ACCOUNTING TERMS:BALANCE SHEET,ASSET,LIABILITIES,CAPITAL,CREDIT,DEBIT

1. 1. 
      
2. BALANCE SHEET: A balance sheet is a statement of the total assets and liabilities of an organization at a particular date – usually the last date of the accounting period.
 

1. A statement of fixed assets, current assets and the liabilities (something referred to as “Net Assets)
2. A statement showing how the net assets have been financed
The Company Act requires the balance sheet to be included in the published financial accounts of all limited companies. In reality, all other organizations that need to prepare accounting information for external users (e.g. charities, clubs and partnerships) will also product a balance sheet since it is an important statement of the financial affairs of the organization.

ASSET: An asset is any right or thing that is owned by a business. Assets include land, buildings, equipment and anything else that can be given a value in money terms for the purpose of financial reporting.

LIABILITIES: To acquire its assets, a business may have to obtain money from various sources in addition to its owners (shareholders) or from retained profits. The various amounts of money owned by a business are called liabilities.
To provide additional information to the user, assets and liabilities are usually classified in the balance sheet as:
Current: those due to be repaid or converted into cash within 12 months of the balance sheet date
Long-term: those due to be repaid or converted into cash more than 12 months after the balance sheet date
Fixed Assets: A fixed assets is an asset which is intended to be of the permanent nature and which is used by the business to provide the capability to conduct the trade.

CAPITAL: As well as borrowing from banks and other sources, all companies receive finance from their owners. This money is generally available for the life of the business and is normally only repaid when the company is “wound up”. To distinguish between the liabilities owed to the third parties and to the business owners, the latter is referred to as “capital” or “equity capital” of the company.

CREDIT: An accounting entry that either decreases assets or increases liabilities and equity on the company's balance sheet. On the company's income statement,  a credit will increase the company's accounts payable (a liability).
The amount of money available to be borrowed by an individual or a company is referred to as credit because it must be paid back to the lender at some point in the future. For example, when you make a purchase at your local mall with your VISA card it is considered a form of credit because you are buying goods with the understanding that you'll need to pay for them later.

DEBIT: An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet or in your bank account. A debit on an accounting entry will have opposite effects on the balance depending on whether it is done to assets or liabilities, with a debit to assets indicating an increase and vice versa for liabilities.
In fundamental accounting, debits are balanced by credits, which operate in the exact opposite direction. When a debit is made to one account of a financial statement, a corresponding credit must occur on an opposing account. This is the fundamental law of bookkeeping accounting.

MARGINAL STANDING FACILITY

MSF rate is the rate at which banks borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities.
This came into effect in may 2011. Under the Marginal Standing Facility (MSF), currently banks avail funds from the RBI on overnight basis against their excess statutory liquidity ratio (SLR) holdings.

Under the facility, the eligible entities can avail overnight, up to one per cent of their respective Net Demand and Time Liabilities (NDTL) outstanding at the end of the second preceding fortnight.

Rate of Interest: The rate of interest on amount availed under this facility will be 100 basis points above the LAF repo rate, or as decided by the Reserve Bank from time to time.
Timing: The Facility will be available on all working days in Mumbai, excluding Saturdays between 3.30 P.M. and 4.30 P.M.

Minimum request size: Requests will be received for a minimum amount of Rs. One crore and in multiples of Rs. One crore thereafter.

Current MSF rate: In the mid-quarter review of the monetary policy , the Reserve Bank of India (RBI) increased the Marginal Standing Facility (MSF) rate by 25 basis points to 9.00% and increased the Repo rate by 25 basis points to 8.00% with immediate effect.

Requirement: It is required because Commercial banks borrow money from RBI at MSF rate when there is an acute cash shortage or acute asset-liability mismatch.

Some Interesting Science Facts

1. There are 62,000 miles of blood vessles in the human body – laid end to end they would circle the earth 2.5 times.

2. At over 2000 kms long, the Great Barrier Reef is the largest living structure on Earth.

3. The risk of being stuck by a falling meteorite for a human is one occurrence every 9,300 years.

4.  A thimbleful of a neutron star would weigh over 100 million tons.

5. A typical hurricane produces produces the energy equivalent of 8,000 one megaton bombs.

6. Blood sucking hookwormsinhabit 700 million people worldwide.

7. The highest speed ever achieved on a bicycle is 166.94 mph, by Fred Rompelberg.

8. We can produce laser light a million times brighter than sunshine.

9. 65% of those with autism are left handed

10. The combined length of the roots of a Finnish pine tree is over 30 miles.

11. the ocean contains enough salt to cover all the constituents to a depth of nearly 500 feet

12. the interstellar gas cloud Sagittarius B contain billion and billion liters of alcohol.

13. Polar bear can run at 25 miles an hour and jump over 6 feet in the air.

14. 60-65 million years ago dolphins and humans shared a common ancestor

15. Polar bears are nearly undetectable by infrared cameras, due to their transparent fur.

16. The average person accidently eats bugs each year of their life

17. A single ryeplant can spread up to 400 miles of roots underground.

18. The temperature on the surface of Mercury exceeds 430 degrees C during the day, and at night, plummets to minus 180 degrees.

19. The evaporation from a large oak or beech tree is from ten to twenty-five gallons in twenty four hours.

20. Butterflies taste with their hind feet, and their taste sensation works on touch – this allows them to determine whether a leaf is edible or not.


source:bankersadda

BANKING OMBUDSMAN

BANKING OMBUDSMAN

The Banking Ombudsman Scheme enables  fast and inexpensive forum to bank customers for resolution of complaints relating to certain services provided by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.

The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services. As on date, fifteen Banking Ombudsmen have been appointed with their offices located mostly in state capitals. The addresses and contact details of the Banking Ombudsman offices has been provided by the banks.

All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

PROCEDURE

One can file a complaint with the Banking Ombudsman simply by writing on a plain paper. One can also file it online or by sending an email to the Banking Ombudsman. There is a form along with details of the scheme in our website.However, it is not necessary to use this format.

The complaint should have the name and address of the complainant, the name and address of the branch or office of the bank against which the complaint is made, facts giving rise to the complaint supported by documents.

The Banking Ombudsman may award compensation not exceeding Rs 1 lakh to the complainant only in the case of complaints relating to credit card operations for mental agony and harassment. The Banking Ombudsman will take into account the loss of the complainants time, expenses incurred by the complainant, harassment and mental anguish suffered by the complainant while passing such award.

It was re-introduced in the year 2006 to receive and deal with the public complaints against the banks of deficiencies in specified types of services.

Under this scheme, the customer can give his complaint to the Branch Manager and it should be responded by the Branch Manager within 30 days, if not the customer can file the complaint with the Banking Ombudsman.

AMENDMENTS:

In the year May 2007, the RBI has amended the Banking Ombudsman Scheme to enable the customers to appeal against the Banking Ombudsman’s decision. Before the scheme was amended, the bank customers could appeal only against the awards given by the Banking Ombudsman. The appellate authority for the Banking Ombudsman scheme is the Deputy Governor of RBI.

The RBI has amended the scheme again on 3rd February 2009, to include deficiencies arising out of Internet Banking. According to this new amended scheme, a customer would also be able to lodge a complaint against the bank for its non-adherence to the provisions of the fair practices code for lenders or the Code of Bank’s Commitment to Customer issued by the Banking Codes and Standard Board of India (BCSBI).

On 4TH January 2013, RBI has set up a working group to evaluate and make improvements in this scheme.

CROSSING OF CHEQUES

Crossing of Cheques:

Any cheque that is crossed with two parallel lines, either across the whole cheque or through the top left hand corner of the cheque.

This symbol means that the cheque can only be deposited directly into a bank account and cannot be immediately cashed by a bank or any other credit institution.

By using crossed cheques, cheque writers are able to simply but effectively protect the cheques they write.

It is also usual to write the words "& Co", in between these two lines. However, it is not necessary to write these words. A crossing is a direction to the paying banker not to pay the money to the holder at the counter.

Types of Crossing:

1. General Crossing:

In a general crossing, simply two parallel transverse lines, with or without the words 'not negotiable' in between, may be drawn. Such a cheque is crossed generally.

The effect of general crossing is that the payment of the cheque will not be made at the counter, it can be collected only through a banker.

2. Special Crossing:

In a special crossing, the name of a banker with or without the words 'not negotiable' is written on the cheque. Such a cheque is crossed specially to that banker.

The effect to special crossing is that the paying banker will be the amount of the cheque only through the bank named in the cheque.

3. Restrictive crossing:

This type of crossing has been recognized by usage and custom of the trade.In a restrictive crossing the words 'Account Payee' or Account Payee Only' are added to the general or special crossing.

The effect of restrictive crossing is that the payment of the cheque will be made by the bank to the collecting banker only for the account payee named. If the collecting banker collects the amount for any other person, he will be liable for wrongful conversion of funds.

4. Not negotiable Crossing:

A person taking is cheque crossed generally or specially, bearing in either case the words 'not negotiable' shall not be able to give a better title to the holder than that of the transferor.

The effect of a not negotiable crossing is that the cheque can be transferred but the transferee will not acquire a better title to the cheque. Thus a cheque is deprived of its essential feature of negotiability.

 

source:bankersadda

White Label ATMs

1.What is White label ATM?White Label ATM or White Label Automated Teller Machines or WLAs will be owned and operated by Non Bank entities.From such White Label ATM customer from any bank will be able to withdraw money, but will need to pay a fee for the services.
They will provide the banking services to the customers of banks in India, based on the cards (debit/credit/prepaid) issued by banks.

Note: The extant guidelines on five free transactions in a month as applicable to bank customers for using other bank ATMs would be inclusive of the transactions effected at the WLAs.

2. What is the purpose for introduction of White Label ATMs in India?The objective of permitting non-banks to operate white label ATMs was to enhance the spread of ATMs in semi-urban and rural areas, where bank-owned ATM penetration has not been growing.

3.Who will benefit from White Label ATMs?The white label automated teller machines are likely to benefit customers as well as banks.With the expansion of ATM network, customers will be able to withdraw funds at more locations which will be convenient and located near to their home or place of work.
Banks too support introduction of white label ATMs as such machines are likely to reduce pre-transaction cost for them and will be free from the problems relating to maintaining and running such a payment channel

4.Which is the first non-bank entity to launch first White Label ATM in India?Tata Communications Payment Solutions Ltd. (TCPSL), a subsidiary of Tata Communications, rolled out the first-ever white label Automated Teller Machines (ATMs) network under the brand Indicash.

The first Indicash ATM was inaugurated at Chandrapada, a rural village in Thane district, Maharashtra.

5.What Problems are likely to be faced by Bankers and Customers?Bankers are already sounding caution about the pitfalls of white label ATMs:1. The first and foremost concern for customers will be the inconvenience they may feel in case of failed transactions on WLAs.In such cases the dispute resolution mechanism will involve three entities — the WLA operator, the sponsorbank of the operator, and the customer's bank.
The WLA operators being non bank entities and running purely on profit basis may take longer time or avoid payments on account of failed transactions.
2. The second concern for customers will be the high cost they are likely to pay for use of such ATMs.

6. Four non-bank entities to set up white label ATMs:The Reserve Bank of India (RBI) has permitted four non-bank entities to set up white label ATMs in India.The RBI has issued Certificate of authorisation to 1. Tata Communications Payment Solutions Ltd.2. Prizm Payment Services Pvt. Ltd.3. Muthoot Finance Ltd., and 4. Vakrangee Ltd. for setting up and operating white label ATMs.


Specific Criteria and guidelines for a non-bank entity:
1. The eligibility criteria for WLA Operators (WLAO) would be as under:
i. The Memorandum of Association (MOA) of the applicant entity must cover the proposed activity of operating WLAs.
ii. Non-bank entities must have net worth of at least Rs 100 crore as per the last audited balance sheet.
iii. The net worth of at least Rs 100 crore has to be maintained at all times.

2. The authorised non-bank entity (henceforth referred to as WLA Operator or WLAO) would have the freedom to choose the location of the WLA.

3. The authorisation for setting up a WLA operation under the proposed guidelines would be initially valid for a period of one year.The scheme and number of WLAs sought to be installed would need to be indicated at the time of application.

The details of the schemes are as under:

Scheme Ai. Year -1 minimum of 1000 WLAsii. Year -2 minimum of twice the number of WLAs installed in Year 1 andiii. Year -3 minimum of three times the number of WLAs installed in Year 2The ratio of 3:1 would be applicable, i.e. for every 3 WLAs installed in Tier III to VI centres, 1 WLA can be installed in Tier I to II centres. Out of the 3 WLAs installed in Tier III to VI centres, a minimum of 10 % should be installed in Tier V & VI centres.

Scheme B: A minimum of 5000 WLAs every year for three years.
The ratio of 2:1 would be applicable, i.e. for every 2 WLAs installed in Tier III to VI centres, 1 WLA can be installed in Tier I to II centres. Out of the WLAs installed in Tier III to VI centres, a minimum of 10 % should be installed in Tier V & VI centres.

Scheme C: A minimum of 25,000 WLAs in the first year and at least another 25,000 in the next two years.
The ratio of 1:1 would be applied under this scheme. Out of the WLAs installed in Tier III to VI centres, a minimum of 10 % should be installed in Tier V & VI centres

4. Only cards issued by banks in India (domestic cards) would be permitted to be used at the WLAs in the initial stage.

5. Acceptance of deposits at the WLAs, by the WLAO would not be permitted.

6. The WLA Operator would not be entitled to any fee from the card issuer-bank other than the "Interchange" fee payable to "acquirer" bank under the bank owned ATM scenario.

7. While the WLA operator is entitled to receive a fee from the banks for the use of ATM resources by the banks customers, WLAs are not permitted to charge bank customer directly for the use of WLAs. 

FINANCIAL REGULATORS IN INDIA

FINANCIAL REGULATORS IN INDIA
The financial system In India is regulated by independent regulators in the field of Banking, Insurance, Capital Market, Commodities Market and Pension Funds. However, Government of India plays an significant role in controlling the financial system in India and influences the roles of such regulators at least to some extent.
The following are the five major financial regulatory bodies in India:

1. Financial Sector Development Council(FSDC):
Financial Stability and Development Council  is the apex-level body constituted by Government of India. The idea to create such a super regulatory body was fird=st mooted by Raghuram Rajan Committee in 1998. The recent global economic meltdown has put pressure on governments and institutions across globe to regulate the economic assests. This council is seen as an India’s initiative to be better conditioned to prevent such incidents in future.
PRESENT CHAIRMAN:  The Union Finance Minister of India (P.Chidambaram)

2. Reserve Bank of India:  Reserve Bank of India is the apex monetary institution in India.  It is also called as the Central Bank of India. It was established on 1st April 1935, in accordance with the provisions of the Reserve Bank of India Act,1934 and was given statuary powers in 1949, fully owned by the Government of India. The Head Office of RBI was initially in Calcutta and later moved to Mumbai in 1937. The Central Office is where the Governor sits and where all the policies are formulated.
PRESENT  GOVERNOR-Raghuram Rajan
PRESENT DEPUTY GOVERNOR-
a) H.R. Khan
b) Dr. K.C. Chakrabarty
c) Urijit Patel
RBI celebrated 75 years in 2010.
Note:  Anand Sinha, who was one of the Deputy governor of RBI has retired now.

3. Securities and Exchange Board of India:SEBI was first established in the year 1988 as the non-statutory body for regulating the securities market. It became an autonomous body in 1992 and more powers were given through an ordinance. Since then it regulates the market through its independent powers. SEBI celebrated 25 years on 24th May 2013.
PRESENT CHAIRMAN- Upendra Kumar (U.K. Sinha)
HEAD OFFICE-MUMBAI

4. Insurance Regulatory and Development Authority:The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India and is based in Hyderabad (Andhra Pradesh). It was formed by an Act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is “to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.”
PRESENT CHAIRMAN-T.S. Vijayan

5. Forward Market Commission in India: FMC headquartered at Mumbai, is a regulatory authority which is overseen by the Ministry of Consumer Affairs, Food and Public Distribution, Govt of India. It is a statutory body set up in 1953 under the Forward Contracts (Regulation) Act, 1952. This commission allows commodity trading in 22 exchanges in India, out of which three are national.
PRESENT CHAIRMAN- Ramesh Abhishek

6. Pension Fund Regulatory and Development Authority: PFRDA was established by Government of India on 23rd August, 2003. The Government has, through an executive order dated 10th October 2003, mandated PFRDA to act as a regulator for the pension sector. The mandate of PFRDA is development and regulation of pension sector in India.
PRESENT CHAIRMAN- Anup Wadhawan

CHEQUE TRUNCATION SYSTEM

Cheque Truncation System is the process of stopping the flow of the physical cheque issued by a drawer to the drawee branch. The physical instrument will be truncated at some point en-route to the drawee branch and an electronic image of the cheque would be sent to the drawee branch along with the relevant information like the MICR fields, date of presentation, presenting banks etc. Thus with the implementation of cheque truncation, the need to move the physical instruments across branches would not be required, except in exceptional circumstances. This would effectively reduce the time required for payment of cheques, the associated cost of transit and delay in processing, etc., thus speeding up the process of collection or realization of the cheques.

The images captured at the presenting bank level would be transmitted to the Clearing House and then to the drawee branches with digital signatures of the presenting bank. Thus each image would carry the digital signature. In order to ensure only images of requisite quality reach the drawee branches, there will be a quality check process at the level of the Capture Systems and the Clearing House Interface. In addition, drawers could consider using holograms, bar coding or such other features, which would add to the uniqueness of the images.

RBI is proposing to implement the project on a PILOT basis in the National Capital Region (NCR), New Delhi. Based on the experienced gathered, it would consider extending the coverage to other centres.

The criteria for banks participating in the Cheque truncation system are:

i. Membership of the clearing house in the NCR.

ii. Membership of the Indian Financial Network (INFINET) 

 In respect of banks who are not members of the INFINET, the following alternatives are available

(a) They may become the sub-members of the direct members or

(b) Such banks may use the infrastructure of the other banks having INFINET membership

All the local cheques can be presented in the CTS.

Thus the benefits could be summarized as:

a) Faster clearing cycle

b) Better reconciliation/verification process

c) Better Customer Service ñ Enhanced Customer Window

d)  No Geographical Dependence

e) Operational Efficiency

f) Minimises Transaction Costs.

g) Reduces operational risk by securing the transmission route.

source:bankersadda