JAIIB Paper 2 (PPB) Module A Unit 15: Ancillary Services (New Syllabus)
The Institute of Indian Banking and Finance (IIBF) recently announced the updated syllabus and exam pattern for the JAIIB Exam 2023. The JAIIB 2023 will include four papers, with Paper 2 (Principles & Practices of Banking) covering Unit 15: Ancillary Services. This unit is crucial for candidates to understand thoroughly as it will impact their performance in the exam.
To aid candidates in comprehending the topic, we will provide all necessary details related to Unit 15: Ancillary Services of JAIIB Paper 2 (PPB) Module A: General Banking Operations. We highly recommend candidates refer to this article and use our Online Mock Test Series to improve their knowledge of Foreign Currency Accounts for Residents and Other Aspects.
For JAIIB Certification Examination 2023 candidates, understanding each unit in the syllabus, including the Marketing unit, is critical. This unit is essential in the banking industry, and candidates must prepare adequately to excel in the exam and establish a successful career in the banking sector.
Remittance means transfer of funds on branch of a bank to another of the same bank or a different bank. Customer can make remittance within city through banker’s cheques and for remitting funds from one centre to another through Demand Draft (DD), Mail Transfer (MT), Telegraphic Transfer (TT), National electronic funds transfer (NEFT), and Real Time Gross Settlement (RTGS) at specified service charges.
Demand Drafts (DD) and Banker’s Cheque (BC)
|BASIS FOR COMPARISON||BANKER’S CHEQUE||DEMAND DRAFT|
|Meaning||Banker’s Cheque or Payment Order is a cheque issued for making the payments within the same city.||Demand draft is a negotiable instrument used to transfer money from one person at one city to another person in another city.|
|Special feature||All banker’s cheque are pre-printed with “NOT NEGOTIABLE”.||Demand draft of Rs. 20000 or more should be issued with “A/c payee” crossing.|
|Clearance||It can be cleared in any branch of the same city.||It can be cleared at any branch of the same bank.|
|Validity||3 months||3 months|
|Scale||Bankers cheque can be cleared in any branch of the bank provided it comes under the local jurisdiction||Demand Draft can be cleared at any branch of the same bank irrespective of the city.|
Mail Transfer (MT)
A mail transfer is a way of remitting money from one place to another through a bank. In case payee is a customer, his account is credited. It is used for both internal and international remittances. Bank charges commission for this service.
Telegraphic Transfer (TT)
- Telegraphic transfer, also known as Wire transfer is an electronic method of transferring funds. In this method, money is transferred from one bank to another via cable services or telegraphs.
- Earlier, overseas payments via telegraphic transfer was a popular method. Though, telegraph is not used for transfers today, name still remains the same for the transfer of funds electronically or for any wire transfer transactions. Telegraphic transfers are safe and convenient way to transfer funds to people staying overseas. Telegraphic transfer or wire transfer is the most common means of transferring funds overseas.
What is the Information Required for Telegraphic Transfer?
Here are the important points to be provided for telegraphic transfer:
- Name of the remitter
- Bank account details of remitter
- Payment currency
- Amount to be remitted
- Name of the beneficiary
- Account number of beneficiary or IBAN (International Bank Account Number) for payments to UAE and Europe
- Name and address of beneficiary bank
- Beneficiary bank’s SWIFT (Society for Worldwide Interbank Financial Telecommunication) code and BIC Code (Bank Identifier Code)
- Details of intermediary bank
- Reason or purpose of transfer
National Electronic Funds Transfer System (NEFT)/ Real Time Gross Settlement System (RTGS)/
|Settlement Type||Half hourly batches||Real time||Real time|
|Minimum Transfer Limit||Re.1||Rs.2 lakh||Re.1|
|Maximum Transfer Limit||No Limit
However, maximum amount per transaction is limited to Rs.50,000/- for cash-based remittances within India and to Nepal under the Indo-Nepal Remittance Facility Scheme.
|No limit||Rs.2 lakh|
|Service Timings||Available 365 days 24/7||Available 365 days 24/7.||Available 365 days 24/7|
|Transaction Charges||No charges for inward transactions (at destination bank branches for credit to beneficiary accounts)||No charges for inward transactions
Charges applicable for outward transactions for amount:
Rs.2 lakh – Rs.5 lakh: not exceeding Rs.25
Above Rs.5 lakh: not exceeding Rs.50
GST is also applicable
|Charges for remittance through IMPS are decided by the individual member banks and PPIs. The taxes are included.|
|Payment Options||Online and Offline||Online and Offline||Online|
RTGS/NEFT Charges For Customers
As at 31st May, 2022 the ceilings prescribed by RBI are as shown below.
Note: No charges must be levied on inward RTGS/ NEFT transactions
Mobile Banking In India
Mobile banking started in India in 2002, and back then, transactions were carried out through SMS. Today, almost all banking transactions can be performed using a computer, laptop or a smartphone. Everything from checking account statements to paying credit card bills, utility bills and transferring funds can be done online.
Mobile banking began as an offshoot of internet banking to further aid convenience and ease of access. In 2018, almost all banks have mobile phone applications for financial transactions. These apps remove the requirement of having a computer or laptop to transfer funds, and with continued advancements, have made visits to the bank a rarity.
Note: In 2008, ICICI Bank was the first bank to launch mobile banking in India.
Electronic Benefit Transfer (EBT) Scheme
- EBT is a product for Financial Inclusion, through which payments reach the beneficiaries’ bank accounts.
- EBT commenced for seven schemes under the “One District One Bank” Model called as ‘Direct Benefit Transfer’ (DBT).
- The program was aimed at transfer of subsidies and cash benefits directly to the people through their Aadhaar seeded bank accounts.
- EBT functions on, “one district – many banks – one leader bank model”.
EBT Scheme Model
- State Government deals only with one leader bank in a district, designated by it in consultation with the RBI Regional Office and SLBC, for the district.
- Leader bank makes arrangement with other banks in the district on revenue sharing contract.
- A Nodal Department is designated in the State Govt. to deal with the leader bank in respect of all the schemes covered.
- List of beneficiaries under all Schemes are provided by Nodal Department to Leader bank for onward transmission the participating banks.
- Participating banks enroll all the beneficiaries, open their bank accounts and issue smart cards to them through Business Correspondents.
- Each month, the leader bank receives the funds from the State Government, in the Savings Account opened by the Nodal Department with it and transfers funds to other banks for credit to the accounts of ultimate beneficiaries’ on a commission basis.
- Participating banks credit the funds to the accounts of respective beneficiaries on the same day.
Safe Deposit Lockers
Safe Deposit locker is a facility extended to the customer to enable to the customers to enable them to keep their valuables/ documents etc, in a specially designed locker on payment of prescribed rentals. The relationship between the bank and the hirer of the lockers is that of a “Lessor and Lessee” or “Bailor and Bailee” (Licensor and Licensee).
Nomination: Section 45 of the Banking Regulation Act deals with the nomination facilities in lockers services. Procedure pertaining to safe deposit lockers is detailed hereunder:
In the case of a singly operated locker, nomination can be made in favour of only one individual.
Where the safe deposit locker is hired hired by two or more individual jointly, nomination can be made by them in favour of one or more persons.
Important Guidelines of RBI on lockers
- As per the guidelines banks cannot force customers to buy FD to open a bank locker. But, as a security cover banks can ask customers for a caution money deposit equivalent to three years rent and amount for a forced opening of the locker. This is done because there are instances where the locker is not used by the lock hirers and even the rent is not paid for it.
- It is mandatory to have an agreement between the locker hirer and the bank. This agreement contains the basic terms and conditions like illegal items would not be stored in the locker, regular payment of dues and so on. The locker hirer should collect the copy of the agreement.
- Banks have to carry out KYC checks on customers, before providing the locker facility. This has to be done for both old and new customers.
- All the applications for the bank locker facility must contain a waitlist number.
- Banks have to take all the necessary steps to safeguard and protect the bank lockers.
- Locker keys must be embossed with the bank/branch identification code for identifying the owner of the keys.
- The locker hirer can appoint a single nominee to the bank locker. If the nominee is appointed, he should be given the due rights by the bank.
- If the bank locker is not operated for a long time, the banks can notify the locker hirer to either operate the locker or to surrender it. The banks should make a request for a written reply, which states the reasons for not operating the locker. If the bank has not received any reply and the locker is still not operated, it has all the right to open the locker forcibly after sending a formal notice to the hirer.
Hiring Out A Locker
- Customer Due Diligence
- Allotment of Locker
- Model Locker Agreement
- Locker Rent
- Term Deposit as Security
- Access to locker: The record of all locker-hirers, who have accessed the lockers with date, check-in and check-out time, is entered in the Access Register along with their signature.
- Privacy in Locker Room: The bank’s officer, or any other locker hirer shall not remain inside the locker room when a locker is opened by a locker-hirer.
- Alerts to Customer: An email and SMS alert should be sent to the registered email ID and mobile number of the customer intimating the date and time of the locker operation.
- Locks and Keys: Locks should be inter-changed whenever a locker is surrendered. The duplicate master keys are deposited with another branch of the bank, and proper record of joint custody of master keys is maintained.
- Daily Checks: The officer-in-charge shall check whether the locker is properly closed post locker operation. If not done, the locker must be immediately closed and sealed, and the locker-hirer promptly intimated.
Nomination Facility In Locker
Sec. 45 – ZC to Sec. 45 –ZF of the BR Act deal with the nomination facilities in lockers services.
- For a singly operated locker, nomination can be made in favour of only one individual.
- Two or more joint hirers can nominate one or more persons.
- Photograph(s) of the nominee(s) may be obtained at the option of the customer(s).
- Nomination forms have been prescribed under the Rules. In case of thumb impressions, attestation by two witnesses is required.
- Acknowledgment of the form for nomination/ cancellation/ variation should be given.
Claims Settlement on Death of a Customer
- Time Limit for Settlement
- Death of the Sole Locker-Hirer:
- Death of Any of Joint Locker-Hirers Operating Jointly
- Death of Any of Joint Locker-Hirers With Survivorship Clause
- Death of a Sole/Joint Locker-Hirer(s) Without Clear Survivorship Clause/ Nominee
- Pre-requisites for Giving Access
Closure and Discharge of Locker Items
- Discharge of locker contents at the request of customer
- Attachment and recovery of contents in a Locker by a Law Enforcement Authority
- Discharge of locker contents by banks due to non-payment of locker rent
- Discharge of locker contents if the locker remains inoperative for a long period of time
What is a Portfolio?
A portfolio refers to a collection of investment tools such as stocks, shares, mutual funds, bonds, cash and so on depending on the investor’s income, budget and convenient time frame.
Following are the two types of Portfolio:
ii)Zero Investment Portfolio
What is Portfolio Management?
- The art of selecting the right investment policy for the individuals in terms of minimum risk and maximum return is called as portfolio management.
- Portfolio management refers to managing an individual’s investments in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits within the stipulated time frame.
- Portfolio management refers to managing money of an individual under the expert guidance of portfolio managers.
- In a layman’s language, the art of managing an individual’s investment is called as portfolio management.
Need for Portfolio Management
- Portfolio management presents the best investment plan to the individuals as per their income, budget, age and ability to undertake risks.
- Portfolio management minimizes the risks involved in investing and also increases the chance of making profits.
- Portfolio managers understand the client’s financial needs and suggest the best and unique investment policy for them with minimum risks involved.
- Portfolio management enables the portfolio managers to provide customized investment solutions to clients as per their needs and requirements.
Portfolio Management Scheme- RBI Guidelines
- PMS services are provided at the customer’s risk, without guaranteeing them a pre- determined return;
- The services are provided to parties in respect of their long- term investible funds;
- The minimum period, for which funds are placed by the clients, should be one year;
- Funds accepted for portfolio management should not be entrusted to another bank for management;
- Funds are expected to deployed essentially in capital market instruments such as shares, debentures, bonds securities etc, but are not to be employed for lending in call money/ bill market and lending to/ Placement with corporate bodies;
- The undeployed funds are the same as outside borrowings of the bank and Cash Reserve Ratio (CRR)/ SLR has to be maintained on such funds;
Role of Merchant Banking in India. basically provide services in the field of marketing, management, legal and financial matters to their clients. Its role ranges from aiding the person in starting the business, provide ways for raising funds, plays an efficient role in expanding the operations and also helps in reconstructing and reviving of sick business units.
The main business of merchant banking as summarized aptly by Narasimhan Committee in its reports is “Management and Underwriting of new issues, syndication of credit and provision of advisory services to corporate clients on fund raising and other financial aspects.
Following other activities are also covered under merchant banking:
- Payment of interest/ Divident warrants/ refund orders
- Bridge loan against issues
- Collection of Central Excise and Customs, Direct Taxes and Indirect Taxes
- Opening of Public Provident Fund Accounts exclusively
- Handling of Treasury Work through opening of Treasury Accounts
- Collection of Railway Stations Revenues through opening of Non operative Collection Accounts
- Opening of Ministry of Health and Family Welfare Accounts
- Opening of Post Office Receipts and Payment accounts
- Opening of Accounts under Deposit Scheme for (DSRGE) and (DSREPSC)
- Accept applications for collection of Relief Bonds/ Savings Bonds & 8% Savings (Taxable) Bonds
- Payment of Central and State Government Pensions
JAIIB PPB Module A Unit 15- Ancillary Services (Ambitious Baba) PDF
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