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Finance Minister in its attempt to REVAMP functioning of PUBLIC SECTOR banks has launched a seven prolonged plan known as – INDRADHANUSH. The seven elements include appointments, board of bureau, capitalization, de-stressing, and empowerment, framework of accountability and GOVERNANCE reforms.

Finance Minister in its attempt to revamp functioning of public sector banks has launched a seven prolonged plan known as – Indradhanush. The seven elements include appointments, board of bureau, capitalization, de-stressing, and empowerment, framework of accountability and governance reforms.

“S4A” NEW scheme has been introduced by the Reserve Bank of India (RBI) for resolution of stressed assets and bad loans of LARGE projects.

The S4A will cover those projects which have STARTED commercial operations and have OUTSTANDING LOAN of over Rs.500 crore. The purpose of the S4A is to strengthen the lenders’ ability to deal with stressed assets and put real assets back on track by providing an avenue for reworking the financial structure of entities facing genuine difficulties. The scheme is an optional framework for resolution of large stressed account.

“S4A” new scheme has been introduced by the Reserve Bank of India (RBI) for resolution of stressed assets and bad loans of large projects.

The S4A will cover those projects which have started commercial operations and have outstanding loan of over Rs.500 crore. The purpose of the S4A is to strengthen the lenders’ ability to deal with stressed assets and put real assets back on track by providing an avenue for reworking the financial structure of entities facing genuine difficulties. The scheme is an optional framework for resolution of large stressed account.

In economics sense, marginal means the additional or changed SITUATION. While calculating the LENDING RATE, banks have to consider the changed cost conditions or the marginal cost conditions. For banks the cost for obtaining funds is BASICALLY the interest rate given to the RBI for getting short term funds.

Following are the main components of MCLR:

1. Marginal cost of funds;
2. Negative carry on account of CRR;
3. Operating costs;
4. Tenor premium

• Negative carry on account of CRR: Is the cost that the banks have to incur while keeping reserves with the RBI. The RBI is not giving an interest for CRR held by the banks. The cost of such funds kept idle can be charged from loans given to the people.
• Operating cost: is the operating expenses incurred by the banks Tenor premium: denotes that higher interest can be charged from long term loans.
• Marginal Cost: The marginal cost that is the novel element of the MCLR. The marginal cost of funds will comprise of Marginal cost of borrowings and return on net worth. According to the RBI, the Marginal Cost should be charged on the basis of following factors: 
• Interest rate given for various types of DEPOSITS- savings, current, term deposit, foreign currency deposit.
• Borrowings – Short term interest rate or the Repo rate etc., Long term rupee borrowing rate.
• Return on net worth – in accordance with capital adequacy norms.

In economics sense, marginal means the additional or changed situation. While calculating the lending rate, banks have to consider the changed cost conditions or the marginal cost conditions. For banks the cost for obtaining funds is basically the interest rate given to the RBI for getting short term funds.

Following are the main components of MCLR:

At present, the banks are slightly slow to change their interest rate in accordance with repo rate change by the RBI. COMMERCIAL banks are significantly depending upon the RBIs LAF repo to get short TERM funds. But they are reluctant to change their INDIVIDUAL lending rates and deposit rates with periodic changes in repo rate.

WHENEVER the RBI is changing the repo rate, it was verbally compelling banks to make changes in their lending rate. The purpose of changing the repo is realized only if the banks are changing their individual lending and deposit rates.

At present, the banks are slightly slow to change their interest rate in accordance with repo rate change by the RBI. Commercial banks are significantly depending upon the RBIs LAF repo to get short term funds. But they are reluctant to change their individual lending rates and deposit rates with periodic changes in repo rate.

Whenever the RBI is changing the repo rate, it was verbally compelling banks to make changes in their lending rate. The purpose of changing the repo is realized only if the banks are changing their individual lending and deposit rates.

The Reserve Bank of India has brought a new methodology of setting lending rate by commercial BANKS under the name MARGINAL Cost of FUNDS based Lending Rate (MCLR). It has modified the EXISTING base rate system from April 2016 onwards.

As per the new guidelines by the RBI, banks have to prepare Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal BENCHMARK lending rates. Banks have to set five benchmark rates for different tenure or time periods ranging from overnight (one day) rates to one year.

The Reserve Bank of India has brought a new methodology of setting lending rate by commercial banks under the name Marginal Cost of Funds based Lending Rate (MCLR). It has modified the existing base rate system from April 2016 onwards.

As per the new guidelines by the RBI, banks have to prepare Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal benchmark lending rates. Banks have to set five benchmark rates for different tenure or time periods ranging from overnight (one day) rates to one year.

PLASTIC money is a TERM that is used predominantly in reference to the hard plastic cards we use every DAY in place of actual bank notes. They can come in many different forms such as cash cards, credit cards, DEBIT cards, pre-paid cash cards ETC.

Plastic money is a term that is used predominantly in reference to the hard plastic cards we use every day in place of actual bank notes. They can come in many different forms such as cash cards, credit cards, debit cards, pre-paid cash cards etc.

A public SECTOR BANK is a bank in which the government HOLDS a major portion of the shares.

Government holdings are more than 50% in public sector banks. 

Private Sector Banks:

• Private sector banks are owned by private lenders.
• The private banks are MANAGED and controlled by private PROMOTERS.

A public sector bank is a bank in which the government holds a major portion of the shares.

Government holdings are more than 50% in public sector banks. 

Private Sector Banks:

The quick ratio is an INDICATOR of a COMPANY’s short-term liquidity. The quick ratio measures a company’s ability to meet its short-term obligations with its most LIQUID assets. For this reason, the ratio excludes inventories from current assets, and is CALCULATED as follows:

Quick ratio = (current assets – inventories) / current liabilities, or

= (cash and equivalents + marketable securities + accounts receivable) / current liabilities

The quick ratio measures the dollar amount of liquid assets available for each dollar of current liabilities. Thus, a quick ratio of 1.5 means that a company has $1.50 of liquid assets available to cover each $1 of current liabilities. The higher the quick ratio, the better the company's liquidity position. Also known as the “acid-test ratio" or "quick assets ratio."

The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. For this reason, the ratio excludes inventories from current assets, and is calculated as follows:

Quick ratio = (current assets – inventories) / current liabilities, or

= (cash and equivalents + marketable securities + accounts receivable) / current liabilities

The quick ratio measures the dollar amount of liquid assets available for each dollar of current liabilities. Thus, a quick ratio of 1.5 means that a company has $1.50 of liquid assets available to cover each $1 of current liabilities. The higher the quick ratio, the better the company's liquidity position. Also known as the “acid-test ratio" or "quick assets ratio."

A player who wins all four Grand SLAM tournaments and the OLYMPIC gold MEDAL during his or her career is SAID to have achieved a Career Golden Slam. SERENA Williams is the only player to have achieved a career golden slam in both singles and doubles.

A player who wins all four Grand Slam tournaments and the Olympic gold medal during his or her career is said to have achieved a Career Golden Slam. Serena Williams is the only player to have achieved a career golden slam in both singles and doubles.

Timing: As mentioned above, Neft OPERATES in hourly batches. Currently, it has 11 settlements from 9am to 7pm on weekdays and five settlements from 9am to 1pm on Saturdays. So, in case you initiate a transaction after a settlement time you have no OPTION but to wait till the next settlement time. But that’s not the case with RTGS transactions, since they are processed constantly throughout the RTGS business hours. The service window for RTGS at banks is available from 9am to 4.30pm on week days and from 9am to 1.30pm on Saturdays for settlement at the RBI end. Keep in mind that the timings that each bank follows may vary.

Amount: As far as Neft goes, it does not have a MINIMUM or maximum limit of amount you can transfer. But the maximum amount per transaction is limited to Rs 50,000 for cash-based remittance and remittance to Nepal.

As far as RTGS goes, it is mostly meant for large transactions. The minimum amount that can be remitted through it is Rs 2 lakh. RTGS does not have an upper ceiling for transactions. 

CHARGES: For Neft, inward transactions (when you receive funds via Neft) are free, as no charges are to be levied from the person to who fund are being transferred to. When you use Neft to make an outward transaction (when you send funds via Neft) at a bank branch for amounts up to Rs 1 lakh, the charge is up to Rs 5 plus service tax. For transactions above Rs 1 lakh and up to Rs2 lakh, the charge is up to Rs 15 plus service tax. For transactions above Rs 2 lakh, the charges can’t exceed Rs 25 plus service tax.

For RTGS, inward transactions (when you receive funds through RTGS) are free. For outward transactions (when you send funds via RTGS), if the amount is between Rs 2 lakh and Rs 5 lakh, the charges will be up to Rs 30 per transaction. If the amount transferred is above Rs 5 lakh, the charges can’t exceed Rs 55 per transaction.

Timing: As mentioned above, Neft operates in hourly batches. Currently, it has 11 settlements from 9am to 7pm on weekdays and five settlements from 9am to 1pm on Saturdays. So, in case you initiate a transaction after a settlement time you have no option but to wait till the next settlement time. But that’s not the case with RTGS transactions, since they are processed constantly throughout the RTGS business hours. The service window for RTGS at banks is available from 9am to 4.30pm on week days and from 9am to 1.30pm on Saturdays for settlement at the RBI end. Keep in mind that the timings that each bank follows may vary.

Amount: As far as Neft goes, it does not have a minimum or maximum limit of amount you can transfer. But the maximum amount per transaction is limited to Rs 50,000 for cash-based remittance and remittance to Nepal.

As far as RTGS goes, it is mostly meant for large transactions. The minimum amount that can be remitted through it is Rs 2 lakh. RTGS does not have an upper ceiling for transactions. 

Charges: For Neft, inward transactions (when you receive funds via Neft) are free, as no charges are to be levied from the person to who fund are being transferred to. When you use Neft to make an outward transaction (when you send funds via Neft) at a bank branch for amounts up to Rs 1 lakh, the charge is up to Rs 5 plus service tax. For transactions above Rs 1 lakh and up to Rs2 lakh, the charge is up to Rs 15 plus service tax. For transactions above Rs 2 lakh, the charges can’t exceed Rs 25 plus service tax.

For RTGS, inward transactions (when you receive funds through RTGS) are free. For outward transactions (when you send funds via RTGS), if the amount is between Rs 2 lakh and Rs 5 lakh, the charges will be up to Rs 30 per transaction. If the amount transferred is above Rs 5 lakh, the charges can’t exceed Rs 55 per transaction.

RTGS stands for REAL time gross settlement, which means that it enables money to move from one bank to another on a real time and gross BASIS. SIMPLY put, real time means the beneficiary bank receives the instructions for fund transfer immediately and gross means that it is not bunched with any other transaction and SETTLEMENTS of funds transfer instructions HAPPEN individually. Since the funds settlement takes place in the books of the Reserve Bank of India (RBI), keep in mind that the payments are final and irrevocable.

RTGS stands for real time gross settlement, which means that it enables money to move from one bank to another on a real time and gross basis. Simply put, real time means the beneficiary bank receives the instructions for fund transfer immediately and gross means that it is not bunched with any other transaction and settlements of funds transfer instructions happen individually. Since the funds settlement takes place in the books of the Reserve Bank of India (RBI), keep in mind that the payments are final and irrevocable.

For a funds transfer to go through RTGS, both the SENDING bank branch and the receiving bank branch would have to be RTGS ENABLED. The LISTS are readily available at all RTGS enabled branches. Considering that more than 26,000 branches at more than 3,000 CITIES/ TOWNS and taluka places are covered under the RTGS system, getting this information would not be difficult.

For a funds transfer to go through RTGS, both the sending bank branch and the receiving bank branch would have to be RTGS enabled. The lists are readily available at all RTGS enabled branches. Considering that more than 26,000 branches at more than 3,000 cities/ towns and taluka places are covered under the RTGS system, getting this information would not be difficult.

On a TYPICAL DAY, RTGS handles about 14000 transactions a day for an APPROXIMATE value of Rs.1, 50,000 CRORE.

On a typical day, RTGS handles about 14000 transactions a day for an approximate value of Rs.1, 50,000 crore.

It would depend on the arrangement between the REMITTING customer and the remitting bank. Some banks with internet banking facility provide this service. Once the funds are CREDITED to the ACCOUNT of the beneficiary bank, the remitting customer gets a confirmation from his bank either by an e-mail or by a short MESSAGE on the mobile.

It would depend on the arrangement between the remitting customer and the remitting bank. Some banks with internet banking facility provide this service. Once the funds are credited to the account of the beneficiary bank, the remitting customer gets a confirmation from his bank either by an e-mail or by a short message on the mobile.

No, all the bank branches in INDIA are not RTGS ENABLED. As on JANUARY 31, 2007 more than 26,000 bank branches are RTGS enabled.

No, all the bank branches in India are not RTGS enabled. As on January 31, 2007 more than 26,000 bank branches are RTGS enabled.

The beneficiary customer can obtain the IFSC code from his BRANCH. The IFSC code is ALSO AVAILABLE in the cheque leaf. This code NUMBER and bank branch details can be communicated by the beneficiary to the remitting customer.

The beneficiary customer can obtain the IFSC code from his branch. The IFSC code is also available in the cheque leaf. This code number and bank branch details can be communicated by the beneficiary to the remitting customer.

The remitting CUSTOMER has to furnish the following INFORMATION to a bank for EFFECTING a RTGS remittance:

1. AMOUNT to be remitted
2. His account number which is to be debited
3. NAME of the beneficiary bank
4. Name of the beneficiary customer
5. Account number of the beneficiary customer
6. Sender to receiver information, if any
7. The IFSC code of the receiving branch

The remitting customer has to furnish the following information to a bank for effecting a RTGS remittance:

While RBI has waived its processing charges for all electronic payment products till March 31, 2008, levy of service charges by banks is left to the discretion of the RESPECTIVE banks. The bank-wise details of charges levied are available on the RBI website – www (dot) RBI (dot) ORG (dot) in.

While RBI has waived its processing charges for all electronic payment products till March 31, 2008, levy of service charges by banks is left to the discretion of the respective banks. The bank-wise details of charges levied are available on the RBI website – www (dot) RBI (dot) org (dot) in.

The RTGS service window for customer’s transactions is available from 9.00 HOURS to 15.00 hours on WEEK days and from 9.00 hours to 12.00 noon on Saturdays i.e. to accept the customer transactions for settlement at the RBI during 9.00 hours to 15.00 hours on week days and between 9.00 hours and 12.00 noon on Saturday.

However, the timings between these hours would VARY DEPENDING on the customer timings the branches have. For inter-bank transactions, the service window is available from 9.00 hours to 17.00 hours on week days and from 9.00 hours to 14.00 hours on Saturdays.

The RTGS service window for customer’s transactions is available from 9.00 hours to 15.00 hours on week days and from 9.00 hours to 12.00 noon on Saturdays i.e. to accept the customer transactions for settlement at the RBI during 9.00 hours to 15.00 hours on week days and between 9.00 hours and 12.00 noon on Saturday.

However, the timings between these hours would vary depending on the customer timings the branches have. For inter-bank transactions, the service window is available from 9.00 hours to 17.00 hours on week days and from 9.00 hours to 14.00 hours on Saturdays.

YES. It is expected that the receiving bank will credit the account of the beneficiary instantly. If the money cannot be credited for any reason, the receiving bank would have to return the money to the REMITTING bank within 2 hours. Once the money is received back by the remitting bank, the original debit entry in the CUSTOMER’s account is REVERSED.

Yes. It is expected that the receiving bank will credit the account of the beneficiary instantly. If the money cannot be credited for any reason, the receiving bank would have to return the money to the remitting bank within 2 hours. Once the money is received back by the remitting bank, the original debit entry in the customer’s account is reversed.

The remitting bank receives a MESSAGE from the Reserve Bank that money has been CREDITED to the receiving bank. BASED on this the remitting bank can advise the remitting customer that money has been DELIVERED to the receiving bank.

The remitting bank receives a message from the Reserve Bank that money has been credited to the receiving bank. Based on this the remitting bank can advise the remitting customer that money has been delivered to the receiving bank.

Under normal circumstances the BENEFICIARY branches are EXPECTED to receive the funds in real time as SOON as funds are transferred by the remitting BANK. The beneficiary bank has to credit the beneficiary’s account within two hours of receiving the funds transfer message.

Under normal circumstances the beneficiary branches are expected to receive the funds in real time as soon as funds are transferred by the remitting bank. The beneficiary bank has to credit the beneficiary’s account within two hours of receiving the funds transfer message.

The RTGS system is primarily for large value transactions. The MINIMUM amount to be remitted through RTGS is Rs.1 lakh. There is no upper ceiling for RTGS transactions. No minimum or maximum STIPULATION has been FIXED for EFT and NEFT transactions.

The RTGS system is primarily for large value transactions. The minimum amount to be remitted through RTGS is Rs.1 lakh. There is no upper ceiling for RTGS transactions. No minimum or maximum stipulation has been fixed for EFT and NEFT transactions.

EFT and NEFT are electronic fund transfer modes that OPERATE on a deferred net SETTLEMENT (DNS) basis which settles transactions in batches. In DNS, the settlement takes place at a particular point of time. All transactions are held up till that time. For example, NEFT settlement takes place 6 times a day during the week days (9.30 am, 10.30 am, 12.00 noon. 1.00 pm, 3.00 pm and 4.00 pm) and 3 times during Saturdays (9.30 am, 10.30 am and 12.00 noon).

Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this, in RTGS, transactions are processed continuously throughout the RTGS business hours.

EFT and NEFT are electronic fund transfer modes that operate on a deferred net settlement (DNS) basis which settles transactions in batches. In DNS, the settlement takes place at a particular point of time. All transactions are held up till that time. For example, NEFT settlement takes place 6 times a day during the week days (9.30 am, 10.30 am, 12.00 noon. 1.00 pm, 3.00 pm and 4.00 pm) and 3 times during Saturdays (9.30 am, 10.30 am and 12.00 noon).

Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this, in RTGS, transactions are processed continuously throughout the RTGS business hours.