MEANING OF NUMBERS at the Bottom of a CHEQUE

Meaning Of Numbers At The Bottom Of A Cheque

You must very often have used your cheque book to issue a cheque to someone, or better still have received it from someone. Apart from reading the amount (that’s the first thing we see) have you ever looked at other numbers written on the cheque? Ok, so you see account number and date but there are a few more numbers written (four sets of numbers to be precise) at the bottom of a cheque (see the pic below). Ever gave a thought to those? If you didn’t, read further to know what these numbers mean.

 

To be honest with you, even I had no idea what these numbers stand for, apart from the leftmost number which is the cheque number. Even googling about it didn’t help (you can find some information about MICR though.) So during my last visit to bank, I asked the branch manager about it, and he was kind enough to explain it to me in detail.

1) Cheque Number

As I mentioned earlier, the first set of numbers represent the cheque number. It is a six digit number.

2) MICR Code

It stands for Magnetic Ink Character Recognition. This number helps a bank to recognize the bank and branch that issued the cheque. You might be thinking that this can be done just by looking at the cheque, but banks have to process hundreds of cheques daily. Going through each and every cheque is a cumbersome process. Instead, the cheques are sorted through a cheque reading machine which uses this number to identify the bank and branch a cheque belongs to. This makes the process faster.

The MICR number is a nine digit number, which consists of three parts-

a) City Code: The first three digits represent the city code and are same as the first three digit of the PIN code of that city.

For e.g., a bank in Hyderabad will have first three digits of MICR code as 500 (since PIN code for Hyderabad starts with 500)

b) Bank Code: The next three digits represent the bank code. Every bank has a unique code assigned to it. For e.g., ICICI bank’s code is 229, for HDFC it is 240 and so on.

c) Branch Code: The last three digits represent the branch code.

Thus you can easily find which bank and branch a cheque belongs to by looking at its MICR number, and vice versa.

3) Bank account Number
The third set of six digit numbers represents your account number (It consists of a few digits of your account number). But if you pick an old cheque book, issued probably before CBS (Core Banking Solution) was introduced, you won’t find this set of number present.

(Note: I am not completely sure of this. Branch Manager of the bank I visited told me this, and when I checked my ICICI cheque book, it tallied with my account number. If you see the sample cheque from Axis bank shown above, it matches there as well. But when I checked my HDFC account cheque book, I found this number and my account number to be different. If someone belongs to a banking background, or has some information about this, please tell others about it through your comments.)

4) Transaction ID

The last two digits tells whether a cheque is a local cheque our payable at par cheque. 29, 30 and 31 represents payable at par cheque, while 09, 10 and 11 represents local cheque. Payable at par cheque is a cheque that can be cashed at any branch of the issuing bank, while local cheque can be cashed only at the issuing branch. So, if you deposit a cheque in your bank, with code 10 written at the bottom of the cheque, it’ll take a few days for the money to come in your account. However since most of the branches these days are CBS (Core Banking Solution) enabled, so the cheques are generally payable at par.

 

 

 

MEANING OF NUMBERS On a CREDIT CARD

Note:

Since VISA and MASTER Cards are the most widely available cards, I have used them for my research. But the results hold true for all card types.

Identifying Card Issuer Type

The first digit in a card represents the Major Industry Identifier and is known as MII digit. It represents the category of entity which issued your credit card. There are following types of issuers:

 

MII Digit	Issuer Type
0	ISO/TC 68 and other industry assignments
1	Airlines
2	Airlines and other industry assignments
3	Travel and entertainment (such as American Express and Diners Club)
4	Banking and financial (Visa)
5	Banking and financial (MasterCard)
6	Merchandizing and banking (Discover)
7	Petroleum
8	Telecommunications and other industry assignments
9	National assignment

You can understand this better by taking out your card and seeing the first digit. If you own a petroleum card (such as those issued by Exxon Mobil or BP) then your card number will start with 7. If you own a debit/credit card issued by a bank then it will start with 4 or 5 (depending on whether it is a Visa card or Master card).

You can understand this better by taking out your card and seeing the first digit. If you own a petroleum card (such as those issued by Exxon Mobil or BP) then your card number will start with 7. If you own a debit/credit card issued by a bank then it will start with 4 or 5 (depending on whether it is a Visa card or Master card).

Identifying Card Issuer

The first six digits in a card represent the issuer and is known as Issuer Identification Number (IIN). Below is a list of popular card issuers and their corresponding code:

Issuer	IIN
American Express	34xxxx, 37xxxx
VISA	4xxxxx
Master Card	51xxxx-55xxxx

So if you have a card that starts with 51 that means it is a Master Card.

Note:
During my study I observed that Maestro card starts with 50 and 62. If you know something about Maestro cards, please share it through your comments.

Mathematically speaking, there can be 10 raised to power 6 (since 6 digits are used to identify an issuer), i.e. 1 million unique card issuers !!

Finding Account Number

Starting from the seventh digit to second last digit, i.e., 7th to n-1 digit in a card represents the account number. I noticed that this account number is not the same as your bank account number. For cards issued by ICICI (whether VISA or MASTER Cards), only first five digits of the card number and the account number matched, while there was no such similarity for cards issued by HDFC bank.

Conclusion:

7th to n-1 digit in the card represents the account number. This account number is not the account number of your bank but the account number generated by the Card Issuer (such as VISA or Master Card) to uniquely identify you.

A card can have a maximum of 19 digits. So the account number can be a maximum of 12 digit number. That means each issuer can issue a maximum of 10 raised to the power 12, i.e., 1 trillion cards !!

Check Digit

The last digit on the card is known as the check digit and it determines whether it is a valid card or not.

　

 

　

MEANING OF NUMBERS On a PAN CARD

Just like a credit card or a cheque leaf, the numbers and alphabets on a PAN card too have a significance. Through this article, we’ll understand the meaning of these alphabets and numbers found on a PAN card.

Meaning of Numbers on a Pan Card

Here is how a PAN card looks like:

 

Unlike credit cards or cheque leafs, which have only numbers, a PAN Card consists of a 10 digit alphanumeric sequence. Let’s understand what each character of this sequence stands for.

First 3 Characters

The first 3 characters on a PAN card represent an alphabetic series running from AAA to ZZZ.

4th Character

The 4th character represents the status of the PAN holder, which can be one of the following:

1.      C – Company

2.      P – Person

3.      H — HUF (Hindu Undivided Family)

4.      F — Firm

5.      A — Association of Persons (AOP)

6.      T — AOP (Trust)

7.      B — Body of Individuals (BOI)

8.      L — Local Authority

9.      J — Artificial Juridical Person

10.  G — Government

So, an individual will have the 4th character as P.

5th Character

The fifth character of the PAN is the first letter of:

11.  the surname in the case the status is “P”, or,

12.  the name of the Entity, Trust, Society, Organization, HUF, etc. in all other cases

For e.g., an individual with the name Vivek Kumar Shukla will have S as the fifth character.

If you change your surname after marriage or due to any other reason, your PAN card number will remain unchanged.

6th to 9th Characters

The next four numbers are sequential numbers running from 0001 to 9999.

10th Character

The last digit is an alphabetic check digit which is generated by applying a formula to the preceding nine letters and numbers.

Below is a pictorial representation of the above information to easily explain the meaning of numbers on a PAN card:

 

Don’t forget to share this interesting piece of information with your friends.

 

COMMON BANKING TERMS

Anytime Banking : With introduction of ATMs, Tele-Banking and internet banking, customers can conduct their business anytime of the day and night. The 'Banking Hours' is not a constraint for transacting banking business.

Anywhere Banking : Refers to banking not only by ATMs, Tele-Banking and internet banking, but also to core banking solutions brought in by banks where customer can deposit his money, cheques and also withdraw money from any branch connected with the system. All major banks in India have brought in core banking in their operations to make banking truly anywhere banking.

ATM : ATMs are Automatic Teller Machines, which do the job of a teller in a bank through Computer Network. ATMs are located on the branch premises or off branch premises. ATMs are useful to dispense cash, receive cash, accept cheques, give balances in the accounts and also give mini-statements to the customers.

Bank Ombudsman : Bank Ombudsman is the authority to look into complaints against Banks in the main areas of collection of cheque / bills, issue of demand drafts, non-adherence to prescribed hours of working, failure to honour guarantee / letter of credit commitments, operations in deposit accounts and also in the areas of loans and advances where banks flout directions / instructions of RBI. This Scheme was announced in 1995 and is functioning with new guidelines from 2007. This scheme covers all scheduled banks, the RRBs and co-operative banks.

Bancassurance : Bancassurance refers to the distribution of insurance products and the insurance policies of insurance companies which may be life policies or non-life policies like home insurance - car insurance, medi-policies and others, by banks as corporate agents through their branches located in different parts of the country by charging a fee.

Banker's Lien : Bankers lien is a special right of lien exercised by the bankers, who can retain goods bailed to them as a security for general balance of account. Bankers can have this right in the absence of a contract to the contrary.

Banking : Accepting for the purpose of lending or investment of deposits of money from Public, Repayable on demand or otherwise and withdrawable by cheques, drafts, order, etc.

Basel-II : The Committee on Banking Regulations and Supervisory Practices, popularity known as Basel Committee, submitted its revised version of norms in June, 2004. Under the revised accord the capital requirement is to be calculated for credit, market and operational risks. The minimum requirement continues to be 8% of capital fund (Tier I & II Capital) Tier II shall continue to be not more than 100% of Tier I Capital.

Brick & Mortar Banking : Brick and Mortar Banking refers to traditional system of banking done only in a fixed branch premises made of brick and mortar. Now there are banking channels like ATM, Internet Banking,tele banking etc.

Business of Banking : Accepting deposits, borrowing money, lending money, investing, dealing in bills, dealing in Foreign Exchange, Hiring Lockers, Opening Safe Custody Accounts, Issuing Letters of Credit, Traveller's Cheques, doing Mutual Fund business, Insurance Business, acting as Trustee or doing any other business which Central Government may notify in the official Gazette.

Bouncing of a cheque : Where an account does not have sufficient balance to honour the cheque issued by the customer , the cheque is returned by the bank with the reason "funds insufficient" or "Exceeds arrangement".This is known as 'Bouncing of a cheque' .

Certificate of Deposit :. Certificate of Deposits are negotiable receipts in bearer form which can be freely traded among investors. This is also a money market instrument,issued for a period ranging from 7 days to f one year .The minimum deposit amount is Rs. 1 lakh and they are transferable by endorsement and delivery.

Cheque : Cheque is a Bill of Exchange drawn on a specified banker ordering the banker to pay a certain sum of money to the drawer of cheque or another person. Money is generally withdrawn by clients by cheques. Cheque is always payable on demand.

Cheque Truncation : Cheque truncation, truncates or stops the flow of cheques through the banking system. Generally truncation takes place at the collecting branch, which sends the electronic image of the cheques to the paying branch through the clearing house and stores the paper cheques with it.

Collecting Banker : Also called receiving banker, who collects on instruments like a cheque, draft or bill of exchange, lodged with himself for the credit of his customer's account.

Consumer Protection Act : It is implemented from 1987 to enforce consumer rights through a simple legal procedure. Banks also are covered under the Act. A consumer can file complaint for deficiency of service with Consumer District Forum for amounts upto Rs.20 Lacs in District Court, and for amounts above Rs.20 Lacs to Rs.1 Crore in State Commission and for amounts above Rs.1 Crore in National Commission.

Co-operative Bank : An association of persons who collectively own and operate a bank for the benefit of consumers / customers, like Saraswat Co-operative Bank or Abhyudaya Co-operative Bank and other such banks.

Co-operative Society : When an association of persons collectively own and operate a unit for the benefit of those using its services like Apna Bazar Co-operative Society or Sahakar Bhandar or a Co-operative Housing Society.

Core Banking Solutions (CBS) : Core Banking Solutions is a buzz word in Indian banking at present, where branches of the bank are connected to a central host and the customers of connected branches can do banking at any breach with core banking facility.

Creditworthiness : It is the capacity of a borrower to repay the loan / advance in time alongwith interest as per agreed terms.

Crossing of Cheques : Crossing refers to drawing two parallel lines across the face of the cheque.A crossed cheque cannot be paid in cash across the counter, and is to be paid through a bank either by transfer, collection or clearing.A general crossing means that cheque can be paid through any bank and a special crossing, where the name of a bank is indicated on the cheque, can be paid only through the named bank.

Current Account : Current account with a bank can be opened generally for business purpose. There are no restrictions on withdrawals in this type of account. No interest is paid in this type of account.

Customer : A person who maintains any type of account with a bank is a bank customer. Consumer Protection Act has a wider definition for consumer as the one who purchases any service for a fee like purchasing a demand draft or a pay order. The term customer is defined differently by Laws, softwares and countries.

Debit Card : A plastic card issued by banks to customers to withdraw money electronically from their accounts. When you purchase things on the basis of Debit Card the amount due is debited immediately to the account . Many banks issue Debit-Cum-ATM Cards. Debtor : A person who takes some money on loan from another person. Demand Deposits : Deposits which are withdrawn on demand by customers.E.g. savings bank and current account deposits. Demat Account : Demat Account concept has revolutionized the capital market of India. When a depository company takes paper shares from an investor and converts them in electronic form through the concerned company, it is called Dematerialization of Shares. These converted Share Certificates in Electronic form are kept in a Demat Account by the Depository Company, like a bank keeps money in a deposit account. Investor can withdraw the shares or purchase more shares through this demat Account. Dishonour of Cheque : Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment. Debit Card : A plastic card issued by banks to customers to withdraw money electronically from their accounts. When you purchase things on the basis of Debit Card the amount due is debited immediately to the account . Many banks issue Debit-Cum-ATM Cards. Debtor : A person who takes some money on loan from another person. Demand Deposits : Deposits which are withdrawn on demand by customers.E.g. savings bank and current account deposits. Demat Account : Demat Account concept has revolutionized the capital market of India. When a depository company takes paper shares from an investor and converts them in electronic form through the concerned company, it is called Dematerialization of Shares. These converted Share Certificates in Electronic form are kept in a Demat Account by the Depository Company, like a bank keeps money in a deposit account. Investor can withdraw the shares or purchase more shares through this demat Account. Dishonour of Cheque : Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment.

E-Banking : E-Banking or electronic banking is a form of banking where funds are transferred through exchange of electronic signals between banks and financial institution and customers ATMs, Credit Cards, Debit Cards, International Cards, Internet Banking and new fund transfer devices like SWIFT, RTGS belong to this category. EFT - (Electronic Fund Transfer) : EFT is a device to facilitate automatic transmission and processing of messages as well as funds from one bank branch to another bank branch and even from one branch of a bank to a branch of another bank. EFT allows transfer of funds electronically with debit and credit to relative accounts. Either or Survivor : Refers to operation of the account opened in two names with a bank. It means that any one of the account holders have powers to withdraw money from the account, issue cheques, give stop payment instructions etc. In the event of death of one of the account holder, the surviving account holder gets all the powers of operation. Electronic Commerce (E-Commerce): E-Commerce is the paperless commerce where the exchange of business takes place by Electronic means. Endorsement : When a Negotiable Instrument contains, on the back of the instrument an endorsement, signed by the holder or payee of an order instrument, transferring the title to the other person, it is called endorsement. Endorsement in Blank : Where the name of the endorsee or transferee is not mentioned on the instrument. Endorsement in Full : Where the name of the endorsee or transferee appears on the instrument while making endorsement. Execution of Documents : Execution of documents is done by putting signature of the person, or affixing his thumb impression or putting signature with stamp or affixing common seal of the company on the documents with or without signatures of directors as per articles of association of the company.

Factoring : Business of buying trade debts at a discount and making a profit when debt is realized and also taking over collection of trade debts at agreed prices. Foreign Banks : Banks incorporated outside India but operating in India and regulated by the Reserve Bank of India (RBI),. e..g., Barclays Bank, HSBC, Citibank, Standard Chartered Bank, etc. Forfaiting : In International Trade when an exporter finds it difficult to realize money from the importer, he sells the right to receive money at a discount to a forfaiter, who undertakes inherent political and commercial risks to finance the exporter, of course with assumption of a profit in the venture. Forgery : when a material alteration is made on a document or a Negotiable Instrument like a cheque, to change the mandate of the drawer, with intention to defraud.

Garnishee Order : When a Court directs a bank to attach the funds to the credit of customer's account under provisions of Section 60 of the Code of Civil Procedure, 1908. General Lien : A right of the creditors to retain possession of all goods given in security to him by the debtor for any outstanding debt. Guarantee : A contract between guarantor and beneficiary to ensure performance of a promise or discharge the liability of a third person. If promise is broken or not performed, the guarantor pays contracted amount to the beneficiary.   Holder : Holder means any person entitled in his own name to the possession of the cheque, bill of exchange or promissory note and who is entitled to receive or recover the amount due on it from the parties. For example, if I give a cheque to my friend to withdraw money from my bank,he becomes holder of that cheque. Even if he loses the cheque, he continues to be holder. Finder cannot become the holder. Holder in due course : A person who receives a Negotiable Instrument for value, before it was due and in good faith, without notice of any defect in it, he is called holder in due course as per Negotiable Instrument Act. In the earlier example if my friend lends some money to me on the basis of the cheque, which I have given to him for encashment, he becomes holder-in-due course. Hypothecation : Charge against property for an amount of debt where neither ownership nor possession is passed to the creditor. In pledge, possession of property is passed on to the lender but in hypothecation, the property remains with the borrower in trust for the lender. Identification : When a person provides a document to a bank or is being identified by a person, who is known to the bank, it is called identification. Banks ask for identification before paying an order cheque or a demand draft across the counter. Indemnifier : When a person indemnifies or guarantees to make good any loss caused to the lender from his actions or others' actions. Indemnity : Indemnity is a bond where the indemnifier undertakes to reimburse the beneficiary from any loss arising due to his actions or third party actions. Insolvent : Insolvent is a person who is unable to pay his debts as they mature, as his liabilities are more than the assets . Civil Courts declare such persons insolvent. Banks do not open accounts of insolvent persons as they cannot enter into contract as per law. Interest Warrant : When cheque is given by a company or an organization in payment of interest on deposit , it is called interest warrant. Interest warrant has all the characteristics of a cheque. International Banking : involves more than two nations or countries. If an Indian Bank has branches in different countries like State Bank of India, it is said to do International Banking. Introduction : Banks are careful in opening any account for a customer as the prospective customer has to be introduced by an existing account holder or a staff member or by any other person known to the bank for opening of account. If bank does not take introduction, it will amount to negligence and will not get protection under law. JHF Account : Joint Hindu Family Account is account of a firm whose business is carried out by Karta of the Joint family, acting for all the family members.. The family members have common ancestor and generally maintain a common residence and are subject to common social, economic and religious regulations. Joint Account : When two or more individuals jointly open an account with a bank. Karta : Manager of a Hindu Undivided Family (HUF) who handles the family business. He is usually the eldest male member of the undivided family. Kiosk Banking : Doing banking from a cubicle from which food, newspapers, tickets etc. are also sold. KYC Norms : Know your customer norms are imposed by R.B.I. on banks and other financial institutions to ensure that they know their customers and to ensure that customers deal only in legitimate banking operations and not in money laundering or frauds. Law of Limitation : Limitation Act of 1963 fixes the limitation period of debts and obligations including banks loans and advances. If the period fixed for particular debt or loan expires, one can not file a suit for is recovery, but the fact of the debt or loan is not denied. It is said that law of limitation bars the remedy but does not extinguish the right. Lease Financing : Financing for the business of renting houses or lands for a specified period of time and also hiring out of an asset for the duration of its economic life. Leasing of a car or heavy machinery for a specific period at specific price is an example. Letter of Credit : A document issued by importers bank to its branch or agent abroad authorizing the payment of a specified sum to a person named in Letter of Credit (usually exporter from abroad). Letters of Credit are covered by rules framed under Uniform Customs and Practices of Documentary Credits framed by International Chamber of Commerce in Paris. Limited Companies Accounts : Accounts of companies incorporated under the Companies Act, 1956 . A company may be private or public. Liability of the shareholders of a company is generally limited to the face value of shares held by them. Mandate : Written authority issued by a customer to another person to act on his behalf, to sign cheques or to operate a bank account. Material Alteration : Alteration in an instrument so as to alter the character of an instrument for example when date, amount, name of the payee are altered or making a cheque payable to bearer from an order one or opening the crossing on a cheque. Merchant Banking : When a bank provides to a customer various types of financial services like accepting bills arising out of trade, arranging and providing underwriting, new issues, providing advice, information or assistance on starting new business, acquisitions, mergers and foreign exchange. Micro Finance: Micro Finance aims at alleviation of poverty and empowerment of weaker sections in India. In micro finance, very small amounts are given as credit to poor in rural, semi-urban and urban areas to enable them to raise their income levels and improve living standards. Minor Accounts : A minor is a person who has not attained legal age of 18 years. As per Contract Act a minor cannot enter into a contract but as per Negotiable Instrument Act, a minor can draw, negotiate, endorse, receive payment on a Negotiable Instrument so as to bind all the persons, except himself. In order to boost their deposits many banks open minor accounts with some restrictions. Mobile Banking : With the help of M-Banking or mobile banking customer can check his bank balance, order a demand draft, stop payment of a cheque, request for a cheque book and have information about latest interest rates. Money Laundering : When a customer uses banking channels to cover up his suspicious and unlawful financial activities, it is called money laundering. Money Market : Money market is not an organized market like Bombay Stock Exchange but is an informal network of banks, financial institutions who deal in money market instruments of short term like CP, CD and Treasury bills of Government. Moratorium : R.B.I. imposes moratorium on operations of a bank; if the affairs of the bank are not conducted as per banking norms. After moratorium R.B.I. and Government explore the options of safeguarding the interests of depositors by way of change in management, amalgamation or take over or by other means. Mortgage : Transfer of an interest in specific immovable property for the purpose of offering a security for taking a loan or advance from another. It may be existing or future debt or performance of an agreement which may create monetary obligation for the transferor (mortgagor). NABARD : National Bank for Agriculture & Rural Development was setup in 1982 under the Act of 1981. NABARD finances and regulates rural financing and also is responsible for development agriculture and rural industries. Negotiation : In the context of banking, negotiation means an act of transferring or assigning a money instrument from one person to another person in the course of business. Non-Fund Based Limits : Non-Fund Based Limits are those type of limits where banker does not part with the funds but may have to part with funds in case of default by the borrowers, like guarantees, letter of credit and acceptance facility. Non-Resident : A person who is not a resident of India is a non-resident. Non-Resident Accounts : Accounts of non-resident Indian citizens opened and maintained as per R.B.I. Rules. Notary Public : A Lawyer who is authorized by Government to certify copies of documents . NPA Account : If interest and instalments and other bank dues are not paid in any loan account within a specified time limit, it is being treated as non-performing assets of a bank. Off Balance Sheet Items : Those items which affect the financial position of a business concern, but do not appear in the Balance Sheet E,g guarantees, letters of credit . The mention "off Balance Sheet items" is often found in Auditors Reports or Directors Reports. Online Banking : Banking through internet site of the bank which is made interactive. Pass Book : A record of all debit and credit entries in a customer's account. Generally all banks issue pass books to Savings Bank/Current Account Holders. Personal Identification Number (PIN) : Personal Identification Number is a number which an ATM card holder has to key in before he is authorized to do any banking transaction in a ATM . Plastic Money : Credit Cards, Debit Cards, ATM Cards and International Cards are considered plastic money as like money they can enable us to get goods and services. Pledge : A bailment of goods as security for payment of a debt or performance of a promise, e.g pledge of stock by a borrower to a banker for a credit limit. Pledge can be made in movable goods only. Post-Dated Cheque : A Cheque which bears the date which is subsequent to the date when it is drawn. For example, a cheque drawn on 8th of February, 2007 bears the date of 12th February, 2007. Power of Attorney : It is a document executed by one person - Donor or Principal, in favour of another person , Donee or Agent - to act on behalf of the former, strictly as per authority given in the document. Premature Withdrawals : Term deposits like Fixed Deposits, Call Deposits, Short Deposits and Recurring Deposits have to mature on a particular day. When these deposits are sought to be withdrawn before maturity , it is premature withdrawal. Prime Lending Rate (PLR) : The rate at which banks lend to their best (prime) customers. Priority Sector Advances : consist of loans and advances to Agriculture, Small Scale Industry, Small Road and Water Transport Operators, Retail Trade, Small Business with limits on investment in equipments, professional and self employed persons, state sponsored organisations for lending to SC/ST, Educational Loans, Housing Finance up to certain limits, self-help groups and consumption loans. Promissory Note : Promissory Note is a promise / undertaking given by one person in writing to another person, to pay to that person , a certain sum of money on demand or on a future day. Provisioning : Provisioning is made for the likely loss in the profit and loss account while finalizing accounts of banks. All banks are supposed to make assets classification . and make appropriate provisions for likely losses in their balance sheets. Public Sector Bank : A bank fully or partly owned by the Government. Rescheduling of Payment : Rearranging the repayment of a debt over a longer period than originally agreed upon due to financial difficulties of the borrower. Restrictive Endorsement : Where endorser desires that instrument is to be paid to particular person only, he restricts further negotiation or transfer by such words as "Pay to Ashok only". Now Ashok cannot negotiate the instrument further. Right of Appropriation : As per Section 59 of the Indian Contract Act, 1972 while making the payment, a debtor has the right to direct his creditor to appropriate such amount against discharge of some particular debt. If the debtor does not do so, the banker can appropriate the payment to any debt of his customer. Right of Set-Off : When a banker combines two accounts in the name of the same customer and adjusts the debit balance in one account with the credit balance in other account, it is called right of set-off. For example, debit balance of Rs.50,000/- in overdraft account can be set off against credit balance of Rs.75,000/- in the Savings Bank Account of the same customer, leaving a balance of Rs.25,000/- credit in the savings account. Safe Custody : When articles of value like jewellery, boxes, shares, debentures, Government bonds, Wills or other documents or articles are given to a bank for safe keeping in its safe vault,it is called safe custody.. Bank charges a fee from its clients for such safe custody. Savings Bank Account : All banks in India are having the facility of opening savings bank account with a nominal balance. This account is used for personal purposes and not for business purpose and there are certain restrictions on withdrawals from this type of account. Account holder gets nominal interest in this account. Teller : Teller is a staff member of a bank who accepts deposits, cashes cheques and performs other banking services for the public. Underwriting : is an agreement by the underwriter to buy on a fixed date and at a fixed rate, the unsubscribed portion of shares or debentures or other issues. Underwriter gets commission for this agreement. Universal Banking : When Banks and Financial Institutions are allowed to undertake all types of activities related to banking like acceptance of deposits, granting of advances, investment, issue of credit cards, project finance, venture capital finance, foreign exchange business, insurance etc. it is called Universal Banking. Virtual Banking : Virtual banking is also called internet banking, through which financial and banking services are accessed via internet's world wide web. It is called virtual banking because an internet bank has no boundaries of brick and mortar and it exists only on the internet. Wholesale Banking : Wholesale banking is different from Retail Banking as its focus is on providing for financial needs of industry and institutional clients.

Next RBI Governer!

Raghuram Rajan appointed as next RBI governor

 

India named Raghuram Rajan, former International Monetary Fund chief economist, to head the Reserve Bank of India (RBI) on Tuesday, giving fresh impetus to efforts to revive a struggling economy and a currency that is languishing at record lows.

 

Raghuram Rajan, who predicted the global financial crisis in 2005, will take over at the RBI from Duvvuri Subbarao, whose turbulent five-year tenure ends on September 4.

Rajan is viewed as a pragmatist on monetary policy who is likely to stick fairly closely to Subbarao's line on managing inflation. The outgoing governor fought an uphill battle against price pressures for much of his term in an economy plagued by supply-side bottlenecks and legislative and bureaucratic paralysis.

 International Monetary Fund's Chief Economist Raghuram Rajan speaks during a news conference on the World Economy Outlook in Singapore September 14, 2006
 

"(Rajan) has the intellectual pedigree and policy experience but my worry is people will think a smart guy coming in will fix all of India's problems," said Bhanu Baweja, head of emerging markets strategy at UBS in London.
 

"The problem in India is political consensus and execution. By itself the appointment doesn't change my view on the market, I am underweight the rupee and Indian equities," Baweja said.
 

India's record-high current account gap at 4.8 percent of GDP makes it highly exposed to global flows away from emerging markets in anticipation of tighter U.S. monetary policy. Reforms are especially challenging for a weak ruling coalition headed by Prime Minister Manmohan Singh that faces elections by next May.
 

The rupee is down nearly 11 percent in 2013, making it the worst performing currency in emerging Asia, and emergency steps by the RBI in July to drain liquidity and raise short-term interest rates have failed to halt its decline.

It fell to a record low of 61.80 to the dollar on Tuesday before buying by the RBI helped it post a gain. Meanwhile, economists have been cutting back their growth forecasts for an economy that expanded by just 5 percent in the last fiscal year, its weakest in a decade.
 

"These are challenging times for the Indian economy, though no one can have any doubt about the country's promise," Rajan said in brief remarks late on Tuesday.
 

"The government and the Reserve Bank are working together to address these challenges. We do not have a magic wand to make the problems disappear instantaneously. But I have absolutely no doubt that we will deal with them," he said.
 

In a March interview with Reuters, Rajan said he believed inflation of around 5 percent in a developing economy is "reasonable", putting him on the same page as Subbarao, who set 5 percent as medium-term goal and 3 percent as a long-term target.
 

In recent months Rajan has tended to speak in favour of pro-growth policies, as well as talking up the need to address the current account deficit.
 

"In the last two months, he has been taking a key role on rupee-related steps, and his appointment as the governor will lift expectations of constructive and positive steps to lift the rupee," Siddhartha Sanyal, an economist at Barclays in Mumbai, said.
 

GLOBAL STATURE
 

Informal and outspoken, Rajan brings global stature to a post that in recent years has been held by career bureaucrats. At 50, he is also young by Indian central bank chief standards.
 

The former University of Chicago professor gained fame with a 2005 paper at a U.S. meeting of central bankers, warning that financial sector developments could trigger an economic crisis. The argument, later spelled out in his book "Fault Lines", was dismissed by many at the time as alarmist.
 

In a Reuters poll, 13 of 15 respondents said Rajan was the best-suited to the RBI job. Other candidates were said by government insiders to include Economic Affairs Secretary Arvind Mayaram and Planning Commission member Saumitra Chaudhuri. Subbarao ruled himself out of a term extension.
 

Rajan had been considered the most likely candidate to be the next governor when he returned to India last year to accept the top advisory post at the Finance Ministry in New Delhi, although some in government had said his relative outsider status might count against him.
 

Based in Mumbai, the RBI is not statutorily independent, although its governor has enjoyed wide latitude when it comes to policymaking.
 

Unlike Subbarao, Rajan favors the formation of a monetary policy committee, departing from the current autocratic power enjoyed by the governor, a set-up that would bring the RBI more in line with the practice at major central banks elsewhere.
 

During his tenure, Rajan will also oversee the issuance of new bank licenses to corporate houses under a policy pushed by the finance ministry but opposed by many in the central bank.
 

Rajan was appointed to a three-year term. Subbarao was also initially appointed for three years, and his tenure was then extended by two years.