1.
KYC:
KYC means Know Your Customer and sometimes Know Your Client. KYC or KYC
check is the mandatory process of identifying and verifying the client's identity
when opening an account and periodically over time. In other words, banks
must ensure that their clients are genuinely who they claim to be.
2. CKYC: Central Know Your Customer
CKYC stands for Central Know Your Customer. It is a centralised storehouse of
KYC records of customers getting various financial services across institutions,
like banks, insurance companies, Non-banking Financial Companies (NBFCs),
etc.
3. RKYC: Really Know Your Customer:
Categories of Risk (CIL PFTCS R)
Credit Risk: Credit risk is the risk to earnings or capital arising from an
obligor's failure to meet the terms of any contract with the bank or otherwise
fail to perform as agreed.
Interest Rate Risk: Interest rate risk is the risk to earnings or capital arising
from movements in interest rates.
Liquidity Risk: Liquidity risk is the risk to earnings or capital arising from a
bank's inability to meet its obligations when they come due, without incurring
unacceptable losses.
Price Risk: Price risk is the risk to earnings or capital arising from changes in
the value of portfolios of financial instruments.
Foreign Exchange: Risk Foreign Exchange risk is the risk to earnings or
capital arising from movement of foreign exchange rates.
Transaction Risk: Transaction risk is the risk to earnings or capital arising
from problems with service or product delivery.
Compliance Risk: Compliance risk is the risk to earnings or capital arising
from violations of, or non-conformance with, laws, rules, regulations,
prescribed practices, or ethical standards.
Strategic Risk: Strategic risk is the risk to earnings or capital arising from
adverse business decisions or improper implementation of those decisions.
Reputation Risk: Reputation risk is the risk to earnings or capital arising from
negative public opinion. This affects the institution's ability to establish new
relationships or services, or continue servicing existing relationships.
4. Dormant Account: A dormant account is an account that has had no
financial activity for a long period of time, except for the posting of interest.
After the dormancy period, which varies by state, dormant accounts become
the unclaimed property of the state.
A savings as well as current account should be treated as inoperative /
dormant if there are no transactions in the account for over a period of two
years. The accounts which have not been operated upon over a period of two
years should be segregated and maintained in separate ledgers.
5. DEAF Fund: Depositor Education and Awareness Fund
DEAF stands for Depositor Education and Awareness Fund. The RBI launched
it as a plan or fund in 2014. It was established to manage unclaimed funds
from depositors.
What is the deaf account policy?
Objective of the DEAF: The amount in credit of in any account with any Bank
has not been operated upon for a period of ten years or any deposit or any
amount remaining unclaimed for more than ten years shall be credited to the
Fund, within a period of three months from the expiry of the said period of
ten years.
6. CRR: Cash Reserve Ratio (CRR) is the minimum percentage of its total
deposits that it must maintain as cash or cash equivalents with the Reserve
Bank of India (RBI).
The current CRR rate is 4.5%. This means that every scheduled
commercial bank is required to maintain 4.5% of its net demand and time
liabilities (i.e. deposits) with the Reserve Bank of India as cash or cash
equivalents.
7. SLR: Statutory Liquidity Ratio popularly called SLR is the minimum
percentage of deposits that the commercial bank maintains through gold,
cash and other securities. However, these deposits are maintained by the
banks themselves and not with the RBI or Reserve Bank of India. Current
SLR in India – 18.00%.
8. NEFT LIMIT: National Electronic Funds Transfer
There is no limit or maximum amount for NEFT Transactions. However, each
bank may have certain specified limits for their NEFT services. For example,
HDFC Bank has an NEFT Transfer Limit of Rs. 25 Lakhs per day per customer
ID if the transaction is done through online mode.
9. RTGS LIMIT: Real Time Gross Settlement
There's a minimum limit of Rs. 2 lakhs for RTGS transactions, and there's no
maximum limit as such. To get an RTGS-enabled account, you can either
contact your bank or check your eligibility status in your online banking
portal.
10. DICGC: Deposit Insurance and Credit Guarantee Corporation
What is the purpose of DICGC?
The preamble of the Deposit Insurance and Credit Guarantee Corporation
Act, 1961 states that it is an Act to provide for the establishment of a
Corporation for the purpose of insurance of deposits and guaranteeing of
credit facilities and for other matters connected therewith or incidental
thereto.
What is the maximum deposit amount insured by DICGC?
Each depositor in a bank is insured upto a maximum of 5,00,000 (Rupees
Five Lakhs) for both principal and interest amount held by him in the same
right and same capacity 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.
11. NPA: In simple terms, NPA meaning in banking are those assets that are
considered nonperforming when the borrower fails to make timely payments
of principal and interest for a specified period, usually 90 days or more.
NPAs indicate a higher risk of default and financial instability.
[Link] Norms: 2.1. 1 The exposure ceiling limits would be 15 percent of
capital funds in case of single borrower and 40 percent of capital funds in the
case of a borrower group. The capital funds for the purpose will comprise of
Tier I and Tier II capital as defined under capital adequacy standards (please
also refer to para 2.3.
[Link] Rate: Repo rate refers to the rate at which commercial banks borrow
money by selling their securities to the Central Bank of our country i.e.
Reserve Bank of India (RBI) to maintain liquidity, in case of shortage of funds
or due to some statutory measures. It is one of the main tools of RBI to keep
inflation under control.
14. Reverse Repo Rate: As the name implies, reverse repo is the inverse
contract to the repo rate. The reverse repo rate is the rate at which the RBI
borrows funds from the country's commercial banks. It is the rate where the
commercial banks in India park excess funds with the Reserve Bank of India,
typically for a short period of time.