues in cases where the loan amount is Rs.

The Basel Accords is a set of recommendations for regulations in the banking industry. Upto now three accords have been published. It defined capital requirement and structure of risk weights for banks. The goal was to minimize credit risk i. Ultimately, this framework was introduced not only in member countries but also in virtually all other countries with active international banks.

Unlike the goal of Basel I norms, Basel II focused on how much of the banks capital, bank must keep aside in order to reduce their credit risks. So in case if a bank is exposed to a greater risk, it needs to keep aside a greater capital to guard against the risks.

Basel II was to be implemented in early The revised framework comprised three pillars, namely: Minimum capital requirements, which sought to develop and expand the standardised rules set out in the Accord; Supervisory review of an institutions capital adequacy and internal assessment process; and Effective use of disclosure as a lever to strengthen market discipline and encourage sound banking practices.

They have been designed to address the shortcomings of Basel II after the financial crisis that the world faced. In September , the Group of Governors and Heads of Supervision announced higher global minimum capital standards for commercial banks.

According to Basel Committee, Basel III is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector. Strengthen banks transparency and disclosures. Market Risk: Market Risk is a type of risk in which losses in on- or off-balance sheet positions that arise from movement in market prices.

Market risk is the most prominent for banks present in investment banking. There is always scope for the borrower to default from his commitments for one or the other reason resulting in crystalisation of credit risk to the bank. Credit risk is inherent to the business of lending funds to the operations linked closely to market risk variables Interest Rate Risk Interest Rate Risk is the type of risk arises due to fluctuation in interest rate.

Changes in interest rate affect earnings, value of assets, liability off-balance sheet items and cash flow. Earnings side involves analyzing the impact of changes in interest rates on accrual or reported earnings in the near term.

Liquidity risk This kind of Risk arises due to inability of bank to meet its obligations when any asset may not be realized into cash. Also, we can say that, it is a mismatch of assets and liabilities. Liquidity is the ability to efficiently accommodate deposit as also reduction in liabilities and to fund the loan growth and possible funding of the off-balance sheet claims. Foreign Exchange Risk Forex risk is the risk that a bank may suffer loss as a result of adverse exchange rate movement during a period in which it has an open position, either spot or forward or both in same foreign currency.

Capital Risk This type of risk arises where the capital comes under risk partially or the whole in some cases emergencies. Operational Risk This risks arises due to failure of day to day activities, system or people. It includes both internal and external frauds like failures related to policies, laws, regulations, documentation or any technological risks.

It is defined as any risk that is not categorized as market or credit risk, is the risk of loss arising from inadequate or failed internal processes, people and systems or from external events. Inflation is a rise in the general level of prices of goods and services in an economy over a period of time Types of Inflation: Demand pull inflation: This type of inflation occurs when total demand for goods and services in an economy exceeds the supply of the same.

Cost-push Inflation: If there is increase in the cost of production of goods and services, due to increase of wages and raw materials cost, there is likely to be a consequent increase in the prices of finished goods and services. Stagflation: It is a situation in which the inflation rate is high and the economic growth rate is low.

Reflation: It is the act of stimulating the economy by increasing the money supply or by reducing taxes. It is an act of pumping money in the market to increase the circulation so that economy can be stipulated again. Disinflation: It is a decrease in the rate of inflation a slowdown in the rate of increase of the general price level of goods and services in a nations gross domestic product over time.

Deflation: It is a decrease in the general price level of goods and services. Financial inclusion is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups. No-frills account These accounts provide basic facilities of deposit and withdrawal to accountholders makes banking affordable by cutting down on extra frills that are no use for the lower section of the society.

Banking service reaches homes through business correspondents The banking systems have started to adopt the business correspondent mechanism to facilitate banking services in those areas where banks are unable to open brick and mortar branches for cost considerations.

Business Correspondents provide affordability and easy accessibility to this unbanked population. Armed with suitable technology, the business correspondents help in taking the banks to the doorsteps of rural households. Lead Bank Scheme aimed at forming a coordinated approach for providing banking facilities. To enable banks to assume their lead role in an effective and systematic manner, all districts in the country excepting the metropolitan cities of Mumbai, Kolkata, Chennai and certain Union Territories were allotted among Public Sector Banks and a few Private Sector Banks The Lead bank role is to act as a consortium leader for co-coordinating the efforts of all credit institutions in each of the allotted districts for expansion of branch banking facilities and for meeting the credit needs of the rural economy.

Swabhiman Scheme Opening of Bank accounts covering the habitations with minimum population atleast through Business correspondent model providing cash services. Habitations with population more than in plain areas and in north-eastern and hilly states as per census are covered. The scheme was launched to provide a safe and cost-efficient avenue to migrant Nepalese workers in India to remit money back to their families in Nepal. The beneficiary would receive funds in Nepalese Rupees.

Under the Scheme, even a walk-in customer can transfer funds upto Rs 50, by depositing the cash at the remitting bank branch. The bank branches originating the Indo-Nepal remittance transactions under the NEFT will process it like any other NEFT transaction, However an originator in India is allowed to remit a maximum of 12 remittances in a year under the scheme.

Lead Bank Scheme The Lead Bank Scheme was introduced in to provide lead roles to individual banks both in public sector and private sector for the districts allotted to them. Commercial banks did not have adequate presence in rural areas and also lacked the required rural orientation and so the rural areas were not able to enjoy the benefits of banking. So a bank public or private was given some area in which that bank had to play a lead role in providing financial services to the people, making them aware about the banks and various benefits of banks and also generating trust among people so that they deposit their money without any fear of loss or fraud.

So this bank was the lead bank of area. KVP was closed in and the new government relaunched it in Amount Invested matures in months. Rate of Interest 7. Certificate can be purchased by an adult for himself or on behalf of a minor or by two adults.

KVP can be purchased from any Departmental Post office. Facility of nomination is available pledge for loan facility and 3. Certificate can be transferred from one person to another and from one post office to another. Denomination: Rs. Accidental insurance cover of Rs. Overdraft facility upto Rs.

RBI guidelines: Basic Savings Bank Deposit Account should be considered as a normal banking service available to all customers Any individual, including poor or those from weaker section of the society , through branches. BSBDA guidelines are applicable to all scheduled commercial banks in India, including foreign banks having branches in India.

There will be no limit on the number of deposits that can be made in a month, account holders will be allowed a maximum of four withdrawals in a month, including ATM withdrawals. Holders of Basic Savings Bank Deposit Account will not be eligible for opening any other savings bank deposit account in that bank.

The aggregate of all withdrawals and transfers in a month does not exceed Rs. Others Strategic Debt Restructuring Scheme The Scheme has been enacted with a view to revive stressed companies and provide lending institutions with a way to initiate change of management in companies which fail to achieve the milestones under Corporate Debt Restructuring. The Strategic Debt Restructuring SDR has been introduced with a view to ensuring more stake of promoters in reviving stressed accounts and providing banks with enhanced capabilities to initiate change of ownership, where necessary, in accounts which fail to achieve the agreed critical conditions and viability milestones.

Therefore, banks should consider using SDR only in cases where change in ownership is likely to improve the economic value of the loan asset and the prospects of recovery of their dues.

Conversion of outstanding debts can be done by a consortium of lending institutions. The Scheme will not be applicable to a single lender. The scheme aimed to strengthen the lenders ability to deal with stressed assets, Reserve Bank of India has been issuing, from time to time, guidelines and prudential norms on stressed assets resolution by regulated lenders. The aggregate exposure including accrued interest of all institutional lenders in the account is more than Rs. Financial Market Financial market are divided in two types depends on duration for which they need money.

They are Money and Capital Market. Money Market Money Market is a short-term credit market. It is the centre in which short-term funds are borrowed and lent. It consists of borrowers and lenders of short- term funds. The lenders are commercial banks, insurance companies, finance companies and the central bank. The money market brings together the lenders and the borrowers. Money and its Types Money: Money is anything that is widely accepted in exchange for goods and services.

Commodity Money - Commodity money is the type of Money that's in the form of a commodity with intrinsic value which means it has value outside of its use as money. The commodity itself represents money, and the money is the commodity. Example: Gold silver, copper, salt, peppercorns, rice, large stones, etc. Representative MoneyIt is actually represents Money. It is exchangeable for a commodity.

Example: Token coins, or any other physical tokens like certificates. Fiat Money whose value is not derived from any intrinsic value or any guarantee that it can be converted into valuable commodity like gold. It has value as money because a government decreed that it has value for that purpose. Money Market Instruments 1. Treasury Bills 2. Commercial Papers 3. Certificate of Deposit 4. Bankers Acceptance 5. Repurchase Agreement Treasury Bills: Treasury bills T-bills offer short-term investment opportunities, generally up to one year.

They are thus useful in managing short-term liquidity. At present, the Government of India issues three types of treasury bills through auctions, namely, day, day and day. There are no treasury bills issued by State Governments.

Minimum Price: Treasury bills are available for a minimum amount of Rs. Treasury bills are issued at a discount and are redeemed at par. Government Securities Government securities, also called the gilt edged securities or G-secs, are not only free from default risk but also provide reasonable returns and, therefore, offer the most suitable investment opportunity to provident funds.

The Government securities comprise dated securities issued by the Government of India and state governments as also, treasury bills issued by the Government of India. Reserve Bank of India manages and services these securities through its public debt offices located in various places as an agent of the Government.

Mutual Fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The first introduction of a mutual fund in India occurred in , when the Government of India launched Unit Trust of India. The first private sector fund to operate in India was Kothari Pioneer, which later merged with Franklin Templeton. It was Promissory Note against funds deposited at a bank or other introduced in India in with a view to enabling highly eligible financial institution for a specified time period.

The maturity period of CDs issued by banks should not be CP can be issued for maturities between a minimum of. The FIs can issue CDs for a period not less than 1 issue. However, the maturity date of the CP should not go year and not exceeding 3 years from the date of issue. CDs can be issued to individuals, corporations, companies Individuals, banking companies, other corporate bodies including banks and PDs , trusts, funds, associations, etc.

However, investment by FIIs would be stated on the Certificate. The money market is a market for short-term financial assets that are close substitutes of money. The most important feature of a money market instrument is that it is liquid and can be turned into money quickly at low cost and provides an avenue for equilibrating the short-term surplus funds of lenders and the requirements of borrowers.

Call Money means deals in overnight funds. Notice Money means deals in funds for 2 14 days. Term Money means deals in funds for 15 days-1 year. Commercial Paper: Commercial Paper CP is an unsecured money market instrument issued in the form of a promissory note. CP, as a privately placed instrument, was introduced in India in with a view to enable highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors.

Who is permitted to issue CP: Subsequently, primary dealers PDs and all-India financial institutions FIs were also permitted to issue CP to enable them to meet their short-term funding requirements.

However the corporate issuing CP should meet the following conditions 1. The tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs. Minimum and maximum period of maturity: CP can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue. Denomination: CP can be issued in denominations of Rs.

CP can be issued either in the form of a promissory note or in a dematerialised form through any of the depositories approved by and registered with SEBI. Capital Market Capital Market are institutional arrangements for facilitating the borrowing and lending of long-term funds. Usually, stress is laid on the markets for long-term debt and equity claims, government securities, bonds, mortgages, and other instruments of long-term debts.

This capital market encircles the system through which the public takes up long-term securities, either directly or through intermediaries. It also to be noted that Risk is much greater in capital market unlike Money Market which has small risk. This instruments consists of a series of channels through which the savings of the community are mobilised and made available to the entrepreneurs for undertaking investment activities.

Regulator: Stock Exchange Board of India setup guidelines, and supervise and regulate the working of capital market. SEBI in consultation with the Government has taken a number of steps to introduce improved practices and greater transperancy in the capital markets in the interest of the investing public and the healthy development of the capital markets.

Capital Market Instruments 1. Shares 2. Debentures 3. Masala Bonds Masala bonds are the rupee-denominated bonds which can be issued by the Indian entities to raise money from overseas markets. By rupee-denominated bonds, it means that the money borrowed will be in Indian rupees and not any foreign currency. Amount Under the automatic route the amount will be equivalent to INR 50 billion Rs 5, crore per annum through Automatic Approval, beyond Rs 5, crore in a financial year will require prior approval of the Reserve Bank Maturity Minimum maturity period of 3 years.

However they can be issued for three or five or seven-year maturities. Where The Rupee denominated bonds can only be issued in a country and can only be subscribed by a resident can of a country: these 1. The advantage is that that of the currency risk. IFC issued an Rs 1, crore bond to fund infrastructure projects in India.

IFC then named them Masala bonds to give a local flavour by calling to mind Indian culture and cuisine. They are the first rupee bonds listed on the London Stock Exchange. They can be issued for three or five or seven-year maturities. They are different from External Commercial Borrowings ECB in a way that in ECB the currency risk lies with the Indian issuer while in case of masala bonds, the currency risk lies with the overseas investor.

Which provides lending to the few specific sectors like agriculture and allied activities, micro and small enterprises, poor people for housing, students for education.

There are eight Categories. The said banks have to achieve the Target within a maximum period of five years starting from April 1, and ending on March 31, The same target has to be achieved in a phased manner by by foreign banks with less than 20 branches. Agriculture Farm credit: Loans to individual farmers up to Rs. Loans up to Rs. For the purpose of Ancillary activities loans up to Rs.

Loans for Food and Agro-processing up to an aggregate sanctioned limit of Rs. Farmers with a landholding of more than 1 hectare and upto 2 hectares are considered as Small Farmers. Micro, Small and Medium Enterprises Manufacturing Sector Enterprises Investment in plant and machinery The Micro, Small and Medium Enterprises Micro Enterprises Does not exceed twenty five lakh rupees engaged in the manufacture or production of Small Enterprises More than twenty five lakh rupees but does not goods to any industry specified in the first exceed five crore rupees schedule to the Industries Development and Medium More than five crore rupees but does not Regulation Act, and as notified by the Enterprises exceed ten crore rupees Government from time to time.

Export Credit Domestic banks Foreign banks with 20 branches and Foreign banks with less than 20 above branches Export credit over corresponding date Incremental export credit over Export credit will be allowed up of the preceding year, up to 2 percent corresponding date of the preceding year, up to 32 percent of ANBC or Credit of ANBC. Education Loans to individuals for educational purposes including vocational courses upto Rs.

Housing i Loans to individuals up to Rs. The housing loans to banks own employees will be excluded. Social infrastructure Bank loans up to a limit of Rs. Renewable Energy Bank loans up to a limit of Rs. For individual households, the loan limit will be Rs. Miscellaneous Assets Vs. If we talk about banks assets: They are those which the bank has and can be readily converted to cash whenever bank requires money. Liabilities are the ones for which an amount of money is owed like in a company the salaries of employees are to be given, etc.

If we talk about banks liabilities: They are those which the bank has from the customer deposits and borrowed money for banks purpose. Letter of credit Vs. Bank Guarantee These are given by buyers to their sellers both in India and outside India.

When products are imported from a foreign company, how the company will assure that they will get the payment in time ans full amount? So the solution is Letter of credit and Bank Guarantee A letter of credit is a letter issued by bank which guarantees buyers payment on time and in correct amount up to the time the services will be delivered to the buyer.

Unlike in letter of credit, in a bank guarantee the payment is done only when the buyer is not able to pay the required amount of money to the seller. So the difference between the two is that if you give letter of credit to seller, that will ensure that bank will pay on your behalf up to the day the services are being provided to you by the seller and if you give bank guarantee to seller, that will ensure that bank will pay on your behalf if you are not able to pay the amount.

All bankrupts will be called insolvent, but not vice-versa. A foreign company which is based in some other country like France invests in India either by setting up a wholly owned subsidiary or getting into a joint venture with some company based in India and then conducts its business in India. Example: Any foreign company invests in the shares of Infosys based in India. Dormant account Vs. Frozen account The account which has not been used for 24 months 2 years by its operator is termed as dormant account while the account in which all the activities have been stopped by the bank is a freezed account.

The dormant accounts can be made as operative as per bank policy. The interest on amount of money in saving accounts will be credited in account in case of inoperative account also. Freezing of account means the transactions in such account cannot be performed until further notice. The payments will be stopped in such accounts and even cheques drawn before freezing are also not allowed to be encashed by anyone.

Cross selling Vs. Like selling a credit card and internet banking to a savings or current account customer, selling their any bancassurance products, etc. Unlike cross selling, up selling means encouraging customers to purchase a higher-end product or we can say a more costly product than the customer has asked for. Like the customer asks for a credit card with overdraft facility of Rs 10, but the banking representative tells him benefits of having the card with more facilities, etc.

Consortium Financing Vs. Multiple Banking There are cases in which big businesses require large finances which it cannot get from single lender. In Consortium financing, several banks or financial institutions finance a single borrower. So the participating banks form a new consortium bank. The whole loan amount is divided among those banks forming consortium, so the risk also gets divided. The bank which takes the higher risk by giving the highest amount of loan will act as a leader and thus it acts as an intermediary between the consortium and the borrower.

Multiple banking is an arrangement where a borrower takes loan amount from several banks. In this case no bank knows that his borrower has taken loan from other banks too. There is no contractual relationship between various banks like that in consortium banking and each bank holds its individual security and own credit rates.

Moratorium period Vs. Grace period When we take a loan from bank, we do not have to start paying the EMIs immediately. The bank gives some time before start paying EMIs which are generally paid on a monthly basis. This time before start of paying EMIs is called Moratorium period. Unlike moratorium period, during the grace period, interest is not charged.

Actually it is a period of time after a payment becomes due. Example: Grace period is given for paying off the overdraft value of credit card. If the money is not paid back within the grace period, interest rate is charged according to the lending institution policy.

NRO Account Vs. NRE Account Vs. It is a rupee denominated account i. So this means it is not a savings account. Authorized dealer banks in India can allow deposits in any of the permitted currency currency freely convertible.

Negotiable Instruments Negotiable instrument is a document which guarantees the payment of a specific amount of money, either on demand, or at a set time, with the payer named on the document. A negotiable instrument can be transferred from one person to another. According to Section 13 of the Negotiable Instruments Act, , A Negotiable Instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer.

Securities: Pledge, Hypothecation,Mortgage Pledge is when the property is offered as collateral or security. It is a right to reserve a legal interest in something.

Example- a lot of banks and credit unions have what is called "cross collateral. Hypothecation: It is used when you borrower have the actual possession of the asset, for which you have taken the loan.

Generally, this is charged against loans for movable assets, like car, bus, etc. Here, the assets bus, car, etc. In case you are unable to repay the loan amount, then the bank has the right to sell the asset bus, car, etc. Mortgage: It is used when you borrower have the actual possession of the assets, for which you are granted loan e.

As we all know exam patterns are changing rapidly, so to prepare according to the updated exam pattern are useful to crack the particular exams. The book begins with fundamental concepts and gradually reaches the higher level concepts of utility. The significant part of the arihant banking awareness book is that it covers chapter wise practice questions along with the previous year questions to understand the exam pattern. There is also 11 practice set incorporated in the book for the students self evaluations that is a very helpful part in the preparation strategy.

Here, in this post we will try to provide you the free pdf of banking awareness book pdf.