AGRICULTURE

National Credit Council – Dec,1967

1st Nationalization of 14 Com Bank – 19.07.1969

PSC – Nov 1974 (1/3rd by March 1979) – Private – March-80

40% - March 1985

Now it is calculated on Quarter basis

Parameter Foreign Banks with <20 Others

branches
Total PSC 40% ANBC of Credit Equivalent 40% ANBC of Credit
of Off-Balance Sheet Exposure, Equivalent of Off-Balance
whichever is higher. Sheet Exposure,
32% - Export credit & 8% - whichever is higher
other PSC
Agriculture 18% (10% to SFMS) NA
Micro Enterprises 7.50% NA
Weaker sections 12% NA

Year SFMS Weaker section

2020-21 8 10
2021-22 9 11
2022-23 9.50 11.50
2023-24 10 12.00
NCF (Non Corporate Farmers) – 12.14% target for 20-21. It is notified by RBI every
year based on last 3 years’ achievement.

Computation of Adjusted Net Bank Credit (ANBC):

Bank Credit in India [As prescribed in item No.VI of Form `A’ under I
Section 42(2) of the RBI Act, 1934]
Bills Rediscounted with RBI and other approved Financial Institutions II
Net Bank Credit (NBC)* III(I-II)
Outstanding Deposits under RIDF and other eligible funds with IV
NABARD, NHB, SIDBI and MUDRA Ltd in lieu of non-achievement of
priority sector lending targets/sub-targets + outstanding PSLCs
Eligible amount for exemptions on issuance of long-term bonds for V
infrastructure and affordable housing
Advances extended in India against the incremental FCNR (B)/NRE VI
deposits, qualifying for exemption from CRR/SLR requirements.
Investments made by public sector banks in the Recapitalization VII
Bonds floated by Government of India
Other investments eligible to be treated as priority sector (e.g. VIII
investments in securitised assets)
Face Value of securities acquired and kept under HTM category IX
under the TLTRO 2.0
Bonds/debentures in Non-SLR categories under HTM category X
For UCBs: investments made after August 30, 2007 in permitted non XI
SLR bonds held under ‘Held to Maturity’ (HTM) category
ANBC (Other than UCBs) III + IV- (V+VI+VII) +VIII - IX + X
ANBC for UCBs III + IV - VI - IX + XI
* For the purpose of priority sector computation only. Banks should not deduct /
net any amount like provisions, accrued interest, etc. from NBC.

Components of PSC

1 Agriculture Farm A. Individual farmers [including SHGs /JLGs,

Credit (i) Crop loans / KCC
(ii) Medium and long-term loans
(iii) Pre and post-harvest activities
(iv) Loans upto Rs 50 lakh against pledge - 12
months.
(v) Loans to distressed farmers indebted to non-
institutional lenders.
(vi) Loans to small and marginal farmers for
purchase of land for agricultural purposes.
(vii) Standalone Agri solar pumps
(viii) installation of solar power plants on
barren/fallow land
B. Corporate farmers (FPO/partnership firms/co-
operatives of farmers directly engaged in Agriculture
and Allied Activities as that of i – vi above), up to Rs
2 crore per borrower.

Rs 5 crore per borrowing entity to FPOs/FPCs

undertaking farming with assured marketing of their
produce at a pre-determined price.
Agri Infra Max of Rs 100 cr
i)Construction of storage facilities (Cold storage,
warehouses, market yards, godowns and silos)
ii) Soil conservation and watershed development.
iii) Plant tissue culture and agri-biotechnology,
seed production, production of bio-pesticides, bio-
fertilizer, and vermi composting
Ancillary i. Start ups in agri/allied – Rs 50 cr
ii. Up to Rs 5 crore to co-operative societies of
farmers for disposing of the produce of
members.
iii. ACABC.
iv. Food and Agro-processing up to an aggregate
sanctioned limit of Rs 100 crore.
v. Custom Service Units managed who undertake
 farm work for farmers on contract basis.
vi. Loans to PACS, FSS and LAMPS for on-lending
to agriculture.
vii. Loan to MFIs for on-lending to agriculture.
viii. Loans to NBFCs as per condition22 of Master
directions.
ix. Outstanding deposits under RIDF/similar
funds.
2 MSME Categor Investment Turnover
y
Micro 1 5
Small 5 50
Medium 50 250
3 Export  Agri & MSME export shall be classified in
respective heads
 Domestic Banks/Foreign Banks with >20
br : Incremental growth in export credit upto
2% ANBC/CEOBE.
 Foreign Banks with <20 br: 32% of
ANBC/CEOBE
4 Education 20 lakh (including vocational), -existing till maturity
5 Housing  Metro - 35 / 45 lakh Other - 25 / 30lakh (Staff
/ HL backed by long term bonds-excluded)
 Repair – Metro / Other -10 /6 lakh
 To Govt - Slum clearance and rehabilitation
with carpet area of not more than 60 sq.m.
 For HFCs for on-lending, up to ₹20 lakh for
individual borrowers,
 Outstanding deposits with NHB on account of
priority sector shortfall.
Social  Rs 5 crore per borrower for setting up schools,
6 Infra drinking water facilities and sanitation facilities
 Loans up to a limit of Rs 10 crore per
borrower for building health care facilities
including under ‘Ayushman Bharat’ in Tier II to
Tier VI centres.
 Bank loans to MFIs extended for on-lending to
individuals and also to members of SHGs/JLGs
for water and sanitation facilities # not
applicable to RRBs, UCBs and SFBs.

7 Renewable  Upto Rs 30 crore to borrowers for

Energy solar/biomass based power generators, wind
mills, micro-hydel plants and for non-
conventional energy based public utilities, viz.,
street lighting systems and remote village
electrification etc
  For individual households, the loan limit will be
Rs10 lakh per borrower.

8 Other  Rs 1.00 lakh per borrower to

individuals/members of SHG/JLG, (Rural –
Household income 1.00 lakh / Other – 1.60
lakh)
 Rs 2.00 lakh to SHG/JLG for other than
agriculture or MSME, for social needs,
construction or repair of house, construction of
toilets or any viable common activity started
by the SHGs.
 Loans to distressed persons [other than
distressed farmers indebted to non-
institutional lenders] not exceeding ₹1.00 lakh
per borrower to prepay their debt to non-
institutional lenders.
 Loans sanctioned to State Sponsored
Organisations for Scheduled Castes/
Scheduled Tribes for the specific purpose of
purchase and supply of inputs and/or the
marketing of the outputs of the beneficiaries
of these organisations.
 Loans up to ₹50 crore to Start-ups, as per
definition of Ministry of Commerce and
Industry, Govt. of India that are engaged in
activities other than Agriculture or MSME.


To address regional disparities in the flow of priority sector credit at the

district level, it has been decided to rank districts on the basis of per capita
credit flow to priority sector and build an incentive framework for districts
with comparatively lower flow of credit and a dis-incentive framework for
districts with comparatively higher flow of priority sector credit.
Accordingly, from FY 2021-22 onwards, a higher weight (125%) would be
assigned to the incremental priority sector credit in the identified districts
where the credit flow is comparatively lower (per capita PSL less than
₹6000), and a lower weight (90%) would be assigned for incremental
priority sector credit in the identified districts where the credit flow is
comparatively higher (per capita PSL greater than ₹25,000). The list of
both categories of districts is given in Annex IA & IB. This list will be valid
for a period up to FY 2023-24 and will be reviewed thereafter. The districts
other than those mentioned in Annex IA and IB will continue to have
existing weightage of 100%.
 FPO

Loan Amt – 3 lakh to 1.00 cr

Equity Grant & Credit Guarantee Fund (EGCGF) Scheme

 The Equity Grant Fund has been set up with the primary objectives of :

o Enhancing viability and sustainability, credit worthiness of Farmer

Producer Companies (FPCs),
o Enhancing the shareholding of members to increase their ownership and
participation in their FPCs.
o Equity Grant shall be a cash infusion equivalent to the amount of
shareholder equity in the FPC subject to a cap of Rs. 10 lakh per FPC
( Self equity should be less than 30 lakh, no one should have >10%
share)
 The Credit Guarantee Fund Scheme provides a Credit Guarantee Cover to
the Eligible Lending Institution (ELI) to enable them to provide collateral free
credit to FPCs. (85% of the sanctioned amount, 0.85% premium – first year,
0.25% subsequently)
Venture Capital Assistance

 Venture Capital Assistance is financial support in the form of an interest free

loan provided by SFAC to meet the shortfall in the capital requirement for
implementation of the project.
Project Development Facility (PDF) for Equity Grant and Credit Guarantee Fund
Scheme

1. What is FPO  Farmer organization is a group of farmers with special

interests and concerns with developed structure, formal membership, status
and functions for its members and with a set of byelaws and rules. 
Mobilizing farmers into groups of between 15-20 members at the village level
(called Farmer Interest Groups or FIGs) and building up their associations to
an appropriate federating point i.e. Farmer Producer Organizations (FPOs). 
Farmers Producer organizations are groups of rural producers coming
together based on the principle of membership, to pursue specific common
interests of their members and developing technical and economic activities
that benefit their members and maintaining relations with partners operating
in their economic and institutional environment.
2. Meaning of FPO A producer company is basically a body corporate registered
as Producer Company under Companies Act, 1956. It covers following points:
 Production, harvesting, processing, procurement, grading, pooling,
handling, marketing, selling, export of primary produce of the Members or
import of goods or services for their benefit  Rendering technical services,
consultancy services, training, education, research and development and all
other activities for the promotion of the interests of its Members 
Generation, transmission and distribution of power, revitalization of land and
water resources, their use, conservation and communications related to
primary produce  Promoting mutual assistance, welfare measures, financial
services, insurance of producers or their primary
3. Farmer Producer Company organization is nothing but a cooperative form of
business organization. It is registered under Indian Companies Act.  It
allows producers 10 or more to form an organization to transact business in
which surplus is distributed among its members as per it Memorandum of
Association and Articles of Association. This Act was came in to effect in 2003
as an amendment in the Part IX A of Companies Act 1956.  At no point a
Producer Company can become a public limited company. The shares of a
producer company cannot be transacted in any stock exchange or share can
be transferred to any non-users members.  The Chief Operating Officer of a
Producer Company can be become the Chairman and it has also proviso to
co-opt technical directors to seek their expertise to make the company to
achieve its set objectives.  This is one such statute that gives level playing
field for cooperative form of business organizations.
4. Background  Small holders had a mean farm size of 0.5 hectare and that
too in 5 to 10 small plots. The small holding size will not produce enough
food to support the family. Such small holders constitute the vast majority of
farmers in the developing countries including India.  Because they are
scattered individuals, they have little or no bargaining power or political
influence in securing loans from scheduled banks (fewer than 4% of small
holders have agricultural credit cards) and very few smallholder farmers
carry crop insurance against natural calamities, etc.  In addition,
smallholders are especially vulnerable to climate change-aggravated weather
events, like untimely rains (especially at harvest times), severe droughts and
floods, hailstorms and pest infestations, any of which can wipe out their
crops. They also continue to suffer from market uncertainties as most
agricultural policies (and institutional support) tend to favor large farmers
and agricultural or food corporations, e.g., industrial
5. For example, in April 2013, the Government of India issued a National Policy
and Process Guidelines document on formation of FPOs. This set of
Guidelines encouraged State Governments to provide incentives, including
credits for and support of the formation and ongoing operation of FPOs in
various states. By September 2013, over 500 FPOs had been formed and are
now successfully operating throughout the country. Those FPOs which are set
up as FPCs enable their members to access financial and other inputs and
services, including appropriate technologies for farming. The FPCs also
organize collection, processing, storage and marketing of their members’
produce in high-value markets at an optimal price. These actions by the FPCs
 have thus reduced transaction costs and allowed the FPCs to enter into a
partnership with private and public sector companies for purposes of
supplying farm produce on more equal terms.
6. As exemplified in Madhya Pradesh (MP) in India, the typical business mix of
an FPC would be:  Aggregation and sale of agricultural produce grown
under contract farming  Production and sale of certified and foundation level
seeds grown under seed production contracts with public and private
organizations  Supply of agriculture inputs and implements, including
financial and logistics services (like modern storage, transport, etc.). This is
brought about through agreements with collateral service management
groups  Price discovery through spot exchange mechanisms  Agriculture
extension services, mainly for production of certified crops, e.g., Responsible
Soybean and Better Cotton with the extension services being provided
through trained staff.
7. A preliminary assessment of FPCs in MP suggests that the benefits to a
member of an FPC are numerous, and in the form of:  Timely and increased
availability of good quality fertilizers, seeds and other agriculture inputs at a
reasonable rate  Better price realization for produce, with efficient extension
services leading to higher farm productivity and a reduction in costs of
cultivation. Provision of cash dividends and other services, including finance,
use of warehouses, access to agricultural implements, a crop grading facility,
etc.  Accrued financial and non-financial benefits to individual FPC
shareholders, which are estimated to be Rs. 8,000 to Rs. 10,000 per person
per annum for a mature well-functioning FPC.
8. It (FPO) is one of the important initiatives taken by the Department of
Agriculture and Cooperation of the Ministry of Agriculture to mainstream the
idea of promoting and strengthening member-based institutions of farmers. 
As per the concept, farmers, who are the producers of agricultural products,
can form groups and register themselves under the Indian Companies Act.
These can be created both at State, cluster, and village levels. It is aimed at
engaging the farmer companies to procure agricultural products and sell
them.  Supply of inputs such as seed, fertilizer and machinery, market
linkages, training & networking and financial and technical advice are also
among the major activities of FPO. The Small Farmers’ Agribusiness
Consortium (SFAC) has been nominated as a central procurement agency to
undertake price support operations under Minimum Support Price (MSP) for
pulses and oilseeds through the FPO’s.
9. Formation and Registration Any of the following combination of producers
can incorporate a producer company:  10 or more producers (individuals) 
Two or more producer institutions  combination of the above two (10+2)
The registrar under 30 days of receipt of all the required documents, after
becoming satisfied that the requirements of this act have been complied
with, issues a certificate. The liability of the members of the company is
limited to the amount of shares purchased by them
10. Management  No. of Directors should be 5 to 15  Directors should
be appointed within 90 days of incorporation  A full time CEO appointed
with substantial power of management  Share capital consists only Equity
 shares  Voting:  Single vote for every member (Individual producer)  On
basis of participation (institution producer)
11. Features of FPO  It is formed by a group of producers for either farm
or non-farm activities  It is a registered body and a legal entity  Producers
are shareholders in the organization  It deals with business activities related
to the primary produce/product  Common interest, It works for the benefit
of the member producers  Both long and short term objectives and plan of
action  Enrolment through membership fee  Democracy through regular
elections  Capacity of the organization should be strong to ensure its long
term stability and sustainability  Linkages and network with other Farmer
Producer Organizations  Committed leadership  A part of the profit is
shared amongst the producers, rest of the surplus is added to its owned
funds for business expansion
12. Need of FPO  The main aim of PO is to ensure better income for the
producers through an organization of their own.  Small producers do not
have the volume individually (both inputs and produce) to get the benefit of
economies of scale. Besides, in agricultural marketing, there is a long chain
of intermediaries who very often work non- transparently leading to the
situation where the producer receives only a small part of the value that the
ultimate consumer pays.  Through aggregation, the primary producers can
avail the benefit of economies of scale. They will also have better bargaining
power vis-à-vis the bulk buyers of produce and bulk suppliers of inputs.
13. Importance of FPO  Collective inputs purchase  Collective marketing
 Processing  Increasing productivity through better inputs  Increasing
knowledge of farmers  Ensuring quality  Marketing assistance  Technical
services  Saving and credit  Local development
14. Why farmers Producers organization  Farmers Producers
Organizations influence policies and demand for required services.  Farmers
can participate in the decision making process of the developmental
activities.  Service system becomes more effective and accountable  They
get better access to latest markets and technology  FPOs can involve in
Farmer and market led extension activities  Build interactions between
research, extension and farming systems  Enable farmers to organize
themselves for action or to share resources  Analyze farmers problems with
extension support  More services can be made available to farmers through
15. Steps in establishing FPO  Understanding the village community 
Identifying potential leaders in the community  Talking to the identified
leaders and seeking cooperation from other agencies  Helping local leaders
to call community meetings  Nominating core group leaders to develop the
FPO  Developing an organizational structure for the FPO & Developing the
FPO’s management through education and action learning  Gearing up for
action  Implementing selected projects  Monitoring and Evaluating the
FPO’s progress
16. Structure of FPO Farmers producer organization General Body
Executive Body (2 representative per FIG) Board of Directors General
Manager FPO Staff Local resource person • Planning • Implementation •
Management
17. Activities of FPO  Management activities  Procurement of inputs 
Disseminating market information  Dissemination of technology and
innovations  Facilitating finance for inputs  Aggregation and storage of
produce  Primary processing like drying, cleaning and grading  Brand
building, Packaging, Labeling and Standardization & Quality control 
Management of fields (Collective production)  Bulk purchase of inputs 
Collective requests for credit  Management of selling of produce  Advice to
producers & training to farmers  Marketing to institutional buyers
18. Who provides support to FPO  There are many organization who
supports FPO’s. They supports FPO financially and technically for the
promotion and handholding of FPO.  NABARD  SFAC  Govt departments 
Corporates  Domestic and international Aid agencies  NGOs
19. Services provided by FPO Financial services Input- supply services
Marketing services Technical services Networkin g services
20. Financial services: The FPO will provide loans for crops, purchase of
tractors, pump sets, construction of wells, laying of pipelines. The FPO will
provide various insurance like Crop Insurance, Electric Motors Insurance and
Life Insurance.  Input Supply Services: The FPO will provide low cost and
quality inputs to member farmers. It will supply fertilizers, pesticides, seeds,
sprayers, pump sets, accessories, pipelines • Procurement and Packaging
Services: The FPO will procure agriculture produce from its member farmers;
will do the storage, value addition and packaging.  Marketing Services: The
FPO will do the direct marketing after procurement of agricultural produce.
This will enable members to save in terms of time, transaction costs,
weighment losses, distress sales, price fluctuations, transportation, quality
maintenance etc.
21. Technical Services: FPO will promote best practices of farming,
maintain marketing information system, diversifying and raising levels of
knowledge and skills in agricultural production and post-harvest processing
that adds value to products.  Networking Services: Making channels of
information (e.g. about product specifications, market prices) and other
business services accessible to rural producers; facilitating linkages with
financial institutions, building linkages of producers, processors, traders and
consumers, facilitating linkages with government programs.
22. Input Supply Services (Seeds, Fertilizers & Machinery) Financial
Services (Credit, Saving, Insurance, extension) Marketing linkage services
(Contract farming, Procurement under MSP) Training and Networking
Services (HRD, Policy Advocacy, Documentation ) FPO
23. Types of FPO’s  Community based, resource oriented farmer producer
organization  Commodity based, market oriented farmer producer
organization
What is Cybersecurity?
Cybersecurity is the practice of protecting electronic systems like computers
etc. and data from malicious attacks. It is also called Information technology
security or electronic information security. Cybersecurity means the body of
technologies and practices designed to protect networks, devices etc. from
attack, damage from any unauthorized access.
What is the need for Cybersecurity in digital banking?
The primary purpose of Cybersecurity in digital banking is to protect the
customer’s assets. As people go cashless, more and more activities or
transactions are done online. People use their digital money like credit cards
and debit cards for transactions which require to be protected under
Cybersecurity.
Cybercrimes in digital banking not only affects the customer, but it also affects
the banks while they attempt to recover the data. The banks may require
spending a considerable amount of money to recover the data or information. 
A strong Cybersecurity is a must for banks as data breaches may make it
tough to trust financial institutions. It may cause severe problems for banks.
Cybersecurity in digital banking ensures that your sensitive data is safe and
secure, which if revealed, could cause a lot of problems like fraud.
One’s data can be easily breached if it is not protected under Cybersecurity. It
may cause substantial financial loss to a person and mental stress in a case
where cybercrime occurs.
Threats for Cybersecurity in Digital Banking
Without a robust Cybersecurity measure in place, your sensitive data may be
at risk.
In this segment, we shall cover the biggest threats to the Cybersecurity
of banks.

 Unencrypted data
It is one of the common threats faced by the banks where the data is left
unencrypted, and hackers or cybercriminals use the data right away, thereby
creating severe issues for the financial institution. All data that is stored on
computers in financial institutions or online must be fully encrypted. It will
ensure that even if your data is stolen, cybercriminals may not be able to use
them.
 Malware
End to end-user devices like computers and mobile devices are mostly used
for conducting digital transactions; therefore, it must be secured. If it is
compromised with malware, then it may pose a serious risk to the bank’s
Cybersecurity whenever they connect with your network.
Sensitive data passes through this network, and if the user device has
malware installed in it without any security that malware can pose a serious
threat to your bank’s network.
 Third-party services
Many banks and financial institutions use third-party services from other
vendors to serve their customers better. However, if these vendors don’t have
a tight Cybersecurity measure, then the bank that has employed them will
suffer badly.
 Spoofing
This is one of the newest forms of cyber threats faced by banks. The
cybercriminals will impersonate a banking website’s URL with a website that is
similar to the original one and functions the same way and when the user
enters his or her login credentials that login credentials are stolen by these
criminals and use it later.
This cyber threat has gone to the next level where new spoofing techniques
have been employed by these criminals. In this, they use a similar URL and
target users who visit the correct URL.
 Phishing
Phishing means the attempt to get sensitive information such as credit card
details etc. for malicious activities by disguising as a trustworthy entity in an
electronic communication. Online banking phishing scams have evolved
continuously. They look to be genuine and real, but they fool you into giving
away your access information.
Cases of attack in Cybersecurity in Digital banking
According to a global economic crime survey, cybercrime has increased like
never before and is the most reported economic crime. With the world going
digital, Cybercriminals have also found new ways to attack and breach data.
In India, banks have seen relentless attacks from organized criminals and
hackers. It was illustrated in a recent case with Canara Bank where a hacker
attacked and defaced the bank’s site by inserting a malicious page and tried
blocking some of the bank’s e-payments.
Another case of an attack in Cybersecurity in digital banking took place with
Union Bank of India where it accounted for a huge loss. The attackers gained
entry using spoofed RBI ID’s and one of the officials fell prey to the phishing
e-mail and clicked on a suspicious link which led to the malware exploiting the
system.
Due to the effective action from the Union Bank of India, a massive loss was
avoided. It was only possible because of the incident response readiness from
the bank.
Our recommendation: Covid-19 Impact on Digital Banking in India
What are the challenges relating to Cybersecurity in
digital banking?
Some of the factors have posed a serious challenge to the
Cybersecurity in digital banking. These are mentioned below:

 Lack of Awareness
Awareness among the people regarding the Cybersecurity has been quite
low, and not many firms invest in training and improving the overall
Cybersecurity awareness among the people.
 Inadequate Budgets and Lack of Management
Cybersecurity is accorded low priority; therefore, they are most of the time
neglected in the budgets. Top management focus also remains low on
Cybersecurity, and support for such projects is given low priority. This may be
because they misjudge the impact of these threats.
 Weak Identity and Access Management
Identity and access management has been the fundamental element of
Cybersecurity and especially in these times when the hackers have the upper
hand; it may require only one hacked credential to enter into an enterprise
network. There has been a slight improvement in this regard, but still, a lot of
work remains to be done in this area.
 Rise of Ransomware
The recent events of malware attacks bring our focus to rising menace of
ransomware. Cybercriminals are starting to use methods that avoid them to
be detected by endpoint protection code that focuses on executable files.
 Mobile devices and Apps
Most of the banking institutions have adopted mobile phones as a medium to
conduct business. As the base increases each day, it also becomes the ideal
choice for exploiters. Mobile phones have become an attractive target for
hackers as we see a rise in mobile phone transactions.
 Social Media
Adoption of social media has led to hackers to exploit even more. Less aware
customers put out their data for anyone to see which is exploited by the
attackers.
What is the solution to the threat to the Cybersecurity
in digital banking?
There are certain approaches that can be followed to curb the threat to the
Cybersecurity in digital banking.
Some of the measures are specified below:
 Integrated Security
As BFSI[1] is highly regulated, banks invest time, money, and effort in
employing the best technology which may be sometimes difficult to manage
together. Moving towards integrated security where all components work and
communicate together is more beneficial.
 Machine Learning and big data analytics
Analytics is an essential element in leveraging cyber resilience. A new
generation of security analytics has come out which can store and assess a
huge number of security data in real-time.
 Understand the importance of security
The mindset where security is seen as a cost must make way for security as a
plus. The risk of security threats and its impact must be analyzed then only
the importance of security can be truly understood.
 Invest in Next-generation endpoint protection
Banks and institutions must invest in technologies that can recognize and
eliminate the practices and actions used in exploits.
 Protect information
Today the data is stored in different devices and in the cloud, so every system
that holds the sensitive data must be protected with security.
 Consumer Awareness
It is one of the important aspects where the consumer must be made aware of
not disclosing their banking credentials to anyone. They must report to the
Cybersecurity cell in case of any suspicious developments in their
transactions or in their bank account as quickly as possible.
 Anti-virus and Anti-malware applications
A firewall may increase protection, but it won’t stop attack unless updated
anti-virus and anti-malware applications are used. Updating to the latest
application can deter potentially disastrous attacks on your system. 
 Legal Entity Identifier for Large Value Transactions in Centralised Payment Systems

The Legal Entity Identifier (LEI) is a 20-digit number used to uniquely identify parties to financial
transactions worldwide. It was conceived as a key measure to improve the quality and accuracy of
financial data systems for better risk management post the Global Financial Crisis.

LEI system for all payment transactions of value ₹50 crore and above undertaken by entities (non-
individuals) using Reserve Bank-run Centralised Payment Systems viz. Real Time Gross Settlement
(RTGS) and National Electronic Funds Transfer (NEFT).

i. entities who undertake large value transactions (₹50 crore and above) to obtain LEI in time, if they do not
already have one;

ii. include remitter and beneficiary LEI information in RTGS and NEFT payment messages

iii. maintain records of all transactions of ₹50 crore and above through RTGS and / or NEFT.

Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal
Entity Identifier Foundation (GLEIF), the body tasked to support the implementation and use of LEI. In
India, LEI can be obtained from Legal Entity Identifier India Ltd. (LEIL) ( https://www.ccilindia-lei.co.in),
which is also recognised as an issuer of LEI by the Reserve Bank under the Payment and Settlement
Systems Act, 2007.

SARFAESI-2002

 Enforcement without court’s intervention

 Moveable & Immoveable except Agri
 ARC
 Takeover of Management of the entity

Requirements:
 A/c must be NPA
  More than 1 lakh & > 20% of P & I
 Security documents in order
 Within limitation period
 CERSAI registered
 Consent of >60% in consortium

Cannot be acted on

 Less than 1 lakh o/s & <20% pf P and I

 Agri land, Aircraft & Ship vessel, tools of artisans etc
 Assets of unpaid seller as per sec 47 of Sale of Goods Act

SOP

A/c turns NPA 60 days Demand Notice (Sec 13-2) within 3 days to
borrowers/Guarantors
By 13 days It has to acknowledged by all (Reg AD)
By 23 days If not acknowledged
Affix Notice on house/business premises
News paper advt
Representation by the party Under Sec 13-3A
To be replied by AO in 15 days
After expiry of 60 days notice Take symbolic possession
(in 3 days) Possession Notice Sec 13-4
Next 7 days Publish symbolic possession notice in newspaper
Apply to CJM/DM for physical possession-if necessary (Sec 14)
File caveat with DRT/HC, if necessary
In case of peaceful possession Obtain valuation and fix Reserve Price
Next 7 days
Next 3 days Publish Sale Notice (30 days)
In case of “applied for physical CJM/DM to order in 60 days for physical possession
possession with CJM”
Next 7 days Branch to get physical possession with the help of Revenue/Police
Next 25 days Physical possession to be completed
Auction 25% on the same/next day
75% in 15 days (extendable to 3 M)
DRT/DRAT the borrowers can approach firstly the DRT and thereafter the
DRAT in appeal. The limitation period is 45 days and 30 days
respectively.
Amendment  Banks and asset reconstruction companies (ARCs)
will be allowed to convert any part of the debt of the
defaulting company into equity.
 The amendments also allow banks to bid for any
immovable property they have put out for auction
themselves, if they do not receive any bids during the
auction.
 Banks can then sell this property to a new bidder at a
 later date to clear off the debt completely.

Debt Recovery Tribunals (DRTs)

OBJECTIVE
DRT is constituted under Recovery of Debts Due to Banks and Financial
Institutions Act, for fast and speedy recovery of debts within 180 days from the
receipt of Application.
COMPOSITION OF DRT - Recovery Officer, Registrar, Assistant Registrar,
Presiding Officer –Appointed by Central Govt. Qualification - District Judge
cadre, 5 yrs term.
Recovery Officer Duties
 execute the Recovery Certificate issued by PO after hearing the Original
Application.
 No objection to the Recovery Certificate on any ground shall be entertained by
the RO and has got no power to decide any legal question arising out of the final
order, at the time of execution of the final order.  He shall make recovery by
any of the modes as provided by Chapter V of the Act.
Registrar
Duties  The Registrar is custodian of record of the DRT as well as of the seal of
the DRT.
Seal of DRT can be used only under authority of Registrar in normal course or
upon a specific direction by PO of the DRT only.
 The Registrar has authority to receive all documents/applications on behalf of
DRT and will examine them so that the same conforms to the Rules/Regulations
of the DRT.
 He/she may direct any party before DRT for carrying out necessary
amendment in the documents or for payment of proper Court fees and may fix
date of hearing before PO.
Assistant Registrar shall assist the Registrar in the work relating to the Registry
and Administration of the DRT.
 Bad loans and Non-Performing Assets (NPAs)  are a perpetual source of

trouble for banks in India. This was an acute problem in the period before
1993, as such cases were listed in civil courts where the proceedings used to
drag on for years.
 In 1993, the Recovery of Debts due to Banks and Financial Institutions
(RDDBFI) Act was passed which led to the establishment of Debt Recovery
Tribunals (DRT) to facilitate the debt recovery involving banks and other
financial institutions.
 The Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest (SARFAESI) Act passed in 2002 also provides access to
DRTs.
 Recovery of Debts due to Banks and Financial Institutions (RDDBFI)
Act
 The RDDBFI Act provides speedy redressal to lenders and borrowers through
the filing of Original Applications (OAs) in Debts Recovery Tribunals
(DRTs) and appeals in Debts Recovery Appellate Tribunals (DRATs).

What are Debt Recovery Tribunals (DRT)?

 DRTs and DRATs are established by the Central Government and consist of
one person each referred to as the Presiding Officer of the Tribunal and the
Chairperson of the Appellate Tribunal respectively.
 DRTs are empowered to go beyond the Civil Procedure Code and pass
comprehensive orders. It can hear cross-suits, counterclaims and allow set-
offs.
 DRTs were empowered to adjudicate claims equal to or greater than ten lakh
rupees. This limit was raised to twenty lakh rupees in 2018.
 After adjudication, the DRT issues order and Recovery Certificate, certifying
the amount payable by the borrower. This is executed by Recovery Officers as
per the procedure for recovery of income tax.
 There are 39 DRTs and 5 DRATs at present.

Jurisdiction of Debt Recovery Tribunals

 DRTs can entertain applications from banks and financial institutions for
recovery of debts (>20 lakh) which are due to them.
 The banks may make an application to the Tribunal within the local limits of
whose jurisdiction the defendant resides or carries on business.
 The Act bars all other Courts from the adjudication of matters relating to debt
recovery apart from the Supreme Court and High Court.

Proceedings of Debt Recovery Tribunals

 Banks need to make an application to the DRT which has jurisdiction in the
region in which the bank operates and pay the required fees.
  The defendant shall present a written statement of his defence before the first
hearing and set up a counter-claim during the course of the hearing.
 The Tribunal may, after giving the applicant and the defendant an opportunity
of being heard, pass such interim or final order.
 The interim order passed against the defendant can restrict him from
disposing or transferring his property without the prior assent of the Tribunal.
 DRT after hearing both the parties and their submissions would pass the final
judgment within 30 days from hearing. DRT will issue a Recovery Certificate
within 15 days from the date of judgment and pass on the same to Recovery
Officer.
 The Tribunal may direct the conditional attachment of the whole or any
portion of the property specified by the applicant.
 The Tribunal may also appoint a receiver and confer him all powers to defend
the suit in the court and to manage the property.
 Where a certificate of recovery is issued against a company registered under
the Companies Act, 1956 the Tribunal may order the sale proceeds of such
company to be distributed among its secured creditors.

Appeal

Any person (bank or financial institution or borrower) who is aggrieved by an

order of the DRT under this act, may prefer an appeal to DRAT having
jurisdiction in the matter.  No right to appeal to the parties wherein order is
passed by the DRT in pursuance of the consent between the parties.  Every
appeal should be filed within 30 days from the date copy of order of the DRT is
made available to the appellant.  If the DRAT is satisfied that there was
sufficient cause for not filing an appeal within the stipulated period, then DRAT
may allow such appeal even after expiry of 30 days.

Appeal against the order of DRT in DRAT (SECTION 20). The Borrowers
shall deposit with the DRAT 50% of the debt due from him to the Bank or
Financial Institution. The DRAT may, for reasons to be recorded in writing,
reduce the amount to be deposited but which shall not be less than 25% of the
debt due

Interim Relief sought

 To appoint a Commissioner for taking inventory of hypothecated assets and

to appoint Court receiver to take its possession
 Injunction to not sell uncharged properties
 Attachment before judgment of personal properties, LIC, MF, Lockers, FD etc
 Garnishee Order against Debtors of the borrower to directly credit to our loan
account
 Direction to surrender passport to DRT
 Direction submit annual IT/Wealth tax

IMP:
  Recovery Certificate issue should be in terms of Original Application (OA)
submitted.

 <20.00 lakh – Through civil court

 Private detectives may be engaged to know the uncharged assets

Civil suits:
 Mortgage suit : Against the mortgaged property.
 Ordinary/Money Suit : Based on loan documents.
 Summary Suit : Against Promissory Note/Guarantee document-Defaluter to
defend in 10 days
 Recovery Certificate & its execution
 Procedure - > File suit -> Obtain injunction for sale of properties ->
Attachment before Judgment -> Obtain Decree (All expenses to be part of
Decree) -> Within a month file Executive Petition (Even if the Debtor
APPEALS in higher court, we should go ahead with filing EP unless he gets
SPECIFIC STAY ORDER against filing EP)
 If decree involves > 1 debtor, EP can be against 1 or all of them.
 If decree is to be executed after 2 years / against the legal heirs, we have to
apply for “leave of the court”.
 Even in partnership firm, to execute decree against a partner who was made
party to the suit but not served notice.

DRT Procedure

Presiding Officer orders issuing Recovery Certificate -> Recovery Officer proceed for recovery ->
Attachment of immovable property & Appointing a Receiver to manage movable& immovable
properties -> Issue Garnishee Order to debtors of judgment borrower & sale of properties

LOK ADALAT

National Legal Services Authority Act, 1987

State, District, Taluk level

Outside the ambit of court

No court fee, mutually agreed terms. IOf not, can go ahead with normal suit/proceeddings

Once agreed, it is like decreed and binding on the parties.

It is like compromise settlement with the court mediation.

Case upto Rs 20.00 lakh

DRT also organizes Adalaths -> participate with prior approval by duly accounting to compromise/waiver
involved etc -> try to obtain decree / RC immediately
PWO/TWO

 NPA a/cs moved out of Br balance sheet, shifted to HO

 Br maintain only shadow balance -. Recovery in these a/cs is credited to P/L ac.
 NPA guidelines & recovery procedure apply for TWO accounts as well
 FWO, when there is no option left for recovery

NPV in compromise proposals

 NPV of Realizable value of security (Not distress value)

 NPV = P/(1+i)2 P-Realizable value, i-Discount rate 12%, 2 – Raised to
 RMCC – Can go 10% lesser than NPV
 Fraud A/c compromise – ZOCC/Head-Recovery/ED/MD Committee under their respective power
 Fraud a/c filed in CBI – Only MCB
 Staff /Staff guaranteed – In service/ceased to be in Bank for Less than 2 years – ED
 Staff /Staff guaranteed - > 2 years – ZMCC

IRAC Norms
When realizable value of security erodes >50% - direct doubtful
When realizable value of security is less than 10% of o/s – Loss asset
Govt guaranteed a/cs - > NPA when Govt repudiates
Project loan (Except CRE)–
DCCO extended by 2/1 yr in infra/other project – treat them SA, 0.40% provision
Court cases – Additional 2/1 yr

CAGR – Compounded Annual Growth Rate

CRAR – Capital to Risk Weighted Assets

TRADE RECEIVABLES DISCOUNTING SYSTEM (TReDS)"

 TReDSTReDS is a digital platform for MSMEs to auction their trade receivables at competitive rates
through online bidding by Financiers
 The objective is to address the critical needs of MSMEs
 Promptly finance trade receivables
 Financing trade receivables based on Buyers credit rating
 Settlement through NACH supports many-to-many situation
 Reversal of unsettled transactions handled automatically and resolves issues related to reconciliation
of payments
 The transactions are processed under TReDS will be without recourse to MSMEs.
TReDS Platform Participants
 Banks / Factoring Companies /NBFCs (Lender)
  (Seller)MSME
 Corporate/Govt Departments/PSUs/Others (Buyer)
RBI granted approval to 3 entities under the Payment and Settlement System (PSS) Act 2007 & Factoring Act
for setting up a (TREDS) platform.
1. A.TREDS LTD (Atreds/Invoicemart) – JV of Axis Bank and MJunction)
2. RXIL (Receievable Exchange of India Ltd – JV of NSE Strategic Investment Corporation and SIDBI
3. Mynd Solutions (M1 Exchange)
How it Works? Onboarding Factoring Unit Auction Process
Buyers and Sellers -> KYC documentation -> Execute Agreement & resolution -> On boarded on TReDS
platform
TReDS Process Flow:
 Supplier supplies the Goods /Services
 Supplier logs in and upload the invoice, transport documents, insurance policy, packing list etc
 TReDS validates the invoice, convert to factoring unit and publish for acceptance
 Buyer logs in and accepts the invoice
 TReDS publish the factoring unit for bidding with rating information.
 Financiers bid against the factoring unit
 Supplier accepts the Bids with best bid price (The margin not financed shall be settled b/w buyer and
seller)
 TReDS generate the settlement file to Dr financier and credit supplier (Only net of Interest amt is
credited)
 TReDs debit financier’s Bank account and credit supplier’s Bank account.
 TReDS on final due date generate final settlement file
 TReDS debit Buyer’s Bank account and credit Financer’s Bank account

Benefits
Supplier – Easy, fast finance at competitive rate and no recourse, simple documentation
Buyer – Better liquidity, optimum WC
Bank – Quality MSME portfolio/Better reach to new clientele/Better decision making
EWS for the Corporates (Buyers) having limit with our Bank
 Increasing interest rates offered by the Banks in TReDS for the Bills raised against the corporate.
 Delay in settlement of bills.
 Special requests for increasing the limits, extension of due dates etc
Action – Enrol maximum corporate customers under TReDS - > can utilize EWS alerts

Wealth Management Service

1. Insurance (Life, General and Standalone)

2. Mutual Fund
3. E-Trade service

IFLIC – BOB: 43.30%, Union Bank-29.53% and Warburg Pincus (Carmel Point Investment India P lTd)-
27.17%

General – NIC, Tata AIG and MS Chola

Health – Star Health and Max Bupa

MDRT –
  Association of Life Insurance Underwriters MDRT/COT/TOT-50/150/300 lakh
 Participation of only specified persons
 Business logged b/s Jan-Dec-20 & issued before 31 st Jan 2021

SAMPARK –

 Analytical data on life insurance

 URL is provided to branches for accessing prospective clients
 Prospective customers list contain
 Radiance customers
 Account holders (Liability customers) having life insurance with others
 Cross sell leads generated
 HL customers with no life insurance
 HL borrowers with other FI/NBFCs

Health

 Comprehensive (vast array of coverage, expensive)/ Scheduled (day to day health)

 Products for Individuals / Family / Fixed benefit

General

 Protection of Economic value of tangible assets against damage / loss.

 Shop keeper’s / Householder’s / Machinery / Equipment/Fire/Farmer’s package/Workmen
compensation/Marine Transit/Travelers’/Fidelity

Mutual Funds:

1. Growth / Equity Funds (Aggressive / Diversified Equity / Growth / Equity Index/Value

Funds/Specialty Funds)
2. Income (Diversified Debt Fund/Focussed/High Yield / Assured Income/Fixed Term Plan)
3. Balanced
4. Gilt
5. Other (Commodity / Real Estate / Fund of Fund/ Exchange Traded Funds

 An index fund is a portfolio of stocks or bonds designed to mimic the composition and
performance of a financial market index. Index funds seek to match the risk and return
of the market, on the theory that in the long-term, the market will outperform any single
investment
 Large cap - > 20000 cr market capitalization
 Mid cap – 5000 to 20000 cr market capitalization
 Small cap - <5000 cr market capitalization

Advantages of MF

 Professional Management
 Diversification
 Variety
  Low cost
 Liquidity
 Convenience’
 Protection

Baroda Wealth Solution

 Special software for offering investment solutions to our customers

 Should have account with us
 Details from Finacle only fetched
 Customers to submit ISA (Investment Service) Account opening form to on board. Any changes
in the details are to be modified in Finacle itself.
 Financial Txns through CTF (Common Transaction Form) only

FOREIGN EXCHANGE

TYPES OF EXPORT FINANCE:

Different types of export credit:

1. Pre- shipment finance (180-270 days)

2. Post shipment finance (180 days)
3. Export finance against the collection of bills.
4. Deferred export finance
5. Export finance against allowances and subsidies

1. Pre-shipment finance:
o Pre-shipment finance is provided when the exporter or seller wants the
payment even before the shipment of the products or goods. 
o Finance is provided for the purchase of raw materials/goods, processing
them into finished products, storage cost, packing and marking of goods
prior to shipment. 
o This type of finance is approved when a firm order is placed by the
importer 
o Also known as packing credit. 
o No fixed criteria, need based finance -> Pre-shipment finance is granted
for a period of 180 days as it is a working capital 
o In the case of unforeseen circumstances, it can be extended to 90 days.
The maximum period allowable is 270 days. 
o BOB- Export credit in FC is only through US dollar.
 o Backed LC / Export Order should be there (may not insist initially, but
should submit in 30 days) – can grant running limit.
o 10% Margin

2. Post shipment finance:

o After dispatching the goods to the importer, the exporter has to make a
bill, which is to be paid by the importer. It takes about 3 to 6 months
before the amount is received by the exporter. This time gap effects the
production of the exporter. For this purpose, the exporter will present the
bill to the financial institution which provides finance for exports. The bank
can purchase the bill or collect the bill or even discount the bill. 
o Post shipment finance is used to pay the wages or other services. 
o To pay for cargo/shipping chargers 
o To pay for advertising in overseas market for promotion 
o The rate of interest on post-shipment finance varies from minimum 90
days and can be extended based on individual financial institution. 
o FIFO base – Export bills have to be offset with Preshipment credit.
o Finance upto 100% of the Bill.
o Max period for realization of Bill – 180 days.

3. Export finance against the collection of bills:

The finance or loan can be obtained by the exporter based on the bills of the
purchase made by the importer or overseas company. In the case of any
default, the finance company will compensate about 80% of the default
amount. It is considered as post shipment finance. 

4. Deferred export finance:

o Finance is also available for the importers / oversea buyers to facilitate
import of goods. There are two types: 
1. Suppliers finance – finance is provided to the exporter (example India) by
exporter’s bank (Indian bank) to sell the goods on the installment basis. 
2. Buyers finance – finance is provided to an overseas buyer by the
exporter’s company. This enables the overseas buyer to pay for
equipment or machinery purchased from the exporter company (example
Indian company).
5. Export finance against allowances and subsidies:
In circumstances when there is unexpected rise in expenditure due to national
and international changes, the government provides allowances or subsidies
for export of goods at the reduced price to the importer.
BOB:

ECGC for pre-shipment to be borne by the customer & post ship-by Bank, Under Export Gold Card – Both
by Bank, For Diamond, Gems & Jewellery-not covered under Whole Turnover basis, exporters to bear
the cost.

ECGC Buyer wise policy (Against the default on the part of the buyers) – to be obtained by exporters.

Export credit proposals to be rejected by next higher authority.

FCNR(B) Loan:

Min- 0.50 million USD

LIBOR linked

BOB – FCNR(B) in 6 currencies – USD, Canadian Dollar, Aust Dollar, Euro, Japanese Yen & Pound Sterling.

What Is Import Finance (Trade Credit Framework of Foreign Trade

Policy)?
Import finance makes up the credit options which allow international traders to get rid
of their cash flow issues. Essentially it helps import traders to bring goods into the
country and also helps to fund their business goals.
Based on regional context, it can also be called trade, inventory or stock finance. It is
often considered as a financing option that comes in handy to meet immediate capital
requirements and is usually provided by a third-party. 
Typically, the need to seek import finance occurs due to the challenges that surround
international trade. The funding option thus often serves as a financial cushioning for
importers.
Usually, goods like soft commodities, cars, metal, furniture, oil, television, clothing,
children’s toys, etc. qualify for import finance. 
BOB –
Trade credit for import of Non capital good – 1 yr from date of shipment / operating
cycle whichever is earlier.
Trade credit for import of capital good – 3 yr from date of shipment.
Max through Automatic route – 50mill USD (150 mill USD for oil/natural gas, shipping,
airline) – Beyond this –RBI approval route.
No hedging for Sight LC
Hedging from the date of acceptance of Bills for Usance LC.
Hedging can be waived by obtaining cash margin:
1 5 to 8% cash margin Zonal Head
2 8 to 10% ---- Regional Head
3 10-15% Branch Head

Or additional 0.50% commission to be charged in lieu of hedging.

Types of Import Finance:

Here are the essential types of import finance you should know about –

 Usance And Standby Letter Of Credit:

When an importer avails a usance Letter of Credit or Deferred Payment Letter of Credit,
it helps them to defer payment against a purchase. As a result, the importer or buyer
gets more time to manage funds or sell imported goods. On the other hand, when a
Standby Letter of Credit is used for a transaction, it provides a guarantee of payment to
sellers.
Though it helps to avoid the risk of default, it is treated as a last resort. Traders who
take part in export and import of goods frequently often prefer Letter of Credit over other
financing options.

 Bank Guarantee:
It serves as a guarantee of a buyer’s creditworthiness and is issued by banks. It
protects the concerned party against any loss arising due to the other party’s inability to
meet contract terms. It is used by individuals who deal in bidding on infrastructure
projects. 

 Asset-Based Facility:
This funding option allows importers to avail loan against assets. Typically, individuals
avail this asset-based loan option by securing any of the following –

o Inventory
o Equipment
o Buildings
o Accounts receivable
 o Other assets in the balance sheet

 Invoice Financing:
With this funding option, one can sell their accounts receivables to raise capital.
Financial institutions may provide up to 50-80% of invoice value as loan and help
businesses cater to their immediate requirements conveniently. Also, the fund received
helps to improve cash flow and maintain working capital of the company successfully.
Based on a business’s requirement and its cash cycle, importers should select a
suitable import financing option. KredX provides quality financing solutions like invoice
discounting services to help solve immediate cash flow related issues and will help
reach the required working capital successfully. 

ECB

Commercial loans raised by resident entities from recognized non-resident entities.

In the form of loans, FCCB, Debentures, Bonds, Trade credit not less than 3 yrs

Either Fully Convertible Foreign Currency / Rupee

Eligible borrowers-

Through FCY All under FCY and

Entities eligible for FDI Registered entities involved in microfinance viz.,
Entities set up in SEZ Not for profit companies, NGOs, Societies etc
SIDBI and EXIM Bank

Eligible lender must be resident of the country who is member of FATF (AML then financial terrorism) /
IOSCO.

Min Average maturity is 3 years

ECB cannot raised from foreign branches of Indian Banks. However can become arranger.

End use – As per negative list of ECB like Real Estate, Equity investment, etc

Fund raiser should follow hedging rules as per the sectoral norms

Change of currency from one FCY to another or INR is permitted.

Max – 50 mill dollars (150 million dollars in case of specific sectors)

Foreign Currency Non-Resident (FCNR) accounts

 As an FCNR account holder, you can maintain your deposit in various currencies
including USD, GBP, EUR, JPY, AUD, CAD, SGD, CHF & HKD
 The tenure of these deposits can range between 1 year and 5 years
 The amount you deposit and the interest earned are fully repatriable
 FCNR account allows automatic renewal of deposit on maturity
 FCNR deposits are not taxable in India

SNRR Account (Special Non Resident Rupee) Account

 Like NRO Account

 For crediting income earned in India (other than interest/rent etc) through
business/investments.
 Income is repatriable unlike NRO

Brands & Other intangible Assets as security (Brand, Goodwill, Trademark:

C & I Only
Min internal rating – BOB2

Min External rating – A

Intangible assets should be distinct and identifiable

Min DSCR – 1.5

Exclusive / Pari-passu charge

Irrevocable POA from the Corporate in favor of Bank assigning the intangible assets.

Quarterly statement of revenues through these intangible assets to be submitted

Registration of charge on these with ROC.

General principles of Processing

Due diligence Market analysis:

KYC-AML-CFT
Promoters / Senior Management – Experience, professionalism, Governance
sanctions /penalty.
Wilful defaulter’s List
CRILC
ECGC Caution list
SEBI Banned list
Disqualified Directors from MCA
Central Fraud Registry (CFR)
Credit Beareau reports (Retail – >5lakh, HL - >10 lakh, commercial >25 lakh – 2
reports)
Enhanced due diligence:
List of shareholders (>5%)
Complete ownership structure in multilayered companies
Details of shares pledged/loans obtained by pledging shares/details of pledgees
and deployment of funds raised.
Related party transactions (if >10% of sales) – Auditor’s quarterly certificate
Valuation of Market value (HL), Realizable value (Other Loans), distress value.
immovable Acquired < 3 yrs – Registered value / Realizable value, whichever is less.
properties Other than retail-Value > 10 cr – 2 reports.
Traders & ML >2cr – 2 reports
Fresh valuation within 3 yrs
Sugar – Avg of last 3 months/present market price whichever is low
Gig Economy:

A gig economy is a free market system in which temporary positions are

common and organizations hire independent workers for short-term
commitments. Examples of gig employees in the workforce could include work
arrangements such as freelancers, independent contractors, project-based
workers and temporary or part-time hires.

There are a number of forces behind the rise in short-term jobs. For one, the
workforce is becoming more mobile and work can increasingly be done
remotely via digital platforms. As a result, job and location are being
decoupled. That means that freelancers can select among temporary jobs and
projects around the world, while employers can select the best individuals for
specific projects from a larger pool than what's available in any given area.

 Digitization 
 Flexible workforce 
  Change Jobs 

New Farm Laws:

1. The Essential Commodities (Amendment) Bill, 2020:

Key provision: It allows for regulating the supply and stock limit of certain
specified agricultural produce under extraordinary circumstances such as an
extraordinary price rise and natural calamity of grave nature, etc.
Issues:
 Any action on imposing stock limits will be based on the price trigger.
 Horticultural produce, a 100 per cent increase in the retail price of the
commodity over the immediately preceding 12 months or the average
retail price of the last five years, whichever is lower, will be the trigger for
invoking the stock limit for such commodities.
 Non-perishable agricultural foodstuffs, a 50 per cent increase in the
retail price of the commodity over the immediately preceding 12 months or
the average retail price of the last five years, whichever is lower.
 This stock limit regulation will not be applicable for value chain participants of
any agricultural produce if their stock limit remains within their installed
capacity.
 It will also not apply to exporters if they can show demand for export.

2. The Farmers’ Produce Trade And Commerce (Promotion And

Facilitation) Bill, 2020:

Key provisions:

 freedom to the farmer to indulge in intra-state or inter-state trade in

areas outside the APMC mandis.
 No market fee or cess under the state APMC Acts  with respect to such
trade outside the APMC market yards (Clause 6).
 Overrides over the inconsistent provisions of the State APMC Acts.
 Also, the Central Government has been given powers to frame rules
and regulations under the Act.

Issues:

 This leads to a situation where local farmers do not find adequate

demand for their produce at MSP in the local market.
 Since most farmers are small or marginal landowners, they do not have
wherewithal to transport their produce to large distances.
  Hence, they are forced to sell them at a lower price than the MSP in the
local market itself.

3. The Farmers (Empowerment and Protection) Agreement on Price

Assurance and Farm Services Bill, 2020:

Key provision: It seeks to create a legal framework for contract farming in

India.
There are two broader concerns here:

 The negotiating power of the two parties involved.  It seems likely that
individual farmers might not find themselves equipped or powerful enough
to negotiate with corporates or big-pocket sponsors to ensure a fair price
for their produce.
 The quality aspect will become crucial when a few corporates will try
to usher in uniformity which might end up adversely impacting the
already skewed agro-ecological diversity in the country.

Video KYC / V-CIP

The Reserve Bank of India (RBI) has amended the Know Your Customer (KYC)
norms allowing the banks, lending companies and fintech startups to remotely
complete KYC of customers through video. Lenders can use this facility as an
alternative to the already available e-KYC facility. The central bank, however, said
that the Video-based Customer Identification Process (V-CIP)  will be consent-
based. This means that banks will have to initially take the consent of customers to
perform the video-based KYC.
Here are the steps for video-based KYC:
a. Bank to develop an application.
b. Accessed only through login-id and password or Live OTP or Time OTP.
c. The customer will have to visit the Branch.
d. The background -white colour and no other person should come into the frame
while capturing the live photograph of the customer.
e. The live photograph of the officially valid document should be captured
vertically from above.
f. All the entries in the application form will be filled according to the documents
and information furnished by the customer.
g. In the documents where Quick Response (QR) code is available, such details
will be auto-populated by scanning the QR code instead of manual filing of
details.
h. Once the above mentioned process is completed, a One Time Password (OTP)
message containing the text that ‘Please verify the details filled in form before
sharing OTP’ would be sent to customer’s mobile number.
i. Upon successful validation of the OTP, it will be treated as customer signature
on the application.
j. The application will then give message about the completion of the process.
The authorised officer will further check and verify if the live photograph of the
customer matches with the photo available in the document and all other
necessary details.
k. On successful verification, the application form should be digitally signed by
authorised officer.
l. He will then take a print of the application form, get signatures/thumb-impression of
customer at appropriate place, then scan and upload the same in system. Original
hard copy may be returned to the customer, RBI mentioned in the circular.

NBFC - Four-layer pyramid structure, with progressive levels of regulation

 NBFCs grouped in four layers -- Base Layer (BL), Middle Layer (ML), Upper
Layer (UL) and a possible Top Layer (TL).
 There will be least regulatory intervention for NBFCs in BL. As one moves up the
pyramid, the regulatory regime will get stricter.
 Bank-like regulations for the top 25 to 30 NBFCs in the country.
Base Layer
 Non systemically important,(NBFC-ND/Non-Deposit taking),
 Peer to Peer lending platforms, Account Aggregators, Non-Operative Financial
Holding Company,
 NBFCs up to Rs 1,000 crore asset size.
 To avoid entry of non serious plyares, revise these norms for NBFC-BL from Rs
2 crore to Rs 20 crore.
 Revise NPA norms of 180 days to be harmonized with 90 days for NBFC-BL.
Middle layer
 Systemically Important – Non Deposit Taking NBFCs (NBFCs -ND-SI), Deposit-
taking NBFCs, Housing Finance Companies, Infrastructure Finance Companies,
Infrastructure Debt Funds, Standalone Primary Dealers and Core Investment
Companies.
 No change in Capital requirement
 Exposure to be changed from “Owned Funds” to Tier-I capital.
 Credit concentration limits 25 per cent for the single borrower and 40 per cent for
a group of borrowers of Tier 1 capital.
  NBFC-ML: IPO financing - Max Rs 1.00 cr per borrower limit
 Land acquisition - Sub limit within the CRE exposure ceiling.
 Restrictions on lending - No loans to companies for buy back of
shares/securities
 Sale of stressed assets by NBFCs - similar to banks.
 CBS compulsory for NBFCs with 10 or more branches.
 Tenure of statutory auditors - three consecutive years .
 Independent Chief Compliance Officer should be appointed.
 Revision of disclosures norms as prescribed for banks.
Upper Layer
 Systemically significant NBFCs – can impact financial stability
 New regulatory superstructure – Bank like.
 Not more than 25 to 30 NBFCs will occupy this layer.
 CET (Common Equity Tier) 1 at 9% capital could be introduced to enhance the
quality of regulatory capital.
 Differential standard asset provisioning on banks’ lines.
 Large Exposure Framework (LEF) as applicable to banks.
 Mandatory listing Listing Obligations and Disclosures Requirements as that of
Private Banks.
Top Layer
 Considered supervisory judgment might push some NBFC-UL to Top Layer for
higher regulation/supervision.
 These NBFCs will occupy the top of the upper layer as a distinct set.
 Ideally, this top layer of the pyramid will remain empty unless supervisors view
specific NBFCs.
 In other words, if certain NBFCs lying in the upper layer are seen to pose
extreme risks as per supervisory judgement, they can be put to significantly
higher and bespoke regulatory/ supervisory requirements.