Discussion Board

Ques: Banking reforms: Why privatization is better than mergers?

Ques: What is "On Tap Licensing"?

What is On Tap Licensing?

On Tap Licensing is one of the Reforms brought in by the RBI Governor Shri Raghuram Rajan which means Continuous Banking i.e. Now bank licensing process will no longer be a once-in-a-decade affair. It will be an ongoing process.From this point onwards, any eligible banking aspirant, individual or entity, can walk to the central bank with an application to start a full-service bank at any point. They don’t need to wait for specific announcement from the RBI or government on a brief window for bank licensing like that happened in 1993, 2001 and later in 2013.For Details Please click on the following Link:RBI on-tap bank licence

'Whether Competition among banks will cut SME borrowing cost’ ?

We reproduce below an article published in Business Line by Suresh P. Iyengar and invite Discussion from all concerned ‘Whether Competition among banks will cut SME borrowing cost’ ?

The cost of funding for micro, small and medium enterprises (MSMEs) can be bought down substantially by unleashing competition among banks. Removing restrictions on foreign banks opening more branches will do the trick, said Deepak Premnarayen, President-elect, Indian Merchant Chamber, in a chat withBusiness Line.

Dismissing the myth that foreign banks are not interested in servicing MSMEs, Premnarayen said the government and RBI should facilitate foreign banks to bring in more money and use technology to bring down cost. Foreign banks are currently allowed to open only 12 branches a year due to India’s commitment to WTO.

“RBI should allow foreign banks to open at least 100 branches a year and channel more fund into the banking system by implementing capital account convertibility. The sea change in the way telecom services were offered before and after liberalisation is there for all to see,” said Premnarayen, who is the Non-Executive Director of FirstRand Bank and Executive Chairman of ICS Group which is into financial services.

Large corporates get funding at 8 per cent while MSMEs are left to borrow at 16-18 per cent through informal sources. Though foreign banks service MSMEs currently, the scope is limited by operational constraints, he said.

The business opportunity is huge as India has over 45 million SMEs, accounting for nearly 40 per cent of gross domestic product.

According to a recent RBI study, there are about 240,000 unlisted small- and medium-sized enterprises (SMEs) and their earnings growth has outpaced listed companies in the past three years.

Premnarayen said foreign banks can use technology and bring down the cost of processing loans and use the cost saving to help MSMEs mend their accounting procedures. Today, banks spend of about ₹200-300 to process a loan application. It can be bought down to ₹50 if processed electronically, he said.

How do you solve this problem as branch manager ?

1. A good customer issues a cheque say for Rs.30,000 without sufficient balance in the savings account and it bounces. The customer has no ill intentions and this has happened inadvertently. 2. The customer gets a mobile alert telling that the cheque is returned and is advised to contact the branch. The branch (eg.in Mumabi) says that cheque clearance is done at NBOs and hence, they have no control. The branch puts a penalty of say Rs. 200. and the same is debited from his savings account. 3. The customer is informed by the intended beneficiary that since the cheque is bounced, they will not accept the same through cheque again but only through cash or DD. They also put Rs. 500. as penalty. 4. How the branch manager has to address this problem to the satisfaction of his good customer ?

What is Dosa Economics?

1. What is a bond?

2. What are corporate bonds?

3. What are government bonds?

4. What are zero coupon bonds?

5. What are inflation-indexed bonds?

6. What are foreign currency convertible bonds (FCCBs)?


Ques: What is interoperability?

What is Interoperability ?

Ans:It is the ability of different information technology systems and software applications to communicate, exchange data, and use the information that has been exchanged. This is used for Post Office Bank by the RBI. “India Posts, which had last year won a licence to operate a payment bank, has not been able to move much on starting operations. ” Interoperability will allow individuals to transfer money from their Post Office account to their accounts in any bank. Besides, the Post Office ATMs can be used for withdrawal of money from the bank accounts. For Details Please click on the following Link: RBI may soon allow interoperability of India Post’s payment bank ATMs

What is the Distinction between

1.Between Bills of Exchange and Cheque

2. Bill of Exchange and Promissory Note

Ans: Cheque, Bill of Exchange & Promissory Notes

What is the Difference Between Judicial & Non-Judicial Stamp paper ?

Stamp papers which would be used in courts like for payment of court fees is Judicial stamp paper. Stamp papers which would be used for execution of documents are called non judicial stamp papers. – Something which has relation to the administration of justice, judicial papers/stamps are used. Some thing with which is related to the transfer of property, commercial agreements, Power of Attorney etc, Non judicial stamp papers are used. – Judicial stamps are also known as court fee stamp paper. Now, when you are lodging any civil plaint or a complaint under the negotiable instruments act, you have to pay court fees which is proportionate to the amount of your claim. now, the clerks cannot be trusted with money which could go to a maximum of 3 lakhs. so in order to avoid this cash transaction, court fe stamp papers are made on which the case no, name of the parties and signature of advocates are put and attached to the end of the plaint.- Stamp Duty paid in respect of Non-Judicial stamp paper is paid under The Indian Stamp Act, 1899 and Stamp Duty paid in respect of Judicial stamp paper is paid under the Court Fees Act, 1870. (Source: CAClubIndia.com)


Whether it is Prudent to Laminate the Property Documents and Certificates ?

No it would not be prudent to Laminate the Document’s instead Make use of Government’s Initiative of “DIGITAL LOCKER”

Please read till the end : ?
CAUTION : Laminating Property Documents & Other Certificates

Most of us are tempted to get the documents laminated so as to preserve them.

“We had our property documents laminated for their safe keeping. This was years ago.
Recently we tried for a bank loan by mortgaging the property docs. At the final stage of verification of original documents, the Bank Lawyer flatly refused even to look at the documents saying that they are laminated. The reason being that, since they are laminated, the original documents cannot be differentiated from the colour photocopies. Appears, it was a hard learned truth as the Bank was duped by the colour photocopies of the original documents, duly laminated and presented.

We were asked to get the documents de-laminated ! else forego the loan.

The concept of de-laminating was something like “OMG, Is it possible ?” to us. We started searching those who can de – laminate documents.

The internet gave us the address of one at Lahore in Pakistan. That apart, we got another person in Bangalore who quoted Rs 3500 per document, with 20 documents on hand, we were looking at cool 70 K for de -lamination. We were about to be robbed.

At last we could find some one at Mysore who agreed for Rs 500 per paper. We rushed to Mysore from Bangalore, got them done. The whole experience has left us with lot of knowledge.

We have a lesson here. Pl do not laminate the original property documents. The Banks will not touch them. No loans can be taken on them. Even the buyers would hesitate at the time of sales. Further, Please be careful while receiving such laminated documents in a transaction. Whilst browsing, I have also come across where the people have run into Visa problems while submitting the laminated mark sheets, degree certificates.”


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