To build mutual trust and confidence between the bankers and the rural poor people.

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1 Self Help groups(shgs) in India Objectives & Features of SHGs A Self Help Group is an association of the poor people specially women who belong to the same social & economic background. The SHGs are usually informal groups of a locality or area, whose members have a common need and importance towards collective action. These groups normally consist of 10 to 20 members. Members of the group meet regularly, make their share of contribution. The SHGs bank linkage model has become famous in rural areas where as without bank linkage SHGs are also functioning. The SHG promotes small saving among its members, which are then kept with a bank. This common fund is then given a name. SHGs have been generally formed for specific issues. The main purpose of SHGs is to mobilize savings among their members and used resources to meet the emergent credit needs of the members of the group. SHGs generally work according to the local requirement. Objectives The Objectives of Forming SHG are as Follows To build mutual trust and confidence between the bankers and the rural poor people. To encourage banking activities in a segment of the population in which formal financial institutions fell difficult to cover. Main features Some Common Features of The Functioning of SHGs are as Follows: The SHGs create the common fund by contributing their small savings Every member of the group actively participates in the functioning of SHGs and they meet regularly. Their accounts and proceeding are maintained by the leader and leader is selected or elected among the group members. Amount of loans are small and for short period. Loan is sanctioned on 憈 rust with minimum documentation and without any security. The rate of interest differs from group to group. It is generally little higher than that of charged by banks. Repayment of loan amount is generally on time Micro Credit and Micro Finance in India Micro credit and micro finance are often used interchangeably as both provide loans/funds to low income groups such as women, landless farmers etc. but there is a little difference present between them. Micro Credit is generally defined as small loans provided to the poor for under-taking self-employment projects that generate income and enable them to provide employment for themselves and their families. Micro Finance is a type of financial service provided by entrepreneur and companies to low income households or groups. Micro finance is broader term in respect of their services. These financial services include saving, credit,

2 insurance, leasing, money transfer, equity transfer. All these financial services provided to customers to meet their financial needs only when transaction value is less and customers belong from the poor section of society. Significance of Micro Credit/Micro Finance- Protection from local money lenders Encouraging banking activities It builds trust and confidence between bankers and the poor rural people. It gives Convenience to the poor living in villages Short term loans are generally available It is a system of groups and members of group are mutually responsible for the repayment of individual loans. We could also say that the liability of loan on the individual is reduced in this system. Virtual Credit /Debit Cards Virtual card is an online card and it does not exist physically. It may be a credit or debit virtual card. It is issued by the bank to provide secure e-commerce transaction to their customers. Virtual cards are online cards which contain 16 digit card number, CVV Number and the expiry date. Virtual cards could only be used online and its validity ends after the transaction or when you cancelled it without its use or within 24 to 48 hours of its creation. Virtual credit and debit cards are issued on the basic of your primary plastic cards. All the transaction made through your virtual card is also shown in your bank account statement. Customer can make only one transaction through the use of one virtual card. You have to decide the limit on the card at the time of its creation In the case of virtual credit card the balance left on the card is credited back to the customer account. In the case of virtual debit card, the amount topped up into this card is debited from the customer 抯 account and if lower amount is used as compared to the card value then the left balance is released to your bank account after the use of the card. Benefits from the Use of Virtual Card It is secure as your account details & Credit /Debit limit of the primary card are not shared with the merchant. Card is cancelled automatically within 24 to 48 hours of its creation. This facility is available to all customers free of cost. Any customer having a primary Credit/Debit Card and internet banking facility can create this virtual card You can block your virtual card when you want. Customer can create any number of virtual cards subject to balance in his/her account. Types of Cheque 1. Order Cheque: A cheque which is payable to a particular person or his order is called an order cheque. 2. Bearer Cheque: A cheque which is payable to a person whosoever bears, is called bearer cheque.

3 3. Blank Cheque: A cheque on which the drawer puts his signature and leaves all other columns blank is called a blank cheque. 4. Stale Cheque: The cheque which is more than three months old is a stale cheque. 5. Multilated Cheque: If a cheque is torn into two or more pieces, it is termed as mutilated cheque. 6. Post Dated Cheque: If a cheque bears a date later than the date of issue, it is termed as post dated cheque. 7. Open Cheque: A cheque which has not been crossed is called an open cheque. Even if a cheque is crossed and subsequently the drawer has cancelled the crossing at the request of the payee and af?xes his full signature with the words 揷 rossing cancelled pay cash, it becomes an open cheque. 8. Crossed Cheque: A cheque which carries too parallel transverse lines across the face of the cheque with or without the words 揑 and co, is said to be crossed. 9. Gift Cheques: Gift cheques are used for offering presentations on occasions like birthday, weddings and such other situations. It is available in various denominations. 10. Traveller 抯 Cheques: It is an instrument issued by a bank for remittance of money from one place to another. Shadow Banking The shadow banking system is a term for the collection of non-bank financial intermediaries that provide services similar to traditional commercial banks. System of non-financial institutions that borrow money in the short term and take that money to invest in long-term assets. Shadow banking systems are able to avoid standard banking regulations through the use of credit derivatives. Para Banking: Banks can undertake certain eligible financial services or activities either departmentally or by setting up subsidiaries is called Para Banking. We could also define Para banking activities as the activities which are done by a Bank apart from its normal day to day activities (like deposit, withdrawal etc.). Activities of Indian Banks which come under Para Banking are as follows- Banks investment in Venture Capital Funds (VCFs) Banks as sponsors to Infrastructure Debt Funds Equipment leasing, Hire purchase business and Factoring services Primary Dealership business Underwriting of Corporate Shares and Debentures Underwriting of bonds of Public Sector Undertakings Retailing of Government Securities Mutual Fund Business Money Market Mutual Funds (MMMFs) Cheque Writing Facility for Investors of MMMFs

4 Insurance business Pension Fund Management (PFM) by banks Referral Services Membership of SEBI approved Stock Exchanges Portfolio Management Services Safety Net Schemes Disclosure of commissions/ remunerations Difference Between FDI and FII 1. FDI is an investment that a parent companymakes in a foreign country. On the contrary, FII is an investment made by an investor in the markets of a foreign nation. 2. FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily. 3. Foreign Direct Investment targets a specific enterprise. The FII increasing capital availability in general. 4. The Foreign Direct Investment is considered to be more stable than Foreign Institutional Investor. Inter Bank Transfers (RTGS & NEFT) Definition of Inter Bank Transfer Transfer of funds electronically from the account of remitting customer in one Bank to the account of the beneficiary maintained with any other Bank branch participating in this scheme. RTGS and NEFT are systems of Inter Bank transfers, which are maintained by Reserve Bank of India. Definition of RTGS and NEFT Real Time Gross Settlement (RTGS) Under this system, fund transfer takes place in real time and are settled on continuous, individual settlement basic. Normally, the beneficiary Bank branch receives the funds in real time as soon as funds are transferred by the remitting Bank. It is the fastest and secure ways of transferring money in India under inter bank money transfer. National Electronic Fund Transfer (NEFT) Under the NEFT system fund transfers take place on Deferred Net Settlement basis and are take place in hourly batches. Presently, NEFT operates in hourly batches from 9 am to 7 pm on week days and 9 am to 1 pm on Saturdays. Currently there are eleven settlements from 9 am to 7 pm on week days and five settlements from 9 am to 1 pm on Saturdays. The remitting customer has to fulfill the following information to the bank at the time of transfer through RTGS and NEFT. (1) Name of the beneficiary bank and branch (2) Name & Account Number of the beneficiary customer (3) Amount to be remitted (4) Remitting customer 抯 account number which is to be debited (5) The IFSC Number of the receiving branch Benefits of using RTGS/ NEFT Fast transfer of the funds to the beneficiary account

5 Credit confirmation SMS or mail is sent after fulfillment of the transaction. Any person or corporate could transfer money from home or work place using internet banking. It is a cost effective and less time consuming way of transferring money. The remitter need not require to send the physical cheque or Demand Draft to the beneficiary. Basel Norms : Bureau of International Settlement (BIS) headquarters at Basel, Switzerland has appointed a committee to supervise and to set some standards for International Banks. This committee is known as Basel Committee on Bank Supervision (BCBS). The rules and regulations for Banks issued by this committee were called Basel Norms / Accords. There are three Basel Norms, namely Basel I, II and III. Basel I Accord : This was issued in This accord focused on the capital adequacy of financial institutions. Banks that operate internationally are required to have a risk weight of 8% or less. India adopted Basel I Norms in the year Basel II Acord : This is the second of the Basel Accords, published in the year This consists of the recommendations on Banking Laws and Regulations issued by BCBS. Basel III Accord : Basel III guidelines were released in the year This is to enhance the banking regulatory framework. It builds on the Basel I and Basel II documents and seeks to improve the banking sector s ability to deal with financial and economic stress, improve risk management and strengthen the banks transparency.