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Banking Awareness Notes: Indian Financial Institutions

Dear Aspirants,

We all know how much is Banking Awareness topic is important for banking examinations and also for interviews. As keeping in that today we are sharing Indian Financial Institutions. We have tries our best to keep the information precise and if any thing left or to be updated please let us know. We have already shared notes on Indian Banking Structure.

National Bank for Agriculture and Rural Development (NABARD)

Headquarter: Mumbai, Maharashtra
Chairman: Harsh Kumar Bhanwala
Established: 12 July 1982

National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India. The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) under the Chairmanship of Shri B. Sivaraman, conceived and recommended the establishment of the National Bank for Agriculture and Rural Development (NABARD).

The main objective behind the set up of NABARD was to uplift rural India by increasing the credit flow for elevation of agriculture & rural non farm sector.

Government of India holds 96.4% stake & RBI holds 0.4% in NABARD.

NABARD is active in developing financial inclusion policy and is a member of the Alliance for Financial Inclusion.

NABARD replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC).

Important Points to Remember about NABARD:

  • National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India.
  • NABARD was established on the recommendations of Shivaraman Committee.
  • NABARD was established by an act of Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981.
  • NABARD replaced the Agricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and Agricultural Refinance and Development Corporation (ARDC).
  • Runs programme for agricultural & rural development. Recommends about licensing for RRBs, Co-operative banks to RBI
  • Provides refinance to lending institutions in rural areas.
  • Helps SHG (Self Help Group) & poor people in rural areas.
  • Rural Infrastructure Development Fund (RIDF) is operated by NABARD.

Small Industries Development Bank of India (SIDBI)

Headquater: Lucknow
Chairman & Managing Director: Mohammad Mustafa
Established: 2 April 1990

Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of Indian Parliament, presently acts as the Principle Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector.

The Bank provides refinance support through a network of eligible member lending institutions for onward lending to MSMEs and direct assistance is channelized through the Bank’s branch offices.

SIDBI also extends financial assistance in the form of loans, grants, equity and quasi-equity to Non Government Organisations / Micro Finance Institutions (MFIs) for on-lending to micro enterprises and economically weaker sections of the society, enabling them to take up income generating activities on a sustainable basis.

SIDBI has initiated various schemes for upliftment of MSME sector and continues to be the prime lending institution for MSME sector.

Associates of SIDBI

  • Credit Guarantee Fund Trust for Micro and Small Enterprises
  • India SME Technology Services Ltd.
  • SME Rating Agency of India Ltd.
  • India SME Asset Reconstruction Company Ltd.
  • Delhi Financial Corporation

Subsidiaries of SIDBI

  • SIDBI Venture Capital Limited
  • SIDBI Trustee Company Limited
  • MUDRA (SIDBI) Bank

Insurance Regulatory and Development Authority of India (IRDAI)

IRDA – Insurance Regulatory Development and Authority is the statutory, independent and apex body that governs and supervise the Insurance Industry in India.

It was constituted by Parliament of India Act called Insurance Regulatory and Development Authority of India (IRDA of India) after the formal declaration of Insurance Laws (Amendment) Ordinance 2014, by the President of India Pranab Mukherjee on December 26,2014.

IRDA Act was passed upon the recommendations of Malhotra Committee report (7 Jan,1994), headed by Mr R.N. Malhotra (Retired Governor, RBI)

Main Recommendations – Entrance of Private Sector Companies and Foreign promoters & An independent regulatory authority for Insurance Sector in India

In April,2000, it was set up as statutory body, with its headquarters at New Delhi.

The headquarters of the agency were shifted to Hyderabad, Telangana in 2001.

Objectives of IRDA:

  • To promote the interest and rights of policy holders.
  • To promote and ensure the growth of Insurance Industry.
  • To ensure speedy settlement of genuine claims and to prevent frauds and malpractices
  • To bring transparency and orderly conduct of in financial markets dealing with insurance.

Chairman of IRDAI is Mr T.S Vijayan.

Functions And Duties of IRDA:

Section 14 of IRDA Act,1999 lays down the duties and functions of IRDA:

  • It issues the registration certificates to insurance companies and regulates them.
  • It protects the interest of policy holders.
  • It provides license to insurance intermediaries such as agents and brokers after specifying the required qualifications and set norms/code of conduct for them.
  • It promotes and regulates the professional organisations related with insurance business to promote efficiency in insurance sector.
  • It regulates and supervise the premium rates and terms of insurance covers.
  • It specifies the conditions and manners, according to which the insurance companies and other intermediaries have to make their financial reports.
  • It regulates the investment of policyholder’s funds by insurance companies.
  • It also ensures the maintenance of solvency margin (company’s ability to pay out claims) by insurance companies.

Export-Import Bank of India (EXIM Bank)

Established: January 1, 1982
Headquarter: Mumbai, Maharashtra.
Chairman: Yaduvendra Mathur.

Export-Import Bank of India (EXIM Bank) is a specialized financial institution, wholly owned by Government of India, set up in 1982, for financing, facilitating and promoting foreign trade of India.

The Bank issued India’s first USD denominated Green bonds with a benchmark size of US$500 million.

The important functions of the EXIM Bank are as follows:

1. Financing of export and import of goods and services both of India and of outside India.

2. Providing finance for joint ventures in foreign countries.

3. Undertaking merchant banking functions of companies engaged in foreign trade.

4. Providing technical and administrative assistance to the parties engaged in export and import business.

5. Offering buyers’ credit and lines of credit to the foreign governments and banks.

6. Providing advance information and business advisory services to Indian exports in respect of multilaterally funded projects overseas.

Securities and Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) is the designated regulatory body for the finance and investment markets in India. The board plays a vital role in maintaining stable and efficient financial and investment markets by creating and enforcing effective regulation in India’s financial marketplace.

Its Preamble states that SEBI must “protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected there with or incidental there to.”

Headquarter: Mumbai, Maharashtra.
Chairman: Upendra Kumar Sinha.

Objective: Protects the interest of investors and to promote the development of stock exchange & regulate the activities of stock market.  

SEBI is allowed to approve by-laws of stock exchanges. It is its job to require the stock exchange to follow its by-laws. SEBI also inspects the books of accounts of financial intermediaries and asks for regular returns from recognized stock exchanges. SEBI’s role covers compelling particular companies to list their shares in stock exchanges. Aside from these, SEBI is tasked to manage the registration of brokers.

As per the SEBI regulations, the level of risk will be depicted by the colour code boxes for Mutual Funds: 

  • Blue: Principal at low risk
  • Yellow: Principal at medium risk
  • Brown: Principal at high risk.

Export Credit Guarantee Corporation of India Limited (ECGC)

Headquarter: Mumbai, Maharashtra.
Chairman: Geetha Muralidhar

ECGC Ltd. (Formerly known as Export Credit Guarantee Corporation of India Ltd.) wholly owned by Government of India, was set up in 1957 with the objective of promoting exports from he country by providing credit risk insurance and related services for exports. Over the years it has designed different export credit risk insurance products to suit the requirements of Indian exporters. ECGC is essentially an export promotion organization, seeking to improve the competitiveness of the Indian exports by providing them with credit insurance covers.

ECGC provides

(i) a range of insurance covers to Indian exporters against the risk of non – realization of export proceeds due to commercial or political risks;

(ii) different types of credit insurance covers to banks and other financial institutions to enable them to extend credit facilities to exporters; and

(iii) Export Factoring facility for MSME sector which is a package of financial products consisting of working capital financing, credit risk protection, maintenance of sales ledger and collection of export receivables from the buyer located in overseas country.

National Housing Bank (NHB)

Established: The bank started its operations from July 1988. National Housing Bank was established under section 6 of National Housing Bank Act (1987).
Headquarter: New Delhi
Chairman: Sriram Kalyanaraman.

National Housing Bank (NHB) was set up by an Act of Parliament in 1987. NHB is an apex financial institution for housing.

NHB has been established with an objective to operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support incidental to such institutions and for matters connected therewith

NHB registers, regulates and supervises Housing Finance Company (HFCs), keeps surveillance through On-site & Off-site Mechanisms and co-ordinates with other Regulators.

National Payments Corporation of India (NPCI)

Headquarter: Mumbai
Head: Chairman – Sh. Balachandran
MD & CEO: A.P. Hota

The umbrella organisation for all retail payments system in India,National Payments Corporation of India (NPCI) has reached a major milestone of successfully linking 15 crore bank accounts with Aadhaar number.

National Payments Corporation of India (NPCI was incorporated in December 2008.

The company has been incorporated as a Section 25 company under The Companies Act 1956, is now under Section 8 of The Companies Act, 2013.

Objectives:

  • The formation of NPCI is aimed to operate for the benefit of all the member banks and their customers.
  • NPCI is now certified for three standards – PCI-DSS (sensitive data security in payment systems), ISO27001 (information security) and ISO 22301 ( business continuity) apart from ISO 9001( Quality Management).
  • NPCI has successfully completed the major project of developing a domestic card payment network called- RuPay.

Services Provided:

  • The corporation service portfolio now and in the future include:
  • National Financial Switch (NFS) which connects 1,87,088 ATMs of 309 banks (89 Member Banks, 220 Sub- Member)
  • Immediate Payment Service (IMPS) provided to 71 member banks, with more than 7.45 crore MMID(Mobile Money Identifier) issued, and crossed 6.5 million transactions.
  • National Automated Clearing House – has close to 400 banks as Live.
  • Aadhaar Payments Bridge System (APBS) has more than 358 banks as Live.
  • Cheque Truncation System (CTS) has fully migrated in southern, western & northern grid from MICR centres.
  • Aadhaar-enabled payment system (AEPS)
  • RuPay – Domestic Card Scheme- has issued over 7.5 crore cards and enabled 10,09,211 PoS terminals in the country.

Products:

  • National Financial Switch (NFS),
  • Immediate Payment Service (IMPS),
  • RuPay, Cheque Truncation System (CTS),
  • Aadhaar Enabled Payment System (AEPS), ACH

National Financial Switch (NFS)

National Financial Switch is a network of shared ATM’s. It was developed by Institute for Development and Research in Banking Technology (IDRBT), Hyderabad in 2004. It is run by the National Payment Corporation of India (NPCI) currently.

Salient Features

  1. NFS has introduced sub-membership model which enables smaller, regional banks including RRBs and local co-operative banks to participate in the ATM network.
  2. NFS has maintained high standards of application and network uptime of above 99.50% which has helped our member banks ensure enhanced customer experience.
  3. The Dispute Management System (DMS), has benefitted members with high operational efficiency and ease of online transaction life cycle management (chargeback, representment, etc.) in the network apart from being compliant with local regulatory requirements.
  4. NPCI has also tied up with International card schemes like Discover Financial Service (DFS), Japan Credit Bureau (JCB) and China UnionPay International (CUPI) which allows their cardholders to use ATMs connected to NFS network.
  5. The Fraud Risk Management (FRM) solution is offered as a value added service to monitor transactions (in real time) and to generate alert or decline the transaction in the NFS network

Value Added Services:

Apart from basic transactions like Cash Withdrawal, Balance Enquiry, PIN Change and Mini Statement, NFS also offers other Value Added Services (VAS) on ATMs/CDMs like:

  1. Interoperable Cash Deposit (ICD)
  2. Mobile Banking Registration (MBR)
  3. Card-to-Card Fund Transfer (C2C)
  4. Cheque Book Request (CBR)
  5. Statement Request (SR)
  6. Aadhar Number Seeding (ANS)

Some of the key features of this service are:

  1. Real time credit to beneficiary account
  2. Instant verification of notes by cash recycler/cash deposit machine
  3. Optimize cash handling cost and reduce idle cash in machines
  4. 24/7 availability of cash deposit facility
  5. Limit per Transaction is restricted to less than Rs.50,000/-
  6. Paperless Transaction

Mobile Banking Registration (MBR)

The service enables cardholders of participating member bank to register for Mobile Banking using any other participating member bank’s ATM.

Card-to-Card Fund Transfer (C2C)

The service enables cardholders of participating member bank to use NFS network ATMs of participating member bank for initiating funds transfer to the any other participating member bank’s cardholder’s account.

Cheque Book Request (CBR)

This service enables cardholder of participating member bank to request for Cheque Book using any other participating member Bank’s ATM.

Statement Request (SR)

This service enables cardholder of participating member bank to request for account statement using any other participating member Bank’s ATM.

Aadhaar Number Seeding (ANS)

This service enables cardholder of participating member bank to request for seeding of Aadhaar number in the account linked to the card using any other participating member Bank’s ATM.

Deposit Insurance and Credit Guarantee Corporation (DICGC)

Established: Under DICGC act 1961 on 15 July 1978.
Subsidiary of RBI 
Head office: Mumbai
Chairman: N.S. Vishwanathan

All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.

Cooperative Banks: All State, Central and Primary cooperative banks, also called urban cooperative banks, functioning in States / Union Territories which have amended the local Cooperative Societies Act empowering the Reserve Bank of India (RBI) to order the Registrar of Cooperative Societies of the State / Union Territory to wind up a cooperative bank or to supersede its committee of management and requiring the Registrar not to take any action regarding winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the Reserve Bank are covered under the Deposit Insurance System.

In the event of a bank failure, DICGC protects bank deposits that are payable in India.
The DICGC insures all deposits such as savings, fixed, current, recurring, etc. except the following types of deposits.
(i)  Deposits of foreign Governments;
(ii) Deposits of Central/State Governments;
(iii)Inter-bank deposits;
(iv) Deposits of the State Land Development Banks with the State co-operative bank;
(v) Any amount due on account of any deposit received outside India
(vi) Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India.

Each depositor in a bank is insured upto a maximum of Rs.1,00,000 (Rupees One Lakh) for both principal and interest amount held by him in the same capacity and same right as on the date of liquidation/cancellation of bank’s licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.

The deposits kept in different branches of a bank are aggregated for the purpose of insurance cover and a maximum amount upto Rupees one lakh is paid. (To Read In Details Click Here……..)

Agriculture Insurance Company of India Limited (AICIL)

Founded: 20 Dec. 2002 under Indian companies act 1956
Headquarter: New Delhi, India
Key people: Sh. Joesph Plappallil (MD & Chairman)
Slogan: Sampann Bharat ki Pehchan, Beemit Phasal Khushaal Kisan.

AICIL was incorporated with an authorized capital of Rs. 1500 Cr. It offers yield-based and weather based crop insurance programs in almost 500 districts of India. It covers almost 20 million farmers, making it the biggest crop insurer in the world in number of farmers served. AICIL commenced business from 1st April 2003.

AICIL is under the administrative control of Ministry of Finance, GOI and under the operational supervision of Ministry of Agriculture, GOI, IRDA, Hyderabad (India) is the regulatory body governing AICIL.

National Securities Depository Limited (NSDL)

MD & CEO: Mr. G.V. Nageswara Rao
Headoffice: Mumbai

NSDL, the first and largest depository in India, established in August 1996 and promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialised form in the Indian capital market.

Promoters Of NSDL:

  1. IDBI (Industrial development bank of India Ltd.) – Largest development Bank of India.
  2. UTI (Unit Trust of India) Largest mutual fund in India.
  3. NSE (National Stock Exchange of India Ltd.) – Largest stock exchange in India.
  4. Some of the prominent banks in the country have taken a stake in NSDL
  5. NSDL also has a subsidiary company NSDL Database Management Ltd.

Employees Provident Fund Organisation (EPFO)

Head office: New Delhi
Head: Shri Bandaru Dattatreya

The Employees’ Provident Fund Organisation (abbreviated to EPFO), is an Organization tasked to assist the Central Board of Trustees, a statutory body formed by the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 and is under the administrative control of the Ministry of Labour and Employment, Government of India.

EPFO assists the Central Board in administering a compulsory contributory Provident Fund Scheme, a Pension Scheme and an Insurance Scheme for the workforce engaged in the organized sector in India. It is also the nodal agency for implementing Bilateral Social Security Agreements with other countries on a reciprocal basis.

 

 

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