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November 07, 2016

Banking Awareness in Simple Language - Lesson 18

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Dear Gr8 Ambitionists, due to hectic work in my bank, I was unable to post my lessons on Banking Awareness regularly. As the exams have been approaching, I will try to speedup the lessons and will post 2 to 3 lessons per day. Please make your schedule accordingly. In our previous Banking Awareness 2017 Lesson 17, we have learnt about some Important Banking and Financial Organizations in exam point of view. In today's lesson too, we shall continue with some other important organizations. Happy Reading :)

Banking Awareness 2017 : Banking & Financial Organizations (Part 2)

MSME (Micro, Small, Medium Enterprises)

Headquarter : Delhi 

The Ministry of MSME, a branch of the GOI, is the apex body for the formulation and administration of rules, regulations & laws relating to micro, small and medium enterprises in India. MSME are classified into two classes
  1. Manufacturing Sector 
  2. Service Sector

Manufacturing Sector
Service Sector
Investment in Plant and machinery
Investment in Equipments
Doesn’t exceed 25 lakh Rs.
MICRO (40% of manufacturing)
Doesn’t exceed 10 lakh Rs.
More than 25 lakh but doesn’t exceed 5 crore.
SMALL (40% of manufacturing)
More than 10 lakh Rs. but doesn’t exceed 20 crore Rs.
More than 5 crore but doesn’t exceed 10 crore Rs.
More than 2 crore but doesn’t exceed 5 crore Rs.

SME (Small & Medium Enterprises)

SMEs are critical for the economic & social development of emerging markets They play a major role in creating jobs & generating income for low income people; they foster economic growth, social stability & contribute to the development of a dynamic private sector.

CGTMSE (Credit Guarantee Fund Trust for Micro & Small Enterprises)

The word CGTMSE and its LOGO ensure assured help for the entrepreneurs to set up MSE units. The ministry of Micro, Small and Medium Enterprises & Small Industries Development bank of India (SIDBI) established a trust named CGTMSE to implement the Credit Guarantee Fund Scheme for Micro & Small enterprises. The scheme was formally launched on Aug, 30,2000 and its operational with effect from 1 Jan, 2001 collateral free loans under CGTMSE scheme. 

The Credit Guarantee Scheme (CGS) provides guarantee to bank, in case if borrower fails to repay the loan then CGTMSE repay the loan amount upto 50% to 85% and maximum loan amount which can be covered under CGTMSE is Rs. 1 crore. 

SIDBI (Small Industries Development Bank of India)

Headoffice : Lucknow
CEO : Dr. Kshatrapati Shivaji 
  1. Small Industries development of India act 1989. 
  2. Set up on 2 April 1990. 
  3. Independent financial institution focuses on growth & development of Micro, Small and Medium Scale Enterprises (MSME) in India. 
Note: SIDBI is a subsidiary of Industrial Development Bank of India. 

Function : It refinances loans & advances provided by the existing lending institution to the small scale units. 

Note : Finance Minister Arun Jaitley launched two funds by SIDBI one for funding start-ups in India and another to aid small enterprises. 
  1. The India Aspiration Fund (IAF) is intended to catalyse tens of thousands of crores of equity investment into start-ups and MSMEs, creating employment for lakh of persons, mostly educated youth over the next 4 to 5 years. LIC will be partner and co-investor in the fund. 
  2. The second fund is a debt fund called SIDBI make in India loan for enterprises (SMILE), which was announced in the Union budget (2015) in February. The fund will provide short term loans and loans in the nature of quasi-equity of MSMEs to meet debt-to-equity norms and pursue growth. 

NPCI (National Payments Corporation of India)  

Headquarter : Mumbai
Chairman : Sh. Balachandran 
MD & CEO  : A.P. Hota 
  1. NPCI was incorporated in Dec 2008 & the certificate of commencement of business was issued in April, 2009. 
  2. NPCI formed to operate for the benefit of all the member banks and their customers.
  3. NPCI has successfully completed the major project of developing a domestic card payment network-Rupay. 
  4. Presently, there are 10 crore promoter banks (SBI, PNB, BOB, BOI, Canara bank, Union Bank of India, ICICI, HDFC, Citi Bank & HSBC). 
Features of NPCI Model : 
  • AEPS (Aadhar Enabled Payment System): It is a new payment service offered by the NPCI to banks, financial institutions using "Aadhar" number and online UIDAI authentication through their respective business correspondent service centres. RBI has approved the pilot of AEPS. 
  • IMPS (Immediate Payment System) : It is an over the mobile 24 x 7 interbank electronic payment mechanism that enables customers to use mobile instruments, Internet banking & ATMs as channels for accessing their bank accounts and placing interbank fund transfers in secured manner.
  1. MMID : Mobile Money Identifier is a 7 digit code issued by bank to their customers. This number is mandatory for the beneficiary of funds if he wants to enter into a transaction.  
  2. IFSC : Indian Financial System Code is a code which is a kind of identity for a specific bank. 
  3. NFS (National Financial Switch) : It was initiated by Institute of Development & Research in Banking Technology and handed over to NPCI in 2009. NFS consists of an national switch to facilitate connectivity between banks switcher & their ATM's and interbank payment gateway for authentication and routing the payment details of various e-commerce transactions. NFS is India's largest ATM connecting facility. Main purpose of NFS initially was to include rural and co-operative banks under its umbrella. 
  4. Rupay : Rupay is the Indian domestic card payment network being set up by NPCI on the behalf of banks in India. 

SEBI (Securities and Exchange Board of India)

Headquarter : Mumbai

Head : Upendera Kumar Sinha
  • Established in 1988 and got statutory power on 12 April 1992 under SEBI act 1992. 
  • Objective : Protects the interest of investors and to promote the development of stock exchange & regulate the activities of stock market. 
  • 1st chariman of SEBI is Dr. S.A. Dave [12 April 1988-23 Aug 1990] Current chairman of SEBI is UK Sinha [18 Feb 2011 — Incumbent] 
  • 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. 
      • This regulations came into effect on 1 July 2013 post which all the fund houses have labelled their funds can be the basis of the risk levels. 
  • SEBI has launched a centralised web based system to redress complaints by — SCORES. 

EXIM (Export — Import Bank of India)

Headquarter : Mumbai
Chairman & MD : Sh. Yadwendra Mathur
  1. It was established in 1982 under EXIM Bank of India Act 1981
  2. The bank lays special emphasis on extension of Lines Of Credit (LOCs) to overseas entities, national govts., regional financial institution and Commercial Banks. 
  3. The bank extends Buyers credit & suppliers credit to finance and promote country's exports. 
  4. To promote hi-tech exports from India, the bank has a lending programme to finance Research & Development (R & D) activities of export-oriented companies.
  5. The authorised capital of the EXIM bank is Its. 200 crore & paid up capital is Rs. 100 crore, wholly subscribed by the central government. 
Functions :

To tap domestic & foreign markets for resources, under taking development & financial activities in export sector (export & import). 

NABARD (National Bank for Agriculture and Rural Development)

Head office : Mumbai

Chairman : Dr. Harsh Kumar Bhanwala
  • Biggest Rural Development Bank 
  • Established on 12 July 1982 on recommendation of Shivaraman committee to implement NABARD act 1981. 
  • AIM : To uplift Rural India & rural non farm sector. 
  • NABARD acts as regulator for co-operative banks & RRB's (Regional Rural Banks).
Functions :
  • Provides refinance to lending institutions in rural areas. 
  • Helps SHG (Self Help Group) & poor people in rural areas.
    Runs programme for agricultural & rural development. 
  • Recommends about licensing for RRBs, Co-operative banks to RBI. 
Note : There is 99% holding of GOI and 1% of RBI in NABARD. 

ECGC (Export Credit Guarantee Corporation of India) 

Industry : Insurance

Founded : 30 July 1957

Headquarter : Mumbai
  1. It is a company wholly owned by Government of India.
  2. OBJECTIVE: To provide insurance cover in respect of risks in export trade. 
  3. ECGC Ltd. provides export credit insurance support to Indian exporters and is controlled by the Ministry of Commerce. 
  4. ECGC Ltd. is the 7th largest credit insurer of the world in terms of courage of national exports. 

DICGC (Deposit Insurance and Credit Guarantee Corporation)

  • Established : Under DICGC act 1961 on 15 July 1978. 
  • Subsidiary of RBI 
  • Head office : Mumbai
  • DICGC insures all bank deposits as saving, fixed, current, recurring etc except following deposits: 
    • Deposits of foreign Government.
    • Deposits of state/central government 
    • Interbank Deposits 
    • Deposit of state land development banks with state cooperative banks 
    • Any amount due on account and deposit received outside India o Any amount exempted by RBI approval. 
  • DICGC Insures upto maximum Rs. 100,000 for both principal & interest held by a customer as on date of scheme merger/reconstruction or cancellation of bank's license come into force (in case of multiple a/c still maximum insured amount is Rs. 1 lakh). 
  • Note : All commercial banks, branches of foreign  banks functioning 1st India, RRBs, local area bank, co-operative banks are insured by DICGC.

IRDA (Insurance Regulatory and Development Authority)

  • Head office : Hyderabad (Telangana) 
  • Chairman : T.S. Vijayan 
  • It is an autonomous apex statutory body to control & develop insurance agency in India. MBA it tinti011ftl agency of GOI. 
  • Passed by Government of India under IRDA Act 1999 on recommendation of Malhotra Committee. 
  • It was incorporated as statutory body in April 2000. 
  • IRDA act 1999, amended in 2002 to incorporate some emerging requirements. 
  • Objective : To protect the interest of policy holders, to regulate, promote & ensure orderly growth of the insurance industry & for matters connected therewith or incidental there to.

GIC (General Insurance Corporation) 

Founded : 22 Nov 1972 under the companies act 1956. 

Headquarter : Mumbai GIC of India (GICRe) is the sole reinsurance company in the Indian insurance market.

Note : GICRe wins marine Insurer of the year Award at the inaugural Maritime Standard Awards 2015. 

LIC (Life Insurance Corporation of India)  

  • The company was founded in 1956 under Life Insurance of India act on 19 June 1956. LIC is an Indian state owned insurance group and investment company head quarter in Mumbai. It is the largest insurance company in India. 
  • LIC offers a variety of Insurance products to its customers such as insurance plans, unit linked plans, special plans and group schemes. 
  • LIC's slogan yogakshemam vahamyaha is in Sanskrit language which translate in English as "Your welfare is our responsibility". The slogan can be seen in the logo, written in devnagri script.
That's all for now friends. In our next Banking Awareness lesson, we shall learn about various Banking & Financial Institutes. Happy Reading :)
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