Mark Project Banking

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B a n k A c c o u n t

Open bank account - the most common and f i rs t serv iceof the banking sector . There are d i f ferent types of bankaccount in Ind ian banking sector . The bank accounts are

as fo l lows:

Bank Savings Account - Bank Savings Account canbe opened for e l ig ib le person / persons and cer ta inorganisat ions / agencies (as advised by ReserveBank of Ind ia (RBI) f rom t ime to t ime)

Bank Current Account - Bank Current Account canbe opened by ind iv iduals / par tnersh ip f i rms /Pr ivate and Publ ic L imi ted Companies / HUFs /

Speci f ied Associates / Societ ies / Trusts , e tc .

Bank Term Deposi ts Account - Bank Term Deposi tsAccount can be opened by ind iv iduals / par tnersh ipf i rms / Pr ivate and Publ ic L imi ted Companies /HUFs/ Speci f ied Associates / Societ ies / Trusts ,etc .

Bank Account Onl ine - With the advancement of technology, the major banks in the publ ic and

pr ivate sector has fac i l i ta ted the i r customer to openbank account on l ine. Bank account on l ine isregis tered through a PC wi th an in ternetconnect ion. The advent o f bank account on l ine hassaved both the cost o f operat ion for banks as wel las the t ime taken in opening an account .

Note: - A minor account can be opened but jo in t ly wi th aguard ian and on ly the gua rd ian would is a l lowed to

operate the account .

General procedure to open an account

The Bank wi l l prov ide you wi th deta i ls o f var ioustypes of accounts that you may open wi th the Bank.


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You can have your choice on what type of accountwould best sui t you, based on your needs andrequirements

The Bank wi l l , pr ior to opening an account , require

documentat ion and informat ion as prescr ibed by the"Know Your Customer" (KYC) guidel ines issued byRBI and or such other norms or procedures adoptedby the Bank pr ior to opening the account .

The due d i l igence process that the Bank wouldfo l low, wi l l invo lve prov id ing documentat ionver i fy ing your ident i ty , ver i fy ing your address, andinformat ion on your occupat ion or business andsource of funds. As par t o f the due d i l igenceprocess the Bank may also require an introduct ionfrom a person acceptable to the Bank i f they sodeem necessary and wi l l need your recentphotographs.

The Bank is required by law to obta in PermanentAccount Number (PAN) or General Index Register (GIR) Number or, where you do not possess suchregis t ra t ion, declarat ion in Form No. 60 or 61 as

speci f ied under the Income Tax Rules.

In the event that the account opening process isl ike ly to take longer than normal , the Bank wi l linform you of the revised t imel ine.

You can a lso ca l l your branch or the execut ive for any quer ies that you may have and the branch /execut ive wi l l rever t on the query at the ear l iest .

The Bank wi l l prov ide you wi th the account openingforms and other relevant mater ia l to enable youopen the account . Bank personnel wi l l advise youon the complete deta i ls o f in format ion that wouldbe required by the Bank for the ver i f icat ionprocess.


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The Bank reserves the r ight , a t i ts so le d iscret ion,to open any account and at such terms as the Bankmay prescr ibe from t ime to t ime

Plastic Money

Credi t Card | Debi t Card

Credit Card

Credi t cards in Ind ia is ga in ing ground. Anumber of banks in India are encouraging

people to use credi t card. The concept o f credi t card was used in 1950 wi th the launchof charge cards in USA by Diners Club andAmer ican Express. Credi t card however became more popular wi th use of magnet icst r ip in 1970.

Credi t card in Ind ia becamepopular wi th the in t roduct ion of fore ign banksin the country .

Credi t cards are f inancia l inst ruments, whichcan be used more than once to borrow moneyor buy products and serv ices on credi t .Basica l ly banks, re ta i l s tores and other businesses issue these.

Major Banks issuing Credit Card in India

State Bank of Ind ia credi t card (SBIcredi t card) Bank of Baroda credi t card or BoB credi t

card ICICI credi t card HDFC credi t card IDBI credi t card
http://finance.indiamart.com/investment_in_india/debit_card.htmlhttp://finance.indiamart.com/investment_in_india/debit_card.html


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ABN AMRO credi t card Standard Char tered credi t card HSBC credi t card Cit ibank Credi t Card

Precautions taken after receiving creditcardTo Avoid:

Bending the Card.

Exposure to e lect ron ic devices andgadgets.

Direct exposure to sunl ight .

Be caut ious about d isc los ing your account number over the phone unlessyou know you ' re deal ing wi th a reputablecompany.

Never put your account number on theouts ide of an envelope or on a postcard.

Draw a l ine through blank spaces on

charge or debi t s l ips above the to ta l sothe amount cannot be changed.

Don' t s ign a b lank charge or debi t s l ip .

Tear up carbons and save your receiptsto check against your monthlystatements.

Cut up o ld cards - cut t ing through the

account number - before d isposing of them.

Open monthly statements promptly andcompare them with your receipts. Reportmistakes or d iscrepancies as soon aspossib le to the specia l address l is ted on


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your s tatement for inqui r ies. Under theFCBA (credi t cards) and the EFTA (ATMor debit cards), the card issuer mustinvest igate errors reported to them

within 60 days of the date yours tatement was mai led to you.

Keep a record - in a safe p lace separatefrom your cards - of your accountnumbers, expi ra t ion dates, and thetelephone numbers of each card issuerso you can repor t a loss quick ly .

Carry on ly those cards that you

ant ic ipate you ' l l need.To Do:

Please s ign on the s ignature panel onthe reverse of the Card immediately witha non-erasable bal l -po int pen (preferablyin b lack ink) . Th is wi l l ensure that thebenef i ts of membership are yours andyours a lone.

Keep the Card in a prominent place inyour wal le t . You wi l l not ice i f i t ismiss ing.

Resons credit card being rejected at retai loutlet:

One may have exceeded the borrowingl imi t or defaul ted (constant ly) on

minimum payment due.

The Card is hot l is ted.

The card has crossed i ts expi ra t ion date.

Non-receipt o f dues of one-card b locksfuture transact ions on any other card(s)


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held of the same cardissuing bank.

The magnet ic s t r ipe on the reverse of the card is damaged i .e . has beenscratched or exposed to cont inuousheat /d i rect sunl ight or magnet ic f ie ld- l ikecard kept near a TV set / o ther e lect ron ic appl iances.

Systems or technology fa i lures have inrare instances a lso led to nonacceptance of cards when swipedthrough an Elect ron ic Terminal .

Global player in credit card market

MasterCard

MasterCard is a product o f MasterCardInternat ional and a long wi th VISA aredis t r ibuted by f inancia l inst i tu t ions aroundthe wor ld. Cardholders borrow money againsta l ine of credi t and pay i t back wi th in terest i f the balance is carr ied over f rom month to

month. I ts products are issued by 23,000f inancia l inst i tu t ions in 220 countr ies andterr i tor ies. In 1998, i t had a lmost 700 mi l l ioncards in c i rcu lat ion, whose users spent $650bi l l ion in more than 16.2 mi l l ion locat ions.

VISA Card

VISA cards is a product o f VISA USA andalong wi th MasterCard is d is t r ibuted byf inancia l inst i tu t ions around the wor ld . AVISA cardholder borrows money against acredi t l ine and repays the money wi th in teresti f the balance is carr ied over f rom month tomonth in a revolv ing l ine of credi t . Near ly 600mi l l ion cards carry one of the VISA brands


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and more than 14 mi l l ion locat ions acceptVISA cards.

Amer ican Express

The wor ld 's favor i te card is Amer icanExpress Credi t Card. More than 57 mi l l ioncards are in c i rcu lat ion and growing and i t iss t i l l growing fur ther . Around US $ 123 b i l l ionwas spent last year through Amer icanExpress Cards and i t is po ised to be theworld 's No. 1 card in the near future. In aregress ive US economy last year , the to ta lamount spent on American Express cards

rose by 4 percent . Amer ican Express cardsare very popular in the U.S. , Canada, Europeand Asia and are used widely in the reta i land everyday expenses segment.

Diners Club In ternat ional

Diners Club is the wor ld 's No. 1 Charge Card.Diners Club cardholders res ide a l l over the

wor ld and the Diners Card is a a l l t imefavour i te for corporates. There are more than8 mi l l ion Diners Club cardholders. They areaf f luent and are f requent t ravelers in premier businesses and inst i tu t ions, inc lud ingFor tune 500 companies and leading g lobalcorporat ions.

JCB Cards

The JCB Card has a merchant network of 10.93 mi l l ion in approx imate ly 189 countr ies.I t is suppor ted by over 320 f inancia linst i tu t ions wor ldwide and serves more than48 mi l l ion cardholders in e ighteen countr ieswor ld wide. The JCB phi losophy of " ident i fythe customer 's needs and p lease the


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customer wi th Serv ice f rom the Hear t " ispaying r ich d iv idends as the i r customersspend US$43 b i l l ion annual ly on the i r JCBcards.

Grace / Interest Free Period

The number of days you have on a cardbefore a card issuer s tar ts charg ing youinterest is ca l led grace per iod. Usual ly th isper iod is the number of days between thestatement date and the due date of payment.Grace per iods on credi t cards are usual ly 2-3weeks. However , there is l ike ly to be no

grace for ba lances carr ied forward f romprevious month and f resh purchasesthereaf ter i f any.

The fol lowing are some of the variet ies ofcredit cards in India

ANZ - Gold ANZ - Si lver Bank Of Ind ia - Ind iacard Bol - Ta j Premium Bol - Gold BoB - Exclus ive BoB - Premium Canara Bank - Cancard Cit ibank - Gold Cit ibank - Si lver Cit ibank WWF Card Cit ibank Visa Card for Women Cit ibank Cry Card Cit ibank Si lver In ternat ional Credi t Card Cit ibank Women's In ternat ional Credi t

Card Cit ibank Gold In ternat ional Credi t Card Cit ibank Elect ron ic Credi t Card Cit ibank Marut i In ternat ional Credi t Card


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Cit ibank Times Card Cit ibank Ind ian Oi l In ternat ional Credi t

Card Cit ibank Ci t i Diners Club Card

HSBC - Gold HSBC - Class ic ICICI Ster l ing Si lver Credi t Card ICICI Sol id Gold Credi t Card ICICI True Blue Credi t Card SBI Card Stanchar t - Gold Stanchar t - Execut ive Stanchar t - Class ic Thomas Cook Standard Chartered Global

Credit Card

Standard segregation of credit cards

Standard Card - I t is the most basic card(sans a l l f r i l ls ) o f fered by issuers.

Classic Card - Brand name for thestandard card issued by VISA.

Gold Card/Execut ive Card - A credit cardthat o f fers a h igher l ine of credi t than astandard card. Income e l ig ib i l i ty is a lsohigher . In addi t ion, issuers prov ide ext raperks or incent ives to cardholders.

Plat inum Card - A credi t card wi th ah igher l imi t and addi t ional perks than agold card.

Ti tan ium Card - A card wi th an evenhigher l imi t than a p la t inum card.

The fol lowing are some of the plusfeatures of credit card in India

Hote l d iscounts


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Travel fare d iscounts Free g lobal ca l l ing card Lost baggage insurance Accident insurance

Insurance on goods purchased Waiver of payment in case of acc identa l

death Household insurance

Some facts of credit cards

The f i rs t card was issued in Ind ia byVisa in 1981.

The country 's f i rs t Gold Card was a lsoissued f rom Visa in 1986.

The f i rs t in ternat ional credi t card wasissued to a rest r ic ted number of customers by Andhra Bank in 1987through the Visa program, af ter get t ingspecia l permiss ion f rom the ReserveBank of India.

The credit cards are shape and size, asspeci f ied by the ISO 7810 standard. I t isgenera l ly o f p last ic qual i ty . I t is a lsosomet imes known as Plast ic Money.

What does Grace / Interest Fre e PeriodMean?The number of days g iven to you on your

card before the card issuer s tar ts charg ingyou in terest is ca l led grace per iod. Genera l lythe grace per iod is the number of daysbetween the statement date and the due dateof payment . Grace per iods on credi t cardsare usual ly 2-3 weeks. However , there isl ike ly to be no grace for ba lances carr ied


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forward from previous month and freshpurchases thereaf ter i f any.

What is impl ied in Cash Advance?

Cash advances on Credit Cards areconvenient and the easiest fac i l i ty to ut i l ise.Manor i ty o f the banks in Ind ia charge at ransact ion fee as wel l as serv ice fee /in terest charge on cash advances. Thisserv ice fee accrues f rom the date of theadvance (as soon as you receive the cash) tothe date of fu l l payment . The charges var iesf rom banks to banks. Cash advance fac i l i ty isa par t o f the overa l l cred i t l imi t ass igned to a

cardholder . The l imi t is o f cash acvance isa lways lesser than the borrowing l imi t or thecredi t l imi t .

How to make payments from Dubai to thealready exist ing Cit ibank cards in India.How to avai l of the statements to know thecurrent bank balance of each ca rd. Isonl ine faci l i ty avai lable?

Accord ing to RBI " Resident Ind ians may benominated as addi t ional /add-on card holdersby non-res idents. However , the non-res identsf rom thei r fore ign currency funds should meetc la ims ar is ing out o f use of such cards byres idents on ly . In cases where the cards havebeen arranged by NRIs these l iab i l i t ies maybe met out o f NRE/FCNR accounts in Ind iaa lso. Under no c i rcumstances wi l l anyremit tance be a l lowed by res idents f rom India

to set t le the i r c la ims against use of suchaddi t ional /add-on cards" . NRIs get rupeecredi t cards which are va l id for use in Ind ia,Nepal and Bhutan.

Can I use my Global credit card on the netto pay some US company for web hosting


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charges? or I have to obtain permissionfrom RBI. I f any permissions are needed,How to get them?The RBI 's exchange contro l manual ment ions

that ' In ternat ional Credi t Cards ' can be usedfor "Regist ra t ion of In ternet domain name,host ing charges for website/home pagesoverseas and access fees for In ternet re la tedserv ices through websi te" . Before us ing your Global Credi t Card on the net for web host ingcharges, you fur ther c lar i fy the aforesaidissue or seek permiss ion f rom your cardissuer . Even get in touch wi th the cardissuing bank or organisat ion d i rect ly for such

clar i f icat ions.

How wil l I know i f my Credit Cardappl ication has got approved?I t is suggested to g ive your mobi le number and e-mai l id a t the t ime of appl icat ion for the Credi t Card. This wi l l he lp the issuer toin t imate you e i ther through SMS or throughe-mai l wi th the approved status of your

appl icat ion. You wi l l a lso receive a le t ter bypost in forming you of the Card approval . Youshould be receiv ing your Card around thesame t ime as the approval le t ter .

How wil l I know i f my Credit Cardappl ication has got decl ined?You wi l l receive a le t ter f rom the Bank even i f your appl icat ion for Card is not approved. I f in case there is a fur ther in format ion of

miss ing documents, you wi l l be sent a le t ter ask ing for the same. Then you need to fu l f i lw i th the documents to the speci f ied address.

What to do i f Credit Card is Lost orStolen?Repor t the loss or thef t o f your credi t cards


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to the card issuers to the ear l iest throughthei r 24-hour he lp l ine serv ice. Fol low up your phone ca l ls wi th a le t ter . Inc lude your account number, when you not iced your card

was miss ing, and the date you f i rs t repor tedthe loss.

Af ter do ing these, check your homeowner 'sinsurance pol icy to see i f i t covers your l iab i l i ty for card thef ts . I f yes i ts f ineotherwise change your po l icy to inc lude th isprotect ion.

Before the in t imat ion, d i f ferent banks have

thei r own l imi t o f loss bear ing by the cardholder . Af ter the in t imat ion, i t is the bankwho bears the loss i f any amount is spent .

Debit Card

Debi t cards, a lso known as check cards look

l ike credi t cards or ATM cards (automatedte l ler machine card) . I t operate l ike cash or apersonal check. Debi t cards are d i f ferentfrom credit cards. Credit card is a way to"pay la ter , " whereas debi t card is a way to"pay now." When we use a debit card, ourmoney is qu ick ly deducted f rom the bankaccount .

Debi t cards are accepted at many locat ions,inc lud ing grocery s tores, re ta i l s tores,gasol ine s tat ions, and restaurants. I ts anal ternat ive to carry ing a checkbook or cash.

With debit card, we use our own money andnot the issuer 's money.


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In Ind ia a lmost a l l the banks issue debi t cardto i ts account ho lders.

Features of Debit Card

Obtain ing a debi t card is o f ten easier than obta in ing a credi t card.

Using a debi t card instead of wr i t ingchecks saves you f rom showingident i f icat ion or g iv ing out personalinformat ion at the t ime of thet ransact ion.

Using a debi t card f rees you f romcarrying cash or a checkbook.

Using a debit card means you no longerhave to stock up on traveler 's checks orcash when you t ravel .

Debi t cards may be more readi lyaccepted by merchants than checks,especia l ly in o ther s tates or countr ieswherever your card brand is accepted.

The debi t card is a qu ick, "pay now"product , g iv ing you no grace per iod.

Using a debit card may mean you haveless protect ion than wi tha credi t card purchase for i tems whichare never de l ivered, are defect ive, or were misrepresented. But , as wi th credi tcards, you may dispute unauthor izedcharges or o ther mistakes wi th in 60days. You should contact the card issueri f a problem cannot be resolved wi th themerchant.


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Return ing goods or cancel ing serv icespurchased wi th a debi t card is t reated asi f the purchase were made with cash ora check.

Tips for responsible use of Debit Card

I f your card is lost or s to len, repor t theloss immediate ly to your f inancia linst i tu t ion.

I f you suspect your card is be ingfraudulent ly used, repor t i t immediate lyto your f inancia l inst i tu t ion.

Hold on to your receipts f rom your debi tcard t ransact ions. A th ie f may get your name and debit card number f rom areceipt and order goods by mai l or overthe te lephone. Your card does not haveto be missing in order for i t to bemisused.

I f you have a PIN number, memorize i t .

Do not keep your PIN number wi th your card. Also, don ' t choose a PIN number that a smart th ie f could f igure out , suchas your phone number or bir thday.

Never g ive your PIN number to anyone.Keep your PIN pr ivate.

Always know how much money you haveavai lab le in your account . Don' t forget

that your debi t card may a l low you toaccess money that you have set as ide tocover a check which has not c learedyour bank yet .

Keep your receipts in one place -- for easy retr ieval and better oversight of


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your bank account.

Loans

Banks in Ind ia wi th the way of development havebecome easy to apply in loan market . Thefo l lowing loans are g iven by a lmost a l l the banks in thecountry :

Personal Loan Car Loan or Auto Loan Loan against Shares Home Loan

Educat ion Loan or Student Loan

In Personal Loan, one can get a sanct ioned loan amountbetween Rs 25,000 to 10,00,000 depending upon theprof i le o f person apply ing for the loan. SBI , ICICI ,HDFC, HSBC are some of the leading banks which dealsin Personal Loan.

Almost a l l the banks have jumped in to the market o f car loan which is a lso somet imes termed as auto loan. I t is

one of the fast moving f inancia l product o f banks. Car loan / auto loan are sanct ioned to the extent o f 85%upon the ex-showroom pr ice of the car with some simplepaper works and a smal l amount of processing fee.

Loan against shares is very easy to get because l iqu idguarantee is invo lved in i t .

Home loan is the la test craze in the banking sector wi th

the development of the infrastructure. Now people aremoving to township outs ide the c i ty . More number of townships are coming up to meet the demand of 'housefor a l l ' . The RBI has a lso l ibera l ised the in terest ra tes of home loan inorder to match the repayment capabi l i ty o f even middle c lass people. Almost a l l banks are deal ingin home loan. Again SBI , ICICI , HDFC, HSBC are


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leading.

The educat ional loan, ra ther to be termed as studentloan, is a good banking product for the mass. Students

wi th cer ta in academic br i l l iance, s tudying at recognisedcol leges/univers i t ies in Ind ia and abroad are genera l lyg iven educat ion loan / s tudent loan so as to meet theexpenses on tu i t ion fee/ maintenance cost /books andother equipment .

Money Transfer

Beside lending and deposi t ing money, banks a lso carry

money from one corner of the globe to another. This actof banks is known as t ransfer o f money. This act iv i ty istermed as remit tance business. Banks genera l ly issueDemand Draf ts , Banker 's Cheques, Money Orders or other such instruments for t ransferr ing the money. Thisis a type of Telegraphic Transfer or Tele Cash Orders.

I t has been only a couple of years that banks have jumped into the money transfer businessess in India.The in ternat ional money t ransfer market grew 9.3% f rom

2003 to 2004 i .e. f rom US$213 bn. to US$233 bn. in2004. Economists say that the market of money transferwi l l fur ther grow at a cumulat ive 10.1%average growth rate through 2008.

With the use of h igh technology and var ie t ies of producti t seems that "Free" money t ransfers wi l l becomecommonplace. We wi l l see more bundl ing of ta i loredmoney serv ices by banks and non- t rad i t ional ent rants

that wi l l inc lude " f ree" money t ransfers. Many banks wi l leven use money t ransfer serv ices as loss- leadersinorder to generate account openings and cross-se l loppor tun i t ies. The pr ice evolut ion of money t ransfer products for banks wi l l be s imi lar to that o f consumerb i l l pay- the product is wor th g iv ing away as an accountacquis i t ion too l to win overa l l market share and


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bank account to any v isa card, e i ther debi t or credi twi th in Ind ia.

A Visa Money Transfer is o f s imi lar k ind, in manyrespects, to the th i rd-par ty fund t ransfer opt ion g iven bysome banks to i ts account ho lders through e-cheque,but th is is rest r ic ted to on ly v isa cardholders.

How to transfer money?

Log on to your bank account through yourrespect ive bank websi tes.

Fi l l the benef ic iary deta i ls l ike v isa card numbers,

name, address and then speci fy the amount thatneeds to be transferred. For bank account specifythe visa card number and credit card number for paying credi t card b i l l .

Cl ick on to VISA Transfer Payments but ton.

Transfer immediately or on schedule date. Youraccount wi l l be debi ted accord ing to the datement ioned.

Notable points of Visa Money Transfer

The t ime taken for money t ransfers could be thesame or even more than that of a demand draft i .e.two or three days or even more.

Current ly there are no charges but l imits has beenset by cer ta in banks on the current t ransfers.

I t is avai lab le in 150 c i t ies across the country now.

The transferred amount can neither be changed nors topped once i t is in i t ia ted.

Banking Services For NRIs In India

Almost a l l the Ind ian Banks prov ide serv ices to the


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NRIs. There are d i f ferent types of accounts for them.They are:

Non-Resident (Ord inary) Account - NRO A/c Non-Resident (External ) Rupee Account - NRE A/c Non-Resident (Fore ign Currency) Account - FCNR

A/c

a. An Ind ian resident who is earn ing for ign exchangecan a lso mainta in Fore ign Currency account in thecountry with an author ised dealer bank but only tothe maximum l imi t o f 50% of such fore ign exchangeearn ings under the ExchangeEarners Fore ign Currency Account (EEFC) Scheme.

Some of the FAQs g iven below wi l l make i t easy tounderstand the serv ices prov ided by banks to theNRIs.

a. What are the special features of each bankaccount?

The special features are as under:

NRO A/c.: The funds, credi ted to th is account ,cannot be repatr ia ted outs ide Ind ia in fore ignexchange, wi thout pr ior permiss ion of the ReserveBank of Ind ia. In terest , earned is e l ig ib le for repatr ia t ion outs ide Ind ia, net o f Ind ian taxes. Theremit tance of in terest (net o f taxes) wi l l bepermit ted by the author ised dealer who maintains

the account , i f the account ho lder makes anappl icat ion to the author ised dealer , in theprescr ibed form. No RBI permiss ion is required for remit tance of in terest .

NRE A/c.: The funds, s tanding to the credi t o f th isaccount , as wel l as in terest earned thereon, are


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remit tab le outs ide Ind ia in f ree fore ign exchange,wi thout permiss ion of the RBI . The in terest incomeis not subject to Ind ian Income-tax. Credi ts to theaccounts should be in the form of remit tance in

fore ign exchange f rom outs ide Ind ia, as wel l asother funds, which are e l ig ib le to be remit tedouts ide Ind ia, in f ree fore ign exchange. Funds,emanat ing f rom local sources, are not e l ig ib le to becredi ted to these accounts, un less these funds areotherwise remit tab le outs ide Ind ia, in terms of theexis t ing Exchange Contro l Regulat ions.

FCNR A/c.: These accounts can be opened in four fore ign currencies:

o Pounds Ster l ing;o US Dol lars ;o Japanese Yen;o Euro.

For the purpose of opening an account , remit tancein foreign exchange, in the same currency, shouldbe received in India. The accounts can be openedonly as f ixed deposi ts , wi th a min imum matur i ty o f one year and, a maximum matur i ty of three years.The pr inc ipa l , as wel l as in terest , earned on theseaccounts, is remit tab le outs ide Ind ia, in the samecurrency or , in o ther conver t ib le currency, asdesi red by the account ho lder . The in terest , earnedon these deposits, is exempt f rom Indian Income-tax.

b. Can Non Resident accounts be opened/ operatedby the Power of Attorney holder in India, on

behalf of the non-resident?

The accounts cannot be opened by the Power of At torney holder in Ind ia. However , the la t ter canoperate the accounts for the purpose of loca lpayments to be made on behalf of the non-residentaccount ho lder . The Power of At torney holder is not


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permit ted to make g i f ts f rom these accounts and, isnot a l lowed to make remit tances outs ide Ind ia.

c. What happens to the status of these accounts

when the non-resident holder becomes a person,resident in India?

The accounts are to be re-designed as residentaccounts, when the non-res ident account ho lder becomes a person, res ident in Ind ia. In the case of f ixed deposits opened by the account holder, beforebecoming res ident in Ind ia, the contracted rate of in terest wi l l be paid t i l l matur i ty o f the deposi ts .

Simi lar ly , FCNR deposi ts wi l l be e l ig ib le to be heldin respect ive currencies t i l l matur i ty o f the deposi ts ,even af ter the non-resident holder become ares ident in Ind ia. He wi l l , however , cease to get taxexempt ion on in terest on the erstwhi le deposi ts(NRE/FCNR deposi ts) , a f ter he becomes res ident inInd ia. In cer ta in s i tuat ions, i t might be advisable for the account ho lder to conver t the account to aResident Fore ign Currency Account Deposi t (RFC)

d. What are the various faci l i t ies avai lable toNRIs/OCBs?

The fac i l i t ies avai lab le to NRIs/OCBs for makinginvestment in Ind ia are as fo l lows:

o opening and maintenance of bank accounts inInd ia;

o investment in shares and secur i t ies of Ind iancompanies, government secur i t ies, un i ts o f

domest ic mutual funds and ,deposi ts wi thInd ian companies/ f i rms;

o investment in immovable proper t ies in Ind ia;

o investment in propr ie torsh ip/par tnersh ip


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concerns in India.

e. Are NRIs permitted to send remittances outsideIndia out of the assets in India that are inheri tedby them?

Yes. RBI wi l l consider appl icat ion f rom NRIs for remit tance of assets, inher i ted by them in Ind ia.Such remit tance may be permi t ted up to US$100,000 per year.

f. Can a person of Indian origin acquire any

immovable property in India by way ofinheri tance?

A person of Ind ian or ig in , res ident outs ide Ind ia,may acquire any immovable property in India byway of inher i tance f rom a person, res ident outs ideIndia, who had acquired such property inaccordance wi th the prov is ions of fore ign exchangelaw in force at the t ime of acquis i t ion by h im or theprovis ions of Fore ign Exchange Management

(Acquis i t ion and Transfer o f Immovable Proper ty inIndia) Regulat ions, 2000. Immovable property, byway of inher i tance, can a lso be acquired by aperson of Indian or ig in resident outside from aperson resident in India.

g. Can NRIs and Overseas Corporate Bodies (OCBs)invest in India?

The Government of India has adopted a l iberalpo l icy, wi th respect to investments by NRIs andOCBs in Ind ia. Such investments are a l lowed, both,through the RBI route and a lso through theGovernment route, i .e . , through the Fore ignInvestment Promot ion Board (FIPB) NRIs and OCBsare permi t ted to invest up to 100% equi ty in rea l


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estate development act iv i ty and c iv i l av ia t ionsectors. Investment, made by the NRIs and OCBs,are fu l ly repatr iab le, except in the case of rea lestate, which has a 3 year lock- in per iod on or ig ina l

investment and, 16% cap on d iv idend repatr ia t ion.For those proposals that do not qual i fy under theautomatic route, Government approval is grantedthrough FIPB.

h. What is the extent and appl ication of ForeignExchange Management Act (FEMA)?

FEMA extends to the whole of Ind ia. I t a lso appl iesto a l l branches, o f f ices and agencies outs ide Ind ia,

owned or contro l led by a person, res ident in Ind ia.I t a lso appl ies to any contravent ion, there under ,commit ted in or , outs ide Ind ia, by any person towhom the Act appl ies.

i. What is the penalty for contravent ion of FEMA?

Any person, contravening FEMA, shal l be l iab le,upon adjudicat ion, to a penal ty up to three t imesthe sum involved in such contravent ion, where such

amount is quant i f iab le, or up to Rupees Twohundred thousand, where the amount is notquant i f iab le. In addi t ion, where such contravent ionis a cont inu ing one, the person wi l l be l iab le tofur ther penal ty , which may extend to Rupees Fivethousand for every day af ter the f i rs t day, dur ingwhich the contravent ion cont inues.

j. Can a person of Indian origin resident outsideIndia gi ft propert ies acquired earl ier in terms ofthe provisions of FERA/FEMA?

Yes. A person of Ind ian or ig in res ident outs ide Ind iamay t ransfer res ident ia l or commerc ia l proper ty inInd ia by way of g i f t to a person res ident in Ind ia or to a person res ident outs ide Ind ia who is a c i t izen


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of Ind ia or to a person of Ind ian or ig in res identouts ide Ind ia. A Person of Ind ian or ig in res identouts ide Ind ia may a lso t ransfer by way of g i f tagr icu l ture land/ farm house/p lantat ion proper ty in

Ind ia to a person res ident in Ind ia who is a c i t izenof India.

k. Can an NRI account be opened in the name ofcrew members of shipping companies?

Yes, i f the i r post ing is not based in Ind ia and theyder ive their income from other country in foreigncurrency.

Easy Banking

This sect ion is fu l ly dedicated to the Tech Banking. Adecade before, i t was tough to be l ie f that bankingsecctor wi l l be at a f inger t ip . Now i ts possib le . A mobi lehand set wi th a connect ion is the only inst rumentneeded to make a gateway to your banking transact ion,the la test innovat ion of technology.

Apar t f rom the Mobi le Banking, inc lud ing of SMSBanking, Net Banking and ATMs are themajor s teps taken by the banks in Ind iatowards modern isat ion. With a l l these devises andsystems, there is a complete f reedom to exper ience.

Check your account, t ransfer your fund, make paymentsand what more, do anything of everything what has beenfo l lowed in physica l banking s ince ages. But th is t imeno standing for hours in f ront o f cash counter and no

t ime boundat ion in withdrawing your own money

Automated Tel ler Machine (ATM)


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The f i rs t bank to in t roduce the ATM concept in Ind ia wasthe Hongkong and Shanghai Banking Corporat ion(HSBC). I t was in the year 1987. Now, a lmost everycommerc ia l banks g ives ATM fac i l i t ies to i ts customers.

The f i rs t bank to cross 1,000 marks in insta l l ing ATMs inInd ia is ICICI . SBI is fo l lowing the concept o f 'ATMs inQuant i ty ' . But Pr ivate Sector Banks have taken the lead.ICICI , UTI , HDFC and IDBI counts more than 50% of thetota l ATMs in Ind ia.

Publ ic Sector Banks are a lso tak ing theinsta l la t ion of ATMs ser iously for Ind ian market . Theyare e i ther set t ing up the i r own ATM centres or enter ing

into t ie-ups wi th other banks. The Corporat ion Bank hasthe second largest network of ATMs amongst the Publ icSector Banks in Ind ia.

The Ind ian banks have a lso come up wi th a 'Swadhan'scheme. Under th is scheme, the banks can use eachother 's ATM at a cost , usual ly Rs. 35 ext ra f rom thei r customers. The main feature of 'Swadhan Card' are asfo l lows:

No exchange fee charged to change an old ATMcard for a Swadhan card.

Rs. 3,000 f ixed as the ce i l ing on wi thdrawal .

Except ion made for select customers who canwi thdraw up to Rs10,000. St i l l , th is is lower thanthe average wi thdrawal o f Rs15,000 by regular ATMs.

IBA g ives banks the d iscret ion to decide a h igher maximum amount for withdrawal.

Transact ions conducted through any of the memberbanks appear on a bank statement, which is givenonly by your own bank.


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All t ransact ions conducted in any of the memberbanks appear on the bank statement, but only yourown bank wi l l prov ide th is .

Note : - No overdraf t fac i l i ty is ava i lab le on Swadhancards.

How 'Swadhan Card' works

Al l in format ions and t ransact ions are routed amongmember inst i tu t ions through a swi tch. The swi tcht ransmits the in format ion and/or data to bank which hasissued the card or to i ts processor , which on the other hand e i ther approves or decl ines the t ransact ion request

and not i f ies the swi tch. The decis ion of the card- issu ingbank 's is then routed by the swi tch to the processor of the ATM, which completes the t ransact ion. The accountsamong members are sett led and account balances aretransmit ted at the end of the day to each memberinst i tu t ion.

Cost of sett ing ATM center

Approximate ly Rs.1mn i t takes for the set t ing of an ATMcenter . Rs.1.2-1.4mn per annum is needed for i tsmaintenance. To keep the cost in equi l ibr ium posi t ion,there should be around 250-300 transact ions per day perATM.

To overcome or to reach the break-even point , the banksare a lways encouraging i ts customers to use the ATMs.Banks l ike HDFC and Ci t ibank even charge penal ty i f acustomer v is i ts the branch.

NCR India and HMA Die bold are the main two p layers inth is market to set up ATMs in Ind ia. The market ,according to them is whopping 100% and they are veryopt imist ic to see 30,000 ATMs in Ind ia very soon.


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Mobile Banking In India

"The account that t ravels wi th you" . This is needed in

today 's fast business envi ronment wi th unendingdeadl ines for fu l f i l lment and loads of appointments tomeed and meet ings to at tend. With mobi le bankingfac i l i t ies, one can bank f rom anywhere, a t anyt ime andin any condi t ion or anyhow. The system is e i ther through SMS or through WAP. (Check out for SMSBanking under d i f ferent head)

Mobi le Banking is the hot test area of development in thebanking sector and is expected to rep lace the

credi t /debi t card system in fu ture. In past two years,mobi le banking users has increasedthree t imes i f we compare the use of e i ther debi t card or credi t card. Moveover 85-90% mobi le users do not owncredi t cards.

Mobi le banking uses the same in f rast ructure l ike theATM solut ion. But i t is ext remely easy and inexpensiveto implement . I t reduces the cost o f operat ion for

bankers in compar ison to the use of ATMs.

Using compact HTML and WAP technologies, thefo l lowing operat ions can be conducted throughadvanced mobi le phones which can is fur ther v iewed onchannels such as the In ternet v ia the Channel Manager .

Bi l l payments Fund t ransfers Check balances Any many more which is a lso avai lab le in SMS

Banking

In countr ies l ike Korea, two SIM Card is used in mobi lephones. One for the te lephonic purpose and the otherfor banking. Bank account data is encrypted on a smart -


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card ch ip. About 3 .3 mi l l ion t ransact ions were repor tedby Bank of Korea in 2004.

SMS Banking

Businesses are in move. So is to be your money. Youmay have to thank the banks which are prov id ingbanking at the send-of -your-sms. The technology is a ti ts h ighest leve l to move your moneywhi le you are on the move. I f you arehaving non-WAP enabled mobi le handset , you can use

the fac i l i ty o f SMS serv ices. The fo l lowing operat ionscan be easi ly used by the serv ice prov ider :

Balance enquiry Last three t ransact ions Cheque payment s tatus Cheque book request Statement request Demat - Free Balance Hold ing Demat - Last two Transact ions Bi l l Payment

The SMS fac i l i ty br ings peace of mind to customers andopens doors to many more technologica l possib i l i t iesand innovat ive serv ices. I t is very s imi lar to how an ATMworks.

To use ATM, a card is necessary and to use SMSserv ice, a mobi le phone is needed. In both the cases,

secret number is necessary to access.

SMS banking is a lso very much safe. Fi rs t , oneauthent icates the mobi le number wi th theauthent icat ions key. Second, the customer uses secretMobi le Personal Iddent i f icat ion Number (MPIN) .


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A new concept has been developed by Bank of PunjabLtd. They ca l l i t "Mobi le Wal le t " . Wi th the suppor t o f th istechnology, a customer can make payment and receivepayment of account o f buy/se l l (merchants) through

SMS.

In th is system, a buyer sends a message for buying andthe bank in return sends a message conf irming thepurchase both to the merchant as wel l as to the buyer.Debi t card number is the key f ie ld which is used for theauthent ic i ty o f the customer.

The processes of the serv ice are s impl i f ied as under :

Customer has to send "REG(one space)(AccountNumber)(one space)(Debit Card Number)" as anSMS to bank 's mobi le number 9810999992 for reg is t ra t ion. For e .g. "REG 06SB110521225047531105000109109" Bank wi l l conf irm theregis t ra t ion wi th the return message.

After that customer wi l l v is i t nearest branch tocol lect the serv ice brochure and get i t f i l led.

Regist ra t ion wi l l be a one t ime process.Onceregis tered, customer would be able to buy th ingsfrom any of the registered merchant of the bank.

Customer need to send "PAY(one space)(merchantcode)(one space)(amount)(one space)(Debit cardnumber)" as an SMS on bank's mobi le number9810999992. For e.g for making a payment of Rs.56.16 to merchant BOPSTC f rom card no.5047531105000109109, Send the fol lowing

message "PAY BOPSTC 56.165047531105000109109"

The t ransact ion wi l l be va l idated onl ine andimmediate ly funds wi l l be t ransfer red f rom customeraccount to merchant account .


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Bank would send transact ion conf irmat ion as anmessage to both merchant and customer(buyer) .

An SMS repor t wi l l be sent to both merchant &buyer everyday stat ing the to ta l number of t ransact ion & to ta l amount o f t ransact ion madedur ing prev ious one day.

Note :- There is obviously a l imi t to the vo lume of t ransact ions now.

Some Useful Tips

Genera l ly wi th 3 inval id log in at tempts, SMS Banking

serv ices are locked. Immediate ly contact the branch for un lock ing the serv ices. In case one forgets thepassword, obtain a new password from the branch. Tolog out , choose the "Log out" opt ion in the handset andSMS Banking session ends.

Net Banking

Net Banking is conduct ing ones banking or bank accountonl ine through a computer and a net connect ion. Thesystem is updated immediate ly a f ter every t ransact ionautomat ica l ly . In other words i t is sa id that i t is updated'on- l ine, rea l t ime' . Through netbanking one can checkthe status of h is /her account , p lace quer ies and a lso canbe fac i l i ta ted wi th a wide range of t ransact ionssimul taneously .

In Ind ia, the regulatory body has not yet sanct ionedvi r tua l bank, in abroad there are banks l ike EGG Bank or NET Bank, which only have a v i r tua l presence wi thout

any physica l branches.

Net Banking has three basic features. They are asfo l lows:

The banks of fer on ly re levant in format ions about


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their products and services to the mass.

Few banks prov ide in teract ion fac i l i ty between thebanks and i ts customers.

Banks are coming up wi th ar rangements of u t i l i typayments, l ike te lephone b i l ls , e lect r ic i ty b i l ls , e tc .

The current s ta t is t ics show that hard ly 10 per cent o f Indian customers uses the internet for banking. Amongal l the fac i l i t ies prov ided, the maximum of them usesonly for checking balance or request ing for a chequebook. Very few customers uses the advance in teract iveserv ices prov ided by the banks.

Accord ing to HDFC and ICICI Bank, 17 per cent o f ICICIcustomers use the In ternet for banking and 10 per centof HDFC customers prefer i t .

Cost of instal lat ion of services

For basic features, the cost for prov id ing such serv icesto the banks come around Rs 40 lakh to Rs 50 lakh. For

the th i rd level serv ice or sophis t icated serv ices, theinvestments mount to the tune of Rs 4 crore to Rs 5crore. These investments is just a f ract ion i f comparedto the operat ions of the bank us ing physica lin f rast ructure.

Services provided by Net Banking

Queries

Check Balance See Statement Inqui re about cheque status Ask for a Statement Ask for a Cheque Book Inqui re about Fixed Deposi t


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Inqui re about TDS deta i ls See Demat Account Update prof i le

Transactions

Stop a Cheque Pay Bi l ls Ask for a Demand Draft Transfer funds between your accounts Transfer funds to a th i rd par ty Request for a new Fixed Deposit Shop Onl ine Pay Bank Credi t Card Dues

Advantages of Net Banking

I t removes the t rad i t ional geographica l barr iers as i tcould reach out to customers of d i f ferentcountr ies/ legal jur isd ic t ion. This has ra ised thequest ion of jur isd ic t ion of law/superv isory system towhich such t ransact ions should be subjected.

I t has added a new d imension to d i f ferent k inds of r isks t rad i t ional ly associated wi th banking,

heightening some of them and throwing new r iskcontro l chal lenges.

Secur i ty o f banking t ransact ions, va l id i ty o f e lect ron ic contract , customers' pr ivacy, e tc . , whichhave al l a long been concerns of both bankers andsupervisors have assumed di f ferent dimensionsgiven that In ternet is a publ ic domain, not subject tocontro l by any s ing le author i ty or group of users.

I t poses a s t ra teg ic r isk of loss of business to thosebanks who do not respond in t ime to th is newtechnology, be ing the ef f ic ient and cost e f fect ivedel ivery.


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Proxy Banking In India

Ind ian v i l lages were mi les away f rom mutual funds,insurance and even equi ty t rad ing. Thanks to In ternetKiosk and the ATM duo which has made i t poss ib le for rura l Ind ia. This k iosk has been set up by ICICI Bank inpar tnersh ip wi th network n-Logue Communicat ions inremote v i l lages of Southern par t o f thecountry . This is known as Prox i Banking. With the helpof f ibre opt ic cables, th is k iosk works on wire less inlocal loop technology.

Reasons for sett ing-up of Proxi Banking

58% of rura l households s t i l l do not have bankaccounts.

Only 21% of rura l households have access to credi tf rom a formal source.

70% of marginal farmers do not have depositaccount.

87% households have no formal credit .

Only 1% rural househlods rely on a loan from af inancia l in termediary. The loans take between 24to 33 weeks to get sanct ioned.

Consumers br ibe of f ic ia ls to get loans approvedwhich var ies between 10 and 20 per cent of theloan amount.

Branch banking in rura ls is a loss-making.

Benefi ts to rurals

Smal l loans g iven for buying buf fa loes. Loans for set t ing up a tea shop. Li fe and non- l i fe insurance prov ided. Weather insurance given to farmers.


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Insurance pol ic ies so ld to farmers l ike groundnut,castor , soya, paddy crop, e tc .

The Proxy Banking is an innovat ive approach to rura llending and wi l l add to the government 's expandingbase of k isan credi t cards and the good o ld gu ide l inesfor agr icu l tura l lending.

Documents

Mark Project Banking