1

➢ GREAT CONCEPT
A structured review rhythm is introduced and well defined administrative review
cadence is institutionalized at Head Office/Regional Office/Branches which was not
there earlier. ‘GREAT’* framework is established to conduct effective reviews.
Comprehensive review dashboards are also created and implemented.

*GREAT stands for :

G- Identify Gaps using data
R- Get to underlying Root causes
E - Exchange specific interventions
A- Agree on Actions
T- Track Timelines for actions
Ref: HO/TRC/ CIRCULAR LETTER/GF (116)/ 3 /2020-21 October 1, 2020

➢ RBI Policy Rates:

Particulars Rate
Policy Repo Rate : 4.90%
Bank Rate 5.15%
Marginal Standing Facility Rate: 5.15%
Standing Deposit Facility Rate: 4.65%
Reverse Repo Rate 3.35%
CRR 4.50%
SLR 18.00%

On the basis of an assessment of the current and evolving macroeconomic situation,

the Monetary Policy Committee (MPC) at its meeting today (June 8, 2022) decided to:
Increase the policy repo rate under the liquidity adjustment facility (LAF) by 50 basis
points to 4.90 per cent with immediate effect.

Consequently, the standing deposit facility (SDF) rate stands adjusted to 4.65 per cent
and the marginal standing facility (MSF) rate and the Bank Rate to 5.15 per cent.
The MPC also decided to remain focused on withdrawal of accommodation to ensure
that inflation remains within the target going forward, while supporting growth.

These decisions are in consonance with the objective of achieving the medium-term
target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per
cent, while supporting growth.

Repo Rate: Repo (Repurchase Obligation) rate is the rate at which the RBI lends shot-
term money to the banks against securities. When the repo rate increases borrowing
from RBI becomes more expensive. Therefore, we can say that in case, RBI wants to
make it more expensive for the banks to borrow money, it increases the repo rate;
similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo
 2

rate. The bank can borrow maximum of 0.25% of NDTL under Repo. It is available
from for a specific time period in the morning session.

Bank Rate: in broader term, bank rate is the rate of interest which a central bank
charges on the loans and advances that it extends to commercial banks. RBI uses this
tool to control the money supply to the economy.

Marginal Standing Facility: Marginal Standing Facility is a new Liquidity

Adjustment Facility (LAF) window created by Reserve Bank of India in its credit
policy of May 2011. MSF is the rate at which the banks are able to borrow overnight
funds from RBI against the approved government securities. The bank above repo
limit can borrow in this mode. It is available from for a specific time period in the
evening session after NEFT hours to tide any mismatch in funding position.

Standing Deposit Facility Rate: The SDF is a liquidity window through which the
RBI will give banks an option to park excess liquidity with it. The Reserve Bank of
India (RBI) has introduced a standing deposit facility (SDF) as a measure aimed at
normalising the course of monetary policy

Reverse Repo: is the rate at which banks park their short-term excess liquidity with
the RBI. The banks use this tool when they feel that they are stuck with excess funds
and are not able to invest anywhere for reasonable returns.

CRR: CRR means Cash Reserve Ratio. Banks in India are required to hold a certain
proportion of their deposits in the form of cash. However, actually Banks don’t hold
these as cash with themselves, but deposit such case with Reserve Bank of India (RBI)
/ currency chests, which is considered as equivalent to holding cash with RBI. Daily
balance can come up to 90% of the stipulated CRR however the 15 days average shall
be above the stipulated CRR rate.

SLR: Every bank is required to maintain at the close of business every day, a minimum
proportion of their Net Demand and Time Liabilities as liquid assets in the form of
cash, gold and un-encumbered approved securities. The ratio of liquid assets to
demand and time liabilities is known as Statutory Liquidity Ratio (SLR). RBI is
empowered to increase this ratio up to 40%. An increase in SLR also restrict the bank’s
leverage position to pump more money into the economy.

Monetary Policy Statement:

“On the basis of an assessment of the current and evolving macroeconomic situation,
the Monetary Policy Committee (MPC) at its meeting today (May 4, 2022) decided to:
• Increase the policy repo rate under the liquidity adjustment facility (LAF) by 40 basis
points to 4.40 per cent with immediate effect. Consequently, the standing deposit
facility (SDF) rate stands adjusted to 4.15 per cent and the marginal standing facility
(MSF) rate and the Bank Rate to 4.65 per cent. • The MPC also decided to remain
accommodative while focusing on withdrawal of accommodation to ensure that
inflation remains within the target going forward, while supporting growth. These
 3

decisions are in consonance with the objective of achieving the mediumterm target for
consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent,
while supporting growth.” Quote MPC dated 02 & 04 May 2022.

RBI Governor: Shri Shaktikanta Das since 12.12.2018

RBI Deputy Governor: Shri Mahesh Kumar Jain, Dr. M.D. Patra, M. Rajeshwar Rao
& T. Rabi Sankar

➢ Agriculture Credit (KBL Agri Nxt):

Year ended ANBC** Total Agri. Credit* % to ANBC

31-03-2017 35814.85 6582.77 #18.38

31-03-2018 38988.15 6877.51 17.64
31-03-2019 49528.57 7081.90 14.29
31-03-2020 57175.68 8568.24 14.99
31-03-2021 61438.87 9071.32 14.76
* including eligible portion of investment in RIDF under Agri. Ancillary.
**ANBC of the corresponding quarter of the previous year.
# In the past, Bank had surpassed the stipulated 18 % target to Agri. as on 31.03.2017
with an achievement level of 18.38 %.

Any shortfall in achievement of stipulated target in various sub sectors of priority

sector lending such as Agriculture, Small and Marginal farmers, non-corporate
farmers, weaker section etc., will attract deployment of funds in RIDF (NABARD) and
other funds (SIDBI, NHB and MUDRA).

**Outstanding deposits of RIDF (NABARD) and other funds (SIDBI, NHB and
MUDRA) as on 31.03.2021 is Rs. 3845.00 crore, of which the amount invested in Rural
Infrastructure Development Fund maintained with NABARD was Rs. 1970.04 crore
only and same was reckoned to arrive at the achievement under agriculture priority
sector.

The position of our investments in various funds on account of shortfall in

various sub sectors of priority sector lending for the last 5 years is furnished as
under:
(Rs. in Balance Balance Balance Balance Total
crore) with with SIDBI with NHB with Investments
Particulars NABARD MUDRA
31.03.2017 1186.17 83.71 129.29 0.00 1399.17
31.03.2018 985.64 166.81 109.76 20.40 1282.61
31.03.2019 986.41 346.79 108.93 40.80 1482.93
31.03.2020 1921.42 999.42 106.54 67.12 3094.50
31.03.2021 1970.04 1435.98 279.48 159.50 3845.00
 4

The average return on RIDF & other investments as on 31.03.2021 is around 3.57 %
only. The average yield on advances and average yield on Agri. advances as on
31.03.2021 is 9.05 % and 8.85 % respectively, the cost of deposits as on 31.03.2021 is
5.29 %. Hence, Bank is losing about Rs.106.00 crore per year as income on account of
investment in RIDF and other fund deposits due to non-achievement of the
mandatory targets stipulated by RBI.

Health of the Agri Advances of the Bank: Rs in Cr

Year Total Total Gross NPA % Agri
Bank Agri Bank Agri % Agri NPA to
Credit Credit NPA to Banks
Banks Agri
Gross advances
NPA
31.03.2017 37585.24 6582.77 1581.59 174.33 11.02 2.65
31.03.2018 48245.51 6877.51 2376.07 199.40 8.39 2.89
31.03.2019 55692.75 7081.90 2456.38 350.07 14.25 4.94
31.03.2020 58043.21 8568.24 2799.93 563.96 20.14 6.58
31.03.2021 52725.09 9071.32 2588.41 602.39 23.27 6.64

The Bank has proposed KBL AgriNxT 2023-24 under its KBL Vikas Transformation
drive where the bank proposed to meet the statutory obligations stipulated by the
RBI to Agriculture the Bank’s road map to achieve the stipulated target is briefed
hereunder

• Under KBL VIKAAS, a special vertical for Agriculture under Credit Marketing
Department (CMD) with National Head – Agri. is formed.
• The Bank is focusing to expand its agriculture business mainly through Farm
Credit, Agriculture Ancillary services including Food and Agro Processing,
Agriculture Infrastructure, Agri Gold Loan and NBFCs/MFIs for onward
lending to agriculture.
• Further, the digital initiatives under Transformation wave – 2.0 of KBL
VIKAAS – KBL AgriNxT, the Bank will also focus to have innovative digital
products/solutions and tie ups with FinTech Companies for agriculture
business expansion.

The action Plan for 2021-22, 2022-23 & 2023-24 Quarterwise increase in Agri Credit as
under
Quarter Total % to Quarter Total % to Quarter Total % to
ended ANBC ended ANBC ended ANBC
Jun-21 15.59 Jun-22 19.00 Jun-23 18.85
Sep-21 16.29 Sep-23 18.82 Sep-23 19.16
Dec-21 17.30 Dec-22 18.87 Dec-23 19.73
Mar-22 18.64 Mar-23 19.01 Mar-24 20.28
Average 16.95 Average 18.93 Average 19.51
 5

Major action points/strategies planned to surpass the stipulated 18 % target under

Agriculture sector and to sustain the same is briefed as under;

1. Separate vertical for Agriculture under credit marketing department, dedicated and
focused efforts will be given for overall growth and development of agriculture
portfolio.

2. Under this Agriculture vertical, various marketing initiatives for sourcing the leads
through analytics, corpository etc., timely GREAT reviews, reaching out to clients
through field visits, fine tuning the products, formulation of new schemes etc., are
being undertaken. The required infrastructure including manpower to meet the
planned growth is also put in place.

3. At present Bank has 200 Green branches (potential branch for agriculture business
expansion) and 10 Agriculture Development Branches (ADB). Green and ADBs need
to intensively focus on agri. credit expansion.

4. Bank is planning to strengthen sales force by increasing the number of AFOs.

Etc.

➢ Additional Links/Pages

• 2 FA: Implementation of Two Factor Authentication (2FA) for Core Banking

Solution (Finacle).
 6

• AD Mandate & AD Portal: Pertains to Active Directory – Login Process and

Change of Password.

• Apply Safe Deposit Locker: Safe Deposit Locker - Operational guidelines for
online booking of Safe Deposit Locker through Branch Portal (Ref HO:
CIRCULAR LETTER: TRY & ACCTS: GF-34: 149: 2021-22 December 31, 2021)

• ASBA & Smart ASBA: Application supported by Blocked Amount. (Ref:

CIR.LETTER No. HO/SEC/5/2020-21 March 20, 2021).

• Audit Management System: Audit related regular inspection and concurrent

audit.

• BC LOC Capture: It was created to enable to capture the details of the Bankers
Certificate and Line of Credit but now LAPS has been enabled to sanction the
same . Hence not in use.

• CAO: The centralised account opening application

• CB Connect:

• CERMO: Cermo+’ is a single gateway that allows Certification, Monitoring

and Reporting of Compliance (to Regulatory/Statutory/Internal guidelines)
and helps compliance department to monitor the compliances due at
branch/regional office/other departments at H.O

• CERSAI: Redirected to CERSAI Portal

• CKYC: Upload and comply with CKYC

KBL ABCD & KBL Xpress ABCD: Annual Branch Customer Dashboard, it is a single
view of customer marketing tool to cross sell our various products.

KBL X PAWS: It is Express Profile analysis of Wallet Share, it helps in analysing the
banks wallet share in the customer monthly expenditure port folio.

DhIRA (Digi-human Interactive Relationship Assistant): It is a ChatBOT is a

software that simulates human-like conversations with users via text messages on
chatbox. It is built to leverage Natural Language Processing (NLP), Artificial
Intelligence & Machine Learning (AI & ML) technologies and its key task is to help
users by providing answers to their questions, related to the Xpress Cash loan. The
BOT is trained with set of FAQ’s and it also nudges the user with page based
suggestions/ recommendations.
 7

➢ Inflation:
The CPI headline inflation in April registered a further sharp increase to 7.8 per cent.
It was the fourth consecutive month when inflation touched or was above the upper
tolerance level of 6 per cent. The surge in headline inflation was seen across all major
categories.

The global geopolitical situation remains fluid and commodity markets remain on the
edge, rendering heightened uncertainty to the domestic inflation outlook. Certain
positive developments on the prices front in recent weeks may help to ease the acute
price pressures to some extent. These would include expectations of a normal south-
west monsoon and kharif agricultural season; the recent supply side measures taken
by the government and the unfolding of their impact; lifting of the palm oil export ban
by Indonesia; and signs of moderation in global industrial metal price indices. Our
quick survey of urban households undertaken after the excise duty cuts on petrol and
diesel on May 21, 2022 shows a significant moderation in their inflation expectations:
declines of 190 basis points in their three months ahead expectations and 90 basis
points in one year ahead expectations. In such a scenario, further reduction of State
VATs on petrol and diesel across the country can certainly contribute to softening of
the inflationary pressures as well as expectations.

Notwithstanding these positive developments, upside risks to inflation do persist.

These risks emanate from elevated commodity prices; revisions in electricity tariffs
across many states; high domestic poultry and animal feed costs; continuing trade and
supply chain bottlenecks; rising pass-through of input costs to selling prices in the
manufacturing and services sectors; the recent spike in tomato prices which are
adding to food inflation; and most important of all, the elevated international crude
oil prices. With the assumption of a normal monsoon in 2022 and average crude oil
price (Indian basket) of US$ 105 per barrel, inflation is now projected at 6.7 per cent in
2022-23, with Q1 at 7.5 per cent; Q2 at 7.4 per cent; Q3 at 6.2 per cent; and Q4 at 5.8 per
cent, with risks evenly balanced. It may be noted that around 75 per cent of the
increase in inflation projections can be attributed to the food group. Further, the
baseline inflation projection of 6.7 per cent for 2022-23 does not take into account the
impact of monetary policy actions taken today.

Between February and April, headline inflation has increased by about 170 basis
points. With no resolution of the war in sight and the upside risks to inflation, prudent
monetary policy measures would ensure that the second-round effects of supply side
shocks on the economy are contained and long-term inflation expectations remain
firmly anchored and inflation gradually aligns close to the target. The monetary policy
actions including withdrawal of accommodation will be calibrated keeping in mind
the requirements of the ongoing economic recovery.

These decisions are in consonance with the objective of achieving the medium term
target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2
 8

per cent, while supporting growth.

➢ Global Economy:
Since the MPC’s meeting in April 2022, disruptions, shortages and escalating prices
induced by the geopolitical tensions and sanctions have persisted and downside risks
have increased. The International Monetary Fund (IMF) has revised down its forecast
of global output growth for 2022 by 0.8 percentage point to 3.6 per cent, in a span of
less than three months. The World Trade Organization has scaled down projection of
world trade growth for 2022 by 1.7 percentage points to 3.0 per cent.

➢ Domestic Economy
Domestic economic activity stabilised in March-April with the ebbing of the third
wave of COVID-19 and the easing of restrictions. Urban demand appears to have
maintained expansion but some weakness persists in rural demand. Investment
activity seems to be gaining traction. Merchandise exports recorded double digit
expansion for the fourteenth consecutive month in April. Non-oil non-gold imports
also grew robustly on the back of improving domestic demand.

Overall system liquidity remained in large surplus. Bank credit rose (y-o-y) by 11.1
per cent as on April 22, 2022. India’s foreign exchange reserves declined by US$ 6.9
billion in 2022-23 (up to April 22) to US$ 600.4 billion.

➢ Ind AS (Indian Accounting Standard):

IFRS: International Financial Reporting Standards (IFRS) are designed as a common

global language for business affairs so that company accounts are understandable and
comparable across international boundaries. It is adopted by International Accounting
Standards Board (IASB) for preparation and presentation of financial statements.

IND AS: The Indian Accounting Standards (Ind AS), as notified under section 133 of the
Companies Act 2013, have been formulated keeping the Indian economic & legal
environment in view and with a view to converge with IFRS Standards, as issued by and
copyright of which is held by the IFRS Foundation.

The Ministry of Corporate Affairs (MCA), in 2015, had notified the Companies (Indian
Accounting Standards (IND AS)) Rules 2015, which stipulated the adoption and applicability
of IND AS in a phased manner beginning from the Accounting period 2016-17.

The MCA has since issued three Amendment Rules, one each in year 2016, 2017, and 2018 to
amend the 2015 rules. The IND AS are basically standards that have been harmonised with
the IFRS to make reporting by Indian companies more globally accessible.

MCA has spelt out the accounting standards applicable for companies in India. As on date
MCA has notified 29 Ind AS applicable for Accounting period on or after 01.04.2021: (The
MCA has kept revising the number of AS and the following are applicable as of now):
 9

AS 1 Disclosure of Accounting Policies

AS 2 Valuation of Inventories
AS 3 Cash Flow Statements
AS 4 Contingencies and Events Occurring After the Balance Sheet Date
Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting
AS 5
Policies
AS 7 Construction Contracts
AS 9 Revenue Recognition
AS 10 Property, Plant and Equipment
AS 11 The Effects of Changes in Foreign Exchange Rates
AS 12 Accounting for Government Grants
AS 13 Accounting for Investments
AS 14 Accounting for Amalgamations
AS 15 Employee Benefits
AS 16 Borrowing Costs
AS 17 Segment Reporting
AS 18 Related Party Disclosures
AS 19 Leases
AS 20 Earnings Per Share
AS 21 Consolidated Financial Statements
AS 22 Accounting for Taxes on Income
AS 23 Accounting for Investments in Associates in Consolidated Financial Statements
AS 24 Discontinuing Operations
AS 25 Interim Financial Reporting
AS 26 Intangible Assets
AS 27 Financial Reporting of Interests in Joint Ventures
AS 28 Impairment of Assets
AS 29 Provisions, Contingent Liabilities and Contingent Assets

Phases of adoption
MCA has notified a phase-wise convergence to IND AS from previous accounting standards.
IND AS shall be adopted by specific classes of companies based on their Net worth and listing
status.

Phase I : Mandatory applicability of IND AS to all companies from 1st April 2016, provided:
It is a listed or unlisted company wherein Its Net worth is greater than or equal to Rs.500
crore* *Net worth shall be checked for the previous three Financial Years (2013-14, 2014-15,
and 2015-16).

Phase II: Mandatory applicability of IND AS to all companies from 1st April 2017, provided:
It is a listed company or is in the process of being listed (as on 31.03.2016) wherein Its Net
worth is greater than or equal to Rs.250 crore but less than Rs.500 crore (for any of the below
mentioned periods). Net worth shall be checked for the previous four Financial Years (2014-
14, 2014-15, 2015-16, and 2016-17)
 10

Phase III: Mandatory applicability of IND AS to all Banks, NBFCs, and Insurance companies
from 1st April 2018, whose: Net worth is more than or equal to INR 500 crore with effect from
1st April 2018.

Phase IV: All NBFCs whose Net worth is more than or equal to INR 250 crore but less than
INR 500 crore shall have IND AS mandatorily applicable to them with effect from 1st April
2019.

Please Note: If IND AS becomes applicable to any company, then IND AS shall automatically
be made applicable to all the subsidiaries, holding companies, associated companies, and
joint ventures of that company, irrespective of individual qualification of such companies. In
case of foreign operations of an Indian Company, the preparation of stand-alone financial
statements may continue with its jurisdictional requirements and need not be prepared as per
the IND AS. However, these entities will still have to report their IND AS adjusted numbers
for their Indian parent company to prepare consolidated IND AS accounts.

• The Reserve Bank of India vide its circular DOR

(NBFC).CC.PD.No.109/22.10.106/2019-20 dated 13.03.2020 has mandated the Non-
Banking Financial Companies and Asset Reconstruction Companies for implementing
Indian Accounting Standards for preparation of their financial statements from
financial year 2019-20 onwards.

IND AS for Banks:. Banks were expected to adopt Ind AS from April 1, 2018, though on April
5, 2018, the Reserve Bank of India (RBI) deferred its implementation by a year to FY 2019-20.
Again, on March 22, 2019 vide DBR.BP.BC.No.29/21.07.001/2018-19 March 22, 2019, it
deferred the accounting standards implementation indefinitely. With some of the key reserve
requirements getting further leeway for implementation, sources indicate that the adoption
of Indian Accounting Standards (Ind AS) for banks may be further extended by two years –
till FY24 (Media Speculation not confirmed by RBI).

Major differences between Indian GAAP (Generally Accepted Accounting Practices) and Ind-
AS:
a. Accounting of fixed assets based on fair value as compared to the historical cost
concept
b. Concept of expected credit loss which varies from industry to industry
c. Business model to be clearly defined by the company while adopting the Ind-AS.
d. Volatility of Balance Sheet figures increases.
e. Other Comprehensive Income (OCI) comprising of incomes & expenses that are
not recognized in the Profit & Loss account as required by other Ind-AS.
f. Balance in OCI to be included as part of “Equity”.

Difference between IFRS and IND AS: As such two are different aspects; IND AS is
an Indian Version to fall in line with International Financial Reporting Standards. It is
also important because the Indian economy requires foreign investment to boost its
growth and the financials of Indian companies in line with international accounting
 11

standards will help them to analyses a take a decision with regard to the investment.
It also makes Indian companies having international presence competitive in global
environment to attract investments.

Effect on IND AS to the banks: (Our Circular HO/Circular Letter/Try &

Accts/GF:34/68/2016-17 dated 15.12.2016).

The IND AS calls for major changes in policies of the bank:

Specific issues impacting the bank:
1. Business Model Concept: Business model of each activity shall be clearly
defined this calls for policy changes. (Loans should be defines whether the
same will be held till maturity - in such case amortized cost method shall be
applied or it will be sold by the bank during the course of business- fair value
method shall be applied.)
2. Fair valuation of Assets & liabilities: Till date the assets & liabilities were
valued at book value. Under IND AS the assets & liabilities shall be reported at
fair values. Fair value is the market price at which the said asset/ liability
would be traded among the market participants. Hence the assets/ liabilities
will be reported in balance sheet at their present values and difference arising
out of the same will be routed through P & L account.
3. Effective Interest Rates (EIR): Current loans are recognized based on the
interest rate charged for the loan. EIR is the internal rate of return for advances.
For calculation of EIR any upfront charges shall be taken into consideration and
shall be amortized for the period of the loan and same shall be deferred and
charged during the term of the loan.
4. Impairment loss: In the existing scenario the provision for Standard Assets/
NPA is calculated/provided as per RBI guidelines. IND AS has brought in the
concept of expected loss method where in the bank’s has estimate the loss it
expects from the loan over its estimated life. This is different from current
provisioning scenario. Under IND AS, the Probability of Default (POD) and
Loss Given Defaults (LGD) will be the key element in calculating the expected
Credit loss.
5. Size of the Balance sheet: Under Ind AS, the off balance sheet items such as
Derivatives (forward contracts), acceptances & endorsement (LC & BG) shall
be considered as On balance sheet items. This may impact capital adequacy.
6. Staff Loans/ Staff Deposits: Loans given to staff at the subsidized rate of
interest and deposit accepted at higher rate of interest from staff shall be fair
valued and the difference shall be routed through P & L account.
7. Interpreting the companies Balance sheets: As all the companies balance sheet
exceeding networth of Rs.500.00 crores as on 31.03.2017 and Rs.250.00 crores as
on 31.03.2018 will be under IND AS and the bank’s credit officers shall be ready
and equipped to analyse and understand such financials.
8. Changes in Core Banking Solution: The system has to be adaptaed to the
changing requirements under IND AS.
 12

Staging of advances under IND AS – Computation of Expected Credit Loss (ECL):

Going forward the banks have to make provision based on Expected Credit Loss
Method.

Expected Credit Loss is computed on loans and advances classified as amortised cost.
Under new ECL Methodology there is no concept of Non Performing Advances (NPA)
as done hitherto as per IRAC norms. At each reporting date the entity recognises a
loss allowance (provision) based on either 12 month ECL’s or lifetime ECL’s
depending on whether there has been significant increase in credit risk on financial
instruments since initial recognition.

The Loan portfolio is bifurcated to Corporate (Debt owned by company, partnership

or proprietorship of above Rs.5.00 Crore) & Retail (Individual borrowers i.e., Natural
Persons of any amount).

Staging of Advances:
Stage 1 Advances with low credit risk and where Standard, SMA 0
there is no significant increase in credit risk
Stage 2 Advances with significant increase in credit SMA 1 & SMA 2
risk
Stage 3 Advances that have defaulted/credit NPA Accounts
impaired and Restructured advances

Upgradation:
An asset shall be upgraded from Stage 3 when their irregularity/deficiency which led
the account being classified as defaulted is fully rectified on sustainable basis.
Therefore an asset in Stage 3 shall not be brought to Stage 1 even after the irregularities
are rectified. At minimum the banks shall keep a Stage 3 asset in Stage 2 for six months
after regularisation before upgrading into Stage 1. (The cooling period for retail
exposure in Stage 2 is 1 month for Retail exposures as against 6 months for Corporate
exposures).

Measurement of Expected Credit Loss:

ECL = PV (PD * LGD * EAD).

Present Value (PV): Net Present Value of the asset based on the discounting factor.

Probability of Default (PD): PD shall be calculated internally (using matrix

multiplication) based on rating migration in respect of Corporate portfolio, slippage
rate/actual loss at pool level for retail portfolio for Stage 1 & Stage 2. PD in case of
Stage 3 is 100%.

Loss Given Default (LGD): LGD shall be calculated internally based on past recovery
of NPA accounts which are closed, Written off and upgraded. Further value of
 13

expected realisation of collaterals is also considered in the recoveries. LGD shall be

carried out separately for Retail and Corporate exposures. For Retail the LGD shall be
based on separate pools (schemes).

Exposure at Default (EAD): The defaulted exposure (Fund Based + Non Fund Based).
For Fund Based the EAD is present O/s balance and for Non Fund Based EAD is
computed based on CCF (Credit Conversion factor) computed internally based past
historical data of/trend of devolvement’s observed.

➢ MD Sir’s Speech on 01.04.2022:

• As per the provisional numbers, the business turnover of the Bank has reached a
new high of Rs.1,38,111.16 crore and CASA share has registered an all-time high of
32.97%.
• As per the provisional figures as on 31.03.2022, the total business turnover stood at
Rs. 1,38,111.16 crore as against Rs.1,28,365.73 crore as on 31.03.2021, thereby
registering a growth of 7.59%. The total deposit stood at Rs.80,385.15 crore as against
the last year’s Rs. 75,640.64 crore, registering a y-o-y growth of 6.27%. The gross
advances of the Bank stood at Rs.57,726.01 crore compared to Rs. 52,725.09 crore as
on 31.3.2021, recording a y-o-y growth of 9.48%. The terminal CD ratio works out to
be 71.81%.
• The total CASA deposits registered a y-o-y growth rate of 11.25% and now stands at
Rs.26,504.07 crore (including ODD) as on 31.03.2022 as against Rs.23,823.32 crore as
on 31.03.2021, constituting 32.97% of core deposit as against 31.50% as on 31.03.2021.
The total new CASA accounts opened during the last financial year stood at 6,08,347.
• Further, NPAs have consistently moderated and so also the stressed portfolio.
• Further, digital transactions reached a level of 93.03% reflecting good efforts of
members of staff in furthering digital adoption by the customers.
• We are also on our way to further consolidate the PCR and CRAR so as to continue
our effort of further strengthen the fundamentals of the Bank.
• Further, to drive our business as Agency Bank, an exclusive National Head has been
on-boarded to our Govt. Agency Business Cell
• Introduction of Responsiveness Index: To conduct a digital survey to obtain
feedback from all the branches and ROs about the responsiveness of the
H.O. Departments.
• Global Economy Outlook: (A disrupted recovery and higher Inflation, Slowing
Growth, Rising Risks.
• Indian Economy Outlook: The MPC has estimated inflation at 4.5% for FY23,
assuming a normal monsoon. Also, RBI has pegged the economic growth rate for
2022-23 at 7.80%, down from 9.20% expected in 2021-22, in view of the uncertainties
on account of the pandemic, higher inflation & continued geo-political tensions.
• Union Budget, more thrust has been given to hard infrastructure like Roads,
Railways, Housing etc. which generate more employment along with development
which are very crucial to the banking sector.
• Banks in India continue to be resilient, thanks to the professional approach of the
Regulator, improving compliance culture, qualitative credit analysis and the practice
of good Corporate Governance prevalent in the banking sector. The timely
 14

intervention by the Central Govt. and the Regulator with various stimulus packages
during the pandemic to handhold all the sectors of the economy helped the banks
also to sail the tides successfully.
• The Bank has recently raised BASEL III Compliant Tier-2 Capital of ` 300 crore in a
record time by way of issuing bonds to supplement the expected business growth in
the coming years.
• Karnataka Bank is the first Bank in India to get ISO 9001:2015 Certification for its
QMS activities associated with Risk Management Processes and practices of the Risk
Management Department at Head Office.
• The Bank has been making its best efforts to achieve the guided goal of bringing
down overall stress in SMA (SMA0, 1, 2) under performing advances to below 5% &
10% in restructured advances respectively.
• The Bank has launched KBL FASTag on 25th August, 2021.
• The Bank has hosted 100 e-learning modules till now on the ELM platform. The 100th
module on “Bank’s history” is launched on 30 th March 2022.
• Retirees’ Portal will facilitate as a one stop information source for the retirees.
• Biometric Attendance Solution is proposed.
• Decentralisation of HR&IR Functions to RO.
• Implementation of new initiatives announced on 01.04.2021 (FY22):
The following major initiatives which were announced on 01.04.2021 have been
successfully implemented during FY22:
❖ Module on Bank’s panel Advocates’ empanelment and review of their
performance.
❖ Up-gradation of VASOOL SO-Ft to cater to the increased requirements and
making it a comprehensive recovery module and Implementation of
‘Death Claim’ Module through VASOOL SO-Ft.
❖ Implementation of Data Analytics.
❖ Digitisation of Mortgage loan under Xpress journey.
❖ XPAWS – Xpress Profile Analysis for Wallet Share – Customer transaction and
behavioural analytics of Primary Bank Statement for increasing Wallet Share
(Cross sell /upsell) extended to all branches.
❖ Extensive use of “Corpository”, a lead generating tool to provide leads of
Mid-Corporate segment to all the RSEs from the centralised location at HO.
❖ Rationalisation of RLPCs into 3 Centralised Loan Processing Hubs (CLPH) one
each at Ahmedabad, Bengaluru and Mangaluru and one Centralised Loan
Sanctioning Centre (CLSC) at Mangaluru for all regulatory Retail loans upto
` 5 crore.
❖ Online submission of 15G/15H forms through Website and Mobile Banking
app.
❖ Formation of a Technology Advisory Group (TAG) - for all IT related initiatives
comprising of domain experts from outside.
❖ Launching of FASTag services.
❖ Introduction of RPA process for issuer chargebacks (NFS, RuPay)
❖ New CBS option for handling cash indent.
❖ Matching tool for GST invoices.
 15

❖ Safe Deposit Locker (SDL) Management in CBS system and enabling online
booking through Bank’s Web Portal.
❖ NRI Mobile Banking facility in the existing KBL Mobile Plus App to NRI
customers for both Android & iOS users.
❖ The new version of KBL Mobile Plus App is launched with additional features
such as support for Kannada Language, Email ID Updation, UPI QR code etc.
❖ Online submission of KYC documents for Re-KYC.
❖ Cobranded Credit Cards Issuance crossed 1,00,000 mark.

• The followings initiatives are in advanced stages of development which will be

implemented soon:
❖ CEDiR – Central External Directory of Identity Records – Common Repository
platform for negative screening and consolidated credit report.
❖ KBL Xpress Current Account Digital Journey - for customer on-boarding and
instant account opening – taken as a part of Neo Banking project.
❖ Customer on-boarding through V-CIP (Video based Customer Identification
Process).
❖ Integration of Digital Journey with National Portal for Credit Linked Govt.
Schemes (Initiative of Dept. of Financial Services).
❖ KBL Xpress Cash Journey for Self Employed customers.
❖ Setting up of ACoE (Analytical Centre of Excellence).
❖ Automation of Stock & Book Debts Statement submission by the borrowers
through Internet Banking.
❖ Trade Finance Automation and on-line submission of forex transaction
requests.
❖ Digitisation of Balance sheet and related financial statements for effective
consolidation and elimination of manual intervention.

• Expanding Service Outlets:

❖ During the year 2021-22, we added 20 new branches to take our total brick &
mortar branches tally to 877.
❖ 86 e-lobbies/ mini e-lobbies were opened during the year and as on 31.03.2022
the total number of e-lobbies/mini e-lobbies stood at 546
❖ The total number of Bank’s currency chest stood at 4 as on 31.03.2022 (i.e. at
Bengaluru, Hubballi, Mangaluru & Mysuru).
❖ A Digi Centre is opened at our Mangaluru-Mannagudda Branch on 30.03.2022
which enables in digital opening of SB accounts, instant issuance of debit card
and in-principle sanction of retail loans.
❖ The work for construction of own buildings for the Regional Offices at
Tumakuru, Kolkata and Udupi has commenced and work is progressing as per
the schedule. With this, total 10 out of 14 ROs will be having owned premises.

• KBL Services Ltd: Wholly Owned Subsidiary commenced its operations on

30.03.2021. The focus for our subsidiary would be to attain size, scale and efficiency
for which we would continue to work together
 16

• Awards and Accolades: This year a record number of 19 prestigious Awards have
been bagged by the Bank in the just concluded financial year

• KBL-VIKAAS: KBL NxT: With an objective of taking the digital initiatives to the
next level, the Bank has launched project ‘KBL NxT’ under wave 2.0 of ‘KBL
VIKAAS’ in April 2021 to emerge as the ‘Digital Bank of Future’. The project is spread
across the years from 2021-2027. In the first phase from 2021-2024, the Bank will be
focusing on digitisation under various verticals of the Bank. These are Vertical NxT,
Tech NxT, Agri NxT, Partner NxT, Customer NxT, Revenue NxT, Brand NxT,
Accounting NxT, HR NxT, Cyber Security NxT, Review & Monitoring NxT,
Compliance NxT, Legal & Recovery NxT, Contact Centre NxT, Standardisation NxT
etc.
• Key initiatives under these verticals are setting up of Analytical Centre of Excellence
(ACoE), Chatbots, Account Aggregators, Neo Banking, Trade Finance Automation,
Digital Insurance, Digitisation of internal processes, Corporate Mobile Banking,
Enhancements to Internet Banking & Retail Mobile Banking, Digital on-boarding of
Saving Accounts with video KYC, Doorstep Gold Loan, Digital Marketing, Opening
of Digi Centres etc.
• With this Digital transformation under KBL-NxT, the Bank endeavours to emerge as
the ‘Digital Bank of Future’.
• New Ideas ([email protected]): This platform was introduced on 15.04.2017. Total
of 1288 ideas have been received as at 31.03.2022, out of which 575 ideas have since
been found useful and implemented, 191 ideas are at different stages of
implementation with the respective owner departments and remaining 522 ideas are
not found feasible.
• Weekly Mail from MD’S Desk: With a view to connect with my colleagues on a
continuous basis, a new dedicated weekly mail from MD’s Desk viz. ‘Monday mail
from MD’ was introduced on 20.07.2020. This has helped the Management to
disseminate important action points every week besides highlighting the previous
week’s activities. (Till date 95 Monday mail received upto 09.05.2022).
• Decentralisation of Administrative/Control Functions: Bengaluru is now widely
regarded as the “IT Capital of India. To encash the business opportunity and
improve the brand image by moving some of the customer facing
departments/Teams/Executives to Bengaluru. To begin with, it is proposed to shift
Credit Marketing and Credit Sanctions Departments (which are presently
functioning at Head Office, Mangaluru) to Bengaluru. Going forward, shifting of
some more customer centric departments/offices to Bengaluru will be explored.

• Vision for Centenary Year of the Bank- KBL@100: The Bank will be stepping into
its Centenary Year on 18.02.2023 and it is proposed to celebrate the Centenary Year
from 18.02.2023 to 18.02.2024. It is envisaged to actively focus on the following factors
among others for FY-2023-24 and beyond…
❖ The purchasing power of middle class would drive the retail segment growth
as middle class earns, spends and have entrepreneurial skills also. This gives
good scope for retail loan growth.
❖ Traditional Agent vis-à-vis Digital Agent
 17

❖ Leveraging on the low cost model of KBL Services Ltd. – getting additional
business and cost reduction etc.
❖ Exploring the possibilities of increasing revenue stream
❖ Further deepening the concept of people first strategy: Competency in all
respects, speed of decisions etc.
❖ Effective Redressal of issues relating to credit sanctions and to ensure that
Centralisation results in quick decision making
❖ Ensuring wholistic adherence to the prescribed TAT and continuous
communication with the borrowers at various stages of processing/sanctions
❖ Priority to retain ETB customers as it is cheaper than acquisition of NTB
customers
❖ Focusing to have branches near the industrial areas
❖ Fraud Risk Management – software to track transactions suspicious in nature
in CBS
❖ On-Boarding of Chief Marketing Officer
❖ On-Boarding of IR Agency to effectively engage with investors
❖ A Comprehensive procurement process to be put in place to ensure smooth
procurement process
❖ Tracking key metrics leading to Centenary Year
❖ Focusing more on customer centricity in terms of Demographic profile,
product, gender, generation, loyalty, recognition etc.
❖ Effective use of analytics and its effective execution
❖ Focusing on SPEED to grow steadily and healthy:
S - Scale Up
P – People first, Customer first
E – Employee Led
E – Excellence Driven
D - Digitally aligned.

On the above backdrop, it is proposed to have the following ambitious mission for our
Centenary Year (KBL@100):
100 Years
Rs.200 THOUSAND CRORE OF BUSINESS TURNOVER (Rs.2 lakh crore)
`1000+ CRORE OF NET PROFIT

• New initiatives proposed for the year 2022-23: The following are some of the new
initiatives proposed for this Financial Year to drive business and to further enhance
the customer journey experience with digital capabilities.

❖ Corporate Mobile Banking with Omni Channel experience.

❖ KBL Mobile Plus enhancement with Multi-Language Support (i.e. 5 Additional
Languages - Hindi, Telugu, Tamil, Marathi, Malayalam), Deposit Loan/ODAD
opening, Credit Score facility, Travel ticket booking etc. in KBL Mobile Plus.
❖ Integrated SB Account opening process using Web Banking Solution inclusive
of CAVC Process.
❖ Centralised Know Your Customer Integrated Solution.
 18

❖ Honey Deposit Automation.

❖ Centralised Customer ID Modification Solution.
❖ Establishment of Digital Banking Units (DBU) under ‘Azadi Ka Amrit
Mahotsav’ initiative of Government of India.
❖ Tie-up with Neo Bank Partners to increase CASA and other retail business.
❖ Priority & Personalised Banking Services for privilege customers - delivering
the right individual experience through the right channel at the right time and
to further strengthen customer experiences, build trust and loyalty
❖ Customer Service Point for on-boarding new customers and providing basic
banking services.
❖ Implementation of Insurance Platform “Banca edge” to provide comprehensive
solutions for sales, service and MIS.
❖ Wealth Management Services which will provide a combined bouquet of
financial products to address the needs of affluent clients.
❖ Online solutions for Sovereign Gold Bond (SGB) investments and NPS.
❖ Hosting of FAQs pertaining to legal opinion given by Legal & Recovery
Department for the benefit of Branches/Regional Offices.
❖ Conducting Mega e-auctions in every quarter.
❖ Upgradation of Cermo Application to Cermo NxT.
❖ Introduction of E-TMS system for certain Compliance Activities.
❖ Ensuring 90% Digital Sanction for Home Loans by taking up digitisation of
sanction to NRIs.
❖ Introducing Personal Loan product for self-employed category-100%
digitisation of personal loans.
❖ Introducing KBL Xpress MSME Scheme for new units, takeover facilities,
composite loans, increase in limit for fresh and renewal facilities.
❖ To enter into co-lending arrangement with reputed HFCs/NBFCs/Fintechs to
increase book growth under Priority Sector Lending.
❖ Introduction of Gold Loan Sourcing & Disbursement at Customer Door Step.
❖ Partnering with Fintechs for various Agri finance activities under Agri NxT
initiative.
❖ Introduction of “e-Krishik Bhandaar Scheme” to provide Loan against
e-Negotiable Warehouse Receipts (e-NWR).
❖ Digitisation of Channel of DSA/BSA which will cover on-boarding,
Commission pay outs, Performance Review etc.
❖ Launching Account Aggregator, WhatsApp Banking and Neo Banking
❖ Digitisation of Audit activities such as preparation of Regular Inspection, Short
Inspection and Concurrent Audit Synopsis notes etc. and related
correspondences with Branches, ROs & HO Departments.
❖ Introduction of web application for Inspection Department operations
including IS Audit viz. preparation of Audit Plan, Assignment of Audits,
conducting the Branch rating exercise, preparation of Synopsis notes & other
back office reports and maintenance of proper database.
❖ Implementation of Virtual Desktop Infrastructure.
❖ Introduction of Omni Channel – Single channel for both Mobile Banking and
Internet Banking.
 19

❖ Co-location site for DR Centre.

❖ Introduction of Virtual Debit card.
❖ Introduction of Online DL / ODAD
❖ Launching an online crash course by our STC on CAIIB to help staff members
having JAIIB to acquire CAIIB Certification
❖ Launching of ESG (Environmental, Social and Governance) Framework.
❖ Revamping of Credit Rating scorecards.
❖ Implementing E-Ticketing System in CLPHs and CLSC for time bound
redressal of branch grievances on proposals submitted / in process.
❖ Automation of CGTMSE registration & claim process.
❖ CERSAI – API (Application Programming Interface).
❖ CRILC (Main) Automation of data submission to RBI.
❖ Introduction of ADF-Automated Data Flow.
• RDF (return to Default)
• Credit to Minority
• NULM (National Urban Livelihood Mission)
❖ Implementation of Documentation Management System for DEA Fund claim
requests received from the Branches.
❖ Total Automation of IMPS/AEPS
❖ Placing of Clean Agent Modular (Automatic) Fire Extinguishers in storage
areas and electrical rooms at Head Office and Kodialbail building.
❖ GST Accounting in CBS –Accounting of GST collected from the customers
under Sundry Liability A/c instead of crediting to the Income A/c.
& many more…..

• Cyber Security: The banking operations are now increasingly driven by digital
mode. With the increased penetration of digital technology, different forms of cyber
frauds are also increasing day by day. This calls for the robust cyber security
framework to safe guard the customers’ as well as Bank’s interest. In this direction,
while we need to continuously upgrade all the cyber security measures in our
banking operations, the users should continue to exercise abundant caution while
handling digital operation/dealing with e-mails/attachments etc.

• Business Goals for the Financial Year 2022-23: Owing to the continued challenges
on account of COVID-19, the available business opportunities and necessity to adopt
cautious/ conservative approach etc., the following moderate business goals are
provisionally set for the current financial year–2022-23:
❖ Business turnover of Rs 1,57,500 crore (Deposits of Rs.90,000 crore and
Advances of Rs.67,500 crore) with CD ratio of 75% thereby achieving a growth
rate of 14% under business turnover, 11.95% in deposits and 16.93% under
advances over the previous year.
❖ Greater focus on CASA to achieve CASA deposits of Rs.31,500 crore with a
growth rate of 18.85% to have a minimum CASA share of 35% of total
deposits. Our ‘cost-lite’ deposit portfolio concept holds good for the current
financial year also.
 20

❖ To further strengthen the credit portfolio with major focus on Retail Loans,
Gold Loan, Agri. Loan, MSME & Mid Corporate sectors to achieve a sustainable
and remunerative business.
❖ To open 23 new branches to take the total number of branches to 900 and
e-lobbies/mini e-lobbies to 570 by 31.03.2023.
❖ To improve the health of advances portfolio by containing the stress
(SMA0+SMA1+SMA2) to below 5%.
❖ To further improve the health of advances portfolio by reducing GNPA and
NNPA by minimizing slippages and improving recovery.

• Business Strategy: It is proposed to have the business guidance i.e. 5/4 and 10/8 for
this year. The branches shall achieve minimum 20% of the incremental business in
the first 4 months at the rate of 5% per month and balance at the rate of 10% per
month in the remaining 8 months. The credit underwriting process to be further
strengthened/streamlined. Also we shall continue to adopt ‘GREAT’ review
mechanism for achieving all-round business growth month on month without any
exception.

• Summary & Conclusion: To continue to drive the growth momentum and to have
this year also a “Year of Business Excellence”, the Bank would primarily
focus on the following among others:
a. Healthy Loan Book growth with special focus on Retail and Mid-Corporate
Segments
b. Bringing maximum eligible sanctions under digital journey
c. Recalibration of administrative/office set up
d. Cost optimisation
e. Greater role for KBL Services and Regional Offices
f. Widening the scope of Contact Centre
g. Driving maximum Govt. Business
h. CASA and ‘Cost-Lite’ Retail Term Deposit growth management
i. Further improving the asset quality by effective screening at the first stage of
on-boarding itself
j. Further intensifying the stress management in advances portfolio on real time
basis
k. Intensifying the Recovery in all categories of NPAs / Technically Written Off
Accounts
l. Conducting business with scrupulous adherence to Compliance factors
m. Effective management of risk factors in all the areas of operations
n. Taking digital initiatives to next level
o. Building robust IT and Cyber Security capabilities
p. Reducing carbon footprint by bringing more and more processes under DMS
/online/paperless mode and effective implementation of ESG framework
q. Building future ready work force with right mix of skills
r. Further strengthening the succession plan at all levels.
s. Effective SOPs for various areas of operations, etc.
t. Year of Business Excellence’
 21

➢ Gross Domestic Product (GDP:

The International Monetary Fund (IMF) on 19.04.2022 slashed India’s economic
growth forecast to 8.2% for FY23 from 9% estimated in January, citing the impact of
high oil prices on consumer demand and private investments. The IMF’s FY23 forecast
for India is among the most optimistic so far. The Reserve Bank of India (RBI), in its
latest policy meeting, lowered India’s growth projection for FY23 to 7.2% from 7.8%
estimated earlier. Last week, the World Bank cut India’s FY23 growth forecast to 8%
from 8.7% estimated in January. As per RBI in May 2022, the feasible range for
medium-term steady state GDP growth in India works out to 6.5–8.5 per cent.

➢ 5 Trillion Economy – India:

Prime Minister Narendra Modi in 2019 envisioned making India a USD 5 trillion
economy and a global economic powerhouse by 2024-25. With this, India would
become the third largest economy in the world.

Chief Economic Adviser V Anantha Nageswaran on Tuesday expressed hope that

India would become a USD 5 trillion economy by FY26 or the next year on the back of
8-9 per cent sustained growth. India is the fastest growing large economies in the
world. Depending on how exchange rate move...Indian Rupee would remain stable to
strong given what is going on the developed world. If we continue to retain the path
of 8-9 per cent real GDP, it would translate into 8 per cent dollar GDP growth. If we
extrapolate that we should be at the USD 5 trillion by 2025-26 or 2026-27,

➢ Budget (2022-23) Highlights:

The Budget goals for FY2022-23 aim to further India's aspirations in Amrit Kaal, as it
moves towards its 100th year post independence.
• Focus on growth and all-inclusive welfare
• Promoting technology-enabled development, energy transition and climate
action
• Virtuous cycle starting from private investment, crowded in by public capital
investment

The Union Budget for FY 2022-23 this year aims to strengthen the infrastructure with
its focus on four priorities of:
• PM GatiShakti
• Inclusive Development
• Productivity Enhancement & Investment, Sunrise opportunities, Energy
Transition, and Climate Action
• Financing of investments

The Union Budget website lists the Highlights of the FY 2022-23 Budget. The Press
Information Bureau (PIB) website provides a summary of the Budget. The
Productivity Linked Incentive in 14 sectors for achieving the vision of AtmaNirbhar
Bharat has received excellent response, with potential to create 60 lakh new jobs, and
an additional production of Rs 30 lakh crore during next 5 years.
 22

KEY FEATURES:
India's GDP has witnessed robust recovery twice with the past two waves of the
pandemic, a testimony to the nation's economic resilience.

❖ Providing Greater Fiscal Space to States

o Enhanced outlay for 'Scheme for Financial Assistance to States for Capital
Investment' from Rs.10,000 crore in Budget Estimates to Rs.15,000 crore in
Revised Estimates for current year
o Allocation of Rs.1 lakh crore in 2022-23 to assist the states in catalysing overall
investments in the economy: fifty-year interest free loans, over and above
normal borrowings
o In 2022-23, States will be allowed a fiscal deficit of 4% of GSDP, of which 0.5%
will be tied to power sector reforms

❖ Agriculture and Allied Sectors

o Rs.2.37 lakh crore direct payment to 1.63 crore farmers for procurement of
wheat and paddy
o Chemical free Natural farming to be promoted throughout the county. Initial
focus is on farmer's lands in 5 Km wide corridors along river Ganga
o NABARD to facilitate fund with blended capital to finance startups for
agriculture & rural enterprise
o 'Kisan Drones' for crop assessment, digitization of land records, spraying of
insecticides and nutrients

❖ MSMEs & Industry

o Udyam, e-shram, NCS and ASEEM portals to be interlinked
o 130 lakh MSMEs provided additional credit under Emergency Credit Linked
Guarantee Scheme (ECLGS)
o ECLGS to be extended up to March 2023
o Guarantee cover under ECLGS to be expanded by Rs.50000 Crore to total cover
of Rs.5 Lakh Crore
o Rs.2 lakh Crore additional credit for Micro and Small Enterprises to be
facilitated under the Credit Guarantee Trust for Micro and Small Enterprises
(CGTMSE)
o Raising and Accelerating MSME performance (RAMP) programme with
outlay of Rs.6000 Crore to be rolled out

❖ Education
o One class-One TV channel' programme of PM eVIDYA to be expanded to 200
TV channels
o Virtual labs and skilling e-labs to be set up to promote critical thinking skills
and simulated learning environment
o High-quality e-content will be developed for delivery through Digital Teachers
 23

o Digital University for world-class quality universal education with

personalised learning experience to be established

❖ Public Capital Investment

o Public investment to continue to pump-prime private investment and demand
in 2022-23
o Outlay for capital expenditure stepped up sharply by 35.4% to Rs.7.50 lakh
crore in 2022-23 from Rs.5.54 lakh crore in the current year
o Outlay in 2022-23 to be 2.9% of GDP
o 'Effective Capital Expenditure' of Central Government estimated at Rs.10.68
lakh crore in 2022-23, which is about 4.1% of GDP.

❖ Saksham Anganwadi
• Integrated benefits to women and children through Mission Shakti, Mission
Vatsalya, Saksham Anganwadi and Poshan 2.0
• Two lakh anganwadis to be upgraded to Saksham Anganwadis

❖ Health
• An open platform for National Digital Health Ecosystem to be rolled out
• National Tele Mental Health Programme’ for quality mental health counselling
and care services to be launched
• A network of 23 tele-mental health centres of excellence will be set up, with
NIMHANS being the nodal centre and International Institute of Information
Technology-Bangalore (IIITB) providing technology support

❖ Energy Transition & Climate Action

• Additional allocation of Rs.19,500 crore for Production Linked Incentive for
manufacture of high efficiency solar modules to meet the goal of 280 GW of
installed solar power by 2030
• Five to seven per cent biomass pellets to be co-fired in thermal power plants:
• CO2 savings of 38 MMT annually
• Extra income to farmers and job opportunities to locals
• Help avoid stubble burning in agriculture fields
• Four pilot projects to be set up for coal gasification and conversion of coal into
chemicals for the industry
• Financial support to farmers belonging to Scheduled Castes and Scheduled
Tribes, who want to take up agro-forestry

❖ Sunrise Opportunities
• Government contribution to be provided for R&D in Sunrise Opportunities
like Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and
its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy,
and Clean Mobility Systems

❖ Banking
• 100 per cent of 1.5 lakh post offices to come on the core banking system.
 24

• Scheduled Commercial Banks to set up 75 Digital Banking Units (DBUs) in 75

districts

➢ Banks (KBL) External Rating:

The Banks Tier II Bonds are rated by Care Ratings which has assigned a rating of Care
A and ICRA has also assigned rating of ICRA A. The Details are as under: I
Instrument Amount CARE ICRA Outlook Date of ROI
Type (Rs. in Ratings Issue (%
Crore) p.a.)
Lower Tier 250.00 CARE A ICRA A Stable 17.11.2012 11.00%
II Bonds (Single A) (Hyb)
(Series IV)
Lower Tier 400.00 CARE A ICRA A Stable 16.11.2018 12.00%
II Bonds (Single A) (Hyb)
(Series V)
Lower Tier 320.00 CARE A ICRA A Stable 18.02.2019 12.00%
II Bonds (Single A) (Hyb)
(Series VI)
Lower Tier 300.00 Yet to be Yet to be -- 30.03.2022 10.70%
II Bonds rated or No rated or No
(Series VII) Information Information

The Banks Bond Trustees are IDBI Trusteeship Services Ltd (for Series IV, Series V,
Series VI) and Beacon Trusteeship Ltd. (Series VII).

Bonds issued under Series I to III has been extinguished and Series IV to VII is live
and is in the form of Debentures which are listed on NSE Debt Segment.

➢ Recent classification of Fraud by our Bank:

SREI Equipment Finance Ltd (9SEFL28 957420-Debt Securities Listed Entity) dealing
with us since 2008 with O/s Rs. 12.81 Cr with 18 other lenders (19 including us) with
our share of 0.08%. The a/c was NPA since 29.09.2021. 100% provision is held on
account of treatment of the account as Fraud.

➢ Banks (KBL) Financials:

Financial Synopsis for the period ended 31.03.2022:
Rs in Crore
Particulars 31.12.2021 31.03.2022
Deposit 78429 80387
Advances 55489 56783
Total Turnover 133918 137170
C D Ratio 70.75% 70.63%

Investments 21991 22041

Net Profit (3 Months) 146.57 130.35
Net Profit (9/12 Months) 378.27 508.62
 25

Operating Profit (3 356.32 380.12

Months)
Operating Profit (9/12 1253.88 1634.00
Months)
Operating Profit (in crore) 1220.18 1585.34
(Excluding Trading Pft)
ROA - Return on Asset 0.65% 0.57%
ROE - Return on Equity 8.51% 7.41%

CASA 31.30% 32.97%

CRAR (Basel III) 14.15 % 15.66%

Gross NPA Amount 2,330.52 2,250.82

Gross NPA 4.11% 3.90%
Net NPA Amount 1,359.89 1,376.97
Net NPA 2.45% 2.42%

PCR (Overall) 73.74% 73.47%

Interest Income 6221.66

Interest Expense 3730.63
Net Interest Income (NII)) 2491.03
Net Interest Margin 3.18% 3.25%
(NIM%)

Yield on Advances % 8.81% 8.84%

Cost of Deposits % 4.68% 4.66%
Interest Spread in Lending 4.13% 4.18%
%

Cost to Income % 56.50% 52.57%

Turnover per Branch (in 155.90 156.41
crore)
Turnover per Employee 15.71 16.10
(in crore)
Operating Profit per 0.15 0.19
Employee
Digital transactions % 92.64% 93.22%
Retail: Mid Corporate: 49: 32 : 19 47:32:21
Large Corporate (%)
Book value of shares (₹ 223.95 214.84
Networth (₹ in Cr) 6965.27 7095.00
 26

No of Branches 877
Top 5 States in terms of Karnataka (540), Karnataka (556),
presence Maharashtra (50), Maharashtra (52),
Tamilnadu (50), Andhra Tamilnadu (50),
Pradesh (41), Telangana Andhra Pradesh (41),
(25) Telangana (25)

Top Credit Sectors

Sector Amt Rs in Cr % to GBC NPA Amt Rs % to Sector
in Cr
MSME 15945.03 28.15% 1090.70 6.84%
Agriculture 9317.35 16.45% 548.12 5.88%
Housing 8621.14 15.22% 237.91 2.76%
Loans
(Residential
Mortgage)
NBFC 7613.40 13.44% 12.03 0.16%
Lease Rental 2865.31 5.06% 44.39 1.55%
Discounting
Gold Loans 2850.40 5.03% 6.59 0.23%

Banking Arrangement
Particulars Amt Rs in Cr % to GBC NPA Amt Rs % to Sector
in Cr
Consortium 1726.24 3.05 12.03 0.70
Multiple 10591.45 18.70 64.78 0.61
banking

Restructured advances of the bank stood at Rs.4478.27 Crore out of which standard
is Rs.4115.18 Cr and NPA is Rs.363.09 Cr. Out of standard Rs.113.64 Cr is in SMA 2.

Slippage Ratio is 3.10%. (Fresh accretion of NPAs during the year/Total standard
assets at the beginning of the year).
➢ Peer Banks Comparison: (KBL in comparison to South Indian Bank, Federal
Bank, Catholic Syrian Bank, City Union Bank & Karur Vysya Bank – 6
Banks)

In terms of Turnover we are in 3rd position below Federal and SIB and above
KVB, CUB and CSB.
In terms of CASA % we are at 5th position, only CUB is below us.
In terms of NPA (Net NPA) we are in 4th position below CSB, Federal, KVB and
above CUB & SIB.
In terms of Net Profit, we are at 4th position after Federal, CUB, KVB and above
CSB and SIB.
In terms of NIM, we are at 5th position and only SIB is below us.
 27

In terms of Cost to Income Ratio, we are at 2nd position after CUB and all others
are below us.
In terms of Share in Digital Transaction (Digital Penetration), we are at 3rd
position after KVB, SIB and above Federal, CSB and CUB.
In terms of CD Ratio, we are at 5th position and only SIB is below us.
In terms of Cost of Deposit, we are at 4th position below Federal, KVB, CSB and
CSB & SIB is below us.
In terms of ROA (Return on Assets), we are 5th position and only SIB is below
us.

Final Analysis on Peer Bank Comparison: Our Best performance is under Cost
to Income Ratio were we are ranked 2 and under Turnover/Digital
Penetration were we are ranked 3rd. In all other parameters, we are below top
3 or in bottom 3.

➢ Account Aggregator:
Account aggregation known as financial data aggregation is a method that involves
compiling information from different accounts, which may include bank accounts,
credit card accounts, investment accounts, and other consumer or business accounts,
into a single place.

As per RBI’s framework, Account Aggregator” means a non-banking financial

company as defined in sub-clause (iii) of clause (f) of section 45-I of the Act, that
undertakes the business of an account aggregator, for a fee or otherwise.

Business of an account aggregator” means the business of providing under a contract,

the service of, retrieving or collecting information of its customer pertaining to such
financial assets, as may be specified by the Bank from time to time; and consolidating,
organizing and presenting such information to the customer or any other person as
per the instructions of the customer.

➢ Mission Statement & Vision Statement:

Mission Statement: "Our mission is to be a technology savvy, customer centric

progressive bank with a national presence, driven by the highest standards of
corporate governance and guided by sound ethical values."

Vision Statement “To be progressive, prosperous and well governed Bank”

➢ Neo Banking:
Neobanks are financial enterprises, akin to regular banks, that operate solely
on digital platforms, such as mobile applications (apps) or website
platforms. The Top Neobanks in India do not have any physical presence
across the nation and operate solely through virtual networks. Neobank is 100
 28

per cent digital and uses apps and online platforms to support their
customers, rather than traditional physical branches

Indian neobanks are FinTech companies which are not directly regulated by
the Reserve Bank of India (RBI). They partner with licensed banks, NBFCs
and other financial institutions to provide financial services through their
digital platforms.

Top 10 Neo Banks in India:

Sr No. Name Of The Neobank Founder Founding Year
1 Jupiter Jitendra Gupta 2019
2 FI Money Sumit Gwalani, Sujith Narayanan 2019
3 Niyo Vinay Bagri 2016
4 OcareNeo Dr. Neeraj Sheth 2015
5 ZikZuk Raj N 2020
6 Open Mabel Chacko, Ajeesh Achuthan 2017
7 Finin Sudheer Maram, Suman Gandham 2019
8 Kotak811 Uday Kotak 2016
9 Instapay Shailendra Agarwal 2013
10 Razorpay Harsheel Mathur 2013

➢ Fintech Companies:
FinTech or fintech stands for Financial Technology, and fintech firms specialize in
technology growth to support the banking and financial services. Today we all have
mobile banking on our phones, which helps us to do all our banking transactions at
our fingertips from the comfort of our homes or any place. At its core, fintech is
utilized to help companies, business owners, and consumers manage their financial
operations, processes, and lives better by utilizing specialized software and
algorithms that are used on computers and, increasingly, smartphones. The term
fintech is a combination of "financial technology"
Top Fintechs in the country:
Rank Company Founded Description
App-based wallet for consumer payments also a
1 Paytm 2010
payment bank
2 BharatPe 2017 QR code based payment app
3 Policybazaar 2008 Online insurance comparison platform
4 CRED 2018 Rewards-based platform for credit card bill payments
5 KhataBook 2016 Digital ledger account book
6 Acko 2017 Tech-enabled automotive insurance
7 ZestMoney 2015 Online platform for point-of-sale financing
8 Lendingkart 2014 Online platform providing working capital for SMEs
 29

Alternative lending platform focusing on SME,

9 InCred 2016
consumer & personal, home and education loans.
10 Pine Labs 1998 PoS software solutions for offline retailers
11 Billdesk 2000 Payment Gateway
12 Digit Insurance 2016 Insurance platform for individuals

➢ LIBOR Transition:
Previously all the foreign currency loans were predominantly linked to LIBOR and
now Pricing of Loans is linked to widely accepted / Alternative Reference Rate(ARR)
in place of LIBOR w.e.f 01.01.2022.

The Financial Conduct Authority (FCA), United Kingdom, the exercising authority
announced in 2017 that they would phase out London Interbank Offered Rate (LIBOR)
by the end of 2021.

Further, it was announced that: a) LIBOR will no longer be a representative rate

immediately after December 31,2021 in the case of Pound Sterling, Euro, Swiss Franc
and Japanese Yen settings and the 1-week and 2 month US Dollar settings. b)
Immediately after June 30, 2023, in the case of the remaining US dollar settings.

The LIBOR was used for various products as benchmark for pricing foreign currency
deposits as well as advances offered by us. Below are the list of the products that are
linked to LIBOR in our Bank; 1. Pre-Shipment Credit in Foreign Currency (PCFC) 2.
Post Shipment Credit facility in Foreign Currency (BRDS) 3. Foreign Currency
Demand/Term Loans (FCDL/FCTL) 4. Interbank Borrowings/ Deployment. 5. FCNR
(B) and RFC Deposits.

Accordingly our bank vide (Circular HO:CREDIT:CIRCULAR: GF-7: 80:2021-2022

dated December 31, 2021) has adopted the following widely accepted/Alternative
Reference Rate(ARR) w.e.f 01.01.2022.

Sl No Currency Alternative Reference Rates (ARR)

1 US Dollar Secured Overnight Financing Rate(SOFR)
2 GBP (Pound Sterling) Sterling Overnight Index Average (SONIA)
3 Euro Euro Short term Rate (ESTR)*

Euro Interbank Offered Rate (EURIBOR)

Euro Overnight Index Average (EONIA)
4 CHF(Swiss Franc) Swiss Average Rate Overnight(SARON)
5 AUD (Australian Dollar) Australian Overnight Index Average (AONIA)
6 JPY (Japanese Yen) Tokyo Overnight Average Rate (TONA)
7 CAD (Canadian Dollar) Canada Overnight Repo Rate Average (CORRA)
*(As ESTR is available only for Overnight Rates, the Bank has adopted
EURIBOR/EONIA).

The rates for our bank products will be as under:

 30

Facility / Product Benchmark / Rate of Interest(for fresh loans from 01.01.2022)

BRDS/PCFC 1)ARR/SOFR + 350 bps + 25 bps
2)ARR/SONIA + 350bps + 25 bps
3)ARR/EURIBOR + 350bps + 25 bps
FCTL/ FCDL 1)ARR/SOFR + Spread as decided by the bank plus 25 bps
2)ARR/SONIA + Spread as decided by the bank plus 25 bps
3)ARR/EURIBOR + Spread as decided by the bank plus 25 bps

➢ SMELL Test:
An informal method for determining whether something is authentic, credible, or
ethical, by using one's common sense or sense of propriety. In banking parlance, it
means going beyond the facts and figures mentioned in the financials of the borrower
which includes studying the sector in which he operates, getting information about
his business and integrity from the other avenues, studying the eco system etc.

➢ Environmental, Social, and Governance (ESG):

ESG stands for Environmental, Social, and GovernanceInvestors are increasingly
applying these non-financial factors as part of their analysis process to identify
material risks and growth opportunities. ESG metrics are not commonly part of
mandatory financial reporting, though companies are increasingly making
disclosures in their annual report or in a standalone sustainability report. Numerous
institutions, such as the Sustainability Accounting Standards Board (SASB), the Global
Reporting Initiative (GRI), and the Task Force on Climate-related Financial
Disclosures (TCFD) are working to form standards and define materiality to facilitate
incorporation of these factors into the investment process.

Sl No Environmental Social Governance

Stands Conservation of the Consideration of
Standards for running a
for natural world people & relationships
company
1 Climate change and Customer satisfactionBoard composition for
carbon emissions Professional approach
2 Air and water Data protection and Audit committee
pollution privacy structure
3 Biodiversity Gender and diversity Bribery and corruption
4 Deforestation Employee engagement Executive compensation
5 Energy efficiency Community relations Lobbying
6 Waste management Human rights Political contributions
7 Water scarcity Labor standards Whistleblower policy

➢ Green Bank:
Green Banks are mission-driven institutions that use innovative financing to
accelerate the transition to clean energy and fight climate change. Being mission-
driven means that Green Banks care about deploying clean energy rather than
 31

maximizing profit. They actively develop a pipeline of clean projects and seek out
opportunities in the market.

In Indian Banking scenario, According to Indian Banks Association (IBA, 2014)

Green Bank is like a normal bank, which considers all the social and environmental
/ ecological factors with an aim to protect the environment and conserve natural
resources. It is also known as ethical bank or sustainable bank. Green banking can
benefit the environment either by reducing the carbon footprint of consumers or
banks. On-line banking is an example of an initiative of Green Banking.

Benefits of online banking include less paperwork, less mail and less driving to
branch offices by bank customers, which all have a positive impact on the
environment. Interestingly, online banking can also increase the efficiency and
profitability of a bank. A bank can lower their own costs that result from paper
overload and bulk mailing fees if more of their customers use online banking.
Green banking also can reduce the need for expensive branch banks. Green
banking is also gaining importance in recent times. Most of the banks are
undergoing computerization, networking, and offering of online.

➢ Green Finance:
As per Reserve Bank of India Bulletin dated 21.01.2021, Green Finance is fast
emerging as a priority for public policy. Green finance refers to the financial
arrangements that are specific to the use for projects that are environmentally
sustainable or projects that adopt the aspects of climate change. Environmentally
sustainable projects include the production of energy from renewable sources like
solar, wind, biogas, etc.; clean transportation that involves lower greenhouse gas
emission; energy efficient projects like green building; waste management that
includes recycling, efficient disposal and conversion to energy, etc.

➢ Green bonds:
As per Reserve Bank of India Bulletin dated 21.01.2021, Green Bonds are the bonds
issued by any sovereign entity, inter-governmental groups or alliances and
corporates with the aim that the proceeds of the bonds are utilised for projects
classified as environmentally sustainable. India started issuing green bonds since
2015. As of February 12, 2020, the outstanding amount of green bonds in India was
US$16.3 billion India issued green bonds of about US$8 billion since January 1,
2018, which constituted about 0.7 per cent of all the bonds issued in the Indian
financial market. Although the value of green bonds issued in India since 2018
constituted a very small portion of the total bond issuance, India maintained a
favourable position compared to several advanced and emerging economies.

Most of the green bonds issued since 2015 had maturities of five years or above,
but less than 10 years. However, some issuers such as Yes Bank Ltd. (2015), Indian
Renewable Energy Development Agency Ltd. (2017, 2019), Rural Electrification
Corporation Limited or REC Ltd. (2017), Power Finance Corporation Ltd. (2017),
Indian Railway Finance Corporation Ltd. (2017), Adani Renewable Energy Ltd.
 32

(2019)15 have issued green bonds with the maturity of 10 or more years. ReNew
Power Pvt. Ltd. has issued green bonds with maturity period of less than 5 years
in 2019. Around 76 per cent of the green bonds issued in India since 2015 were
denominated in US$. In addition to corporates and government, the World Bank
has issued green bonds towards several projects in India from time to time

➢ Red Team:
As per the RBI circular DBS.CO/CSITE/BC.11/33.01.001/2015-16 dated June 02,
2016 relating to Cyber Security Framework, Red Team need to be constituted by
Banks. In this regard, a Red Team is constituted in our Bank and functioning from
07th December 2017.

Red Team is an independent group that challenges an organization to improve its

effectiveness by assuming an adversarial role or point of view. When used in a
hacking context, a red team is a group of white- hat hackers that attack an
organization’s digital infrastructure as an attacker would in order to test the
organization’s defenses. The use of cyber red teams provides “real – world attack
simulations designed to assess and significantly improve the effectiveness of an
entire information security programme”.

Red Team aims to identify any vulnerability in the PPT (People, Process and
Technology) defensive system and help the organization improve its own
defensive abilities.

Red team initially conducted two activities, both relating to “bank’s email usage
“and “awareness level of staff members “thereof. The bank’s email usage is still
being continued and several instances of compromising the banks confidential
data is observed. The importance of the same is disseminated by the top
management in almost all the meetings/platforms.

➢ SMA (Special Mention Accounts):

❖ SMA-0: Overdues not more than 30 days and incipient stress in the account like
Delay of 90 days in submission of control returns (stock Qos, financial statements,
non renewal etc), Inward Cheque returns more than 3 instances, non achievement
of estimated sales/ profit falling short by 40% or more, reduction of Drawing Power
(DP) by 20% or more after a stock audit, evidence of diversion of funds for
unapproved purpose; or drop in internal risk rating by 2 or more notches in a single
review, devolvemet of LC, BG, DPG and non payment within 30 days, third request
for extension/perfection of security, frequent TOD’s in the account, The borrower
reporting stress in the business and financials and Promoter(s) pledging/selling
their shares in the borrower company due to financial stress.

❖ SMA-1: Principal or interest payment overdue between 31-60 days

❖ SMA-2: Principal or interest payment overdue between 61-90 days

 33

➢ SMA Concept of Renewal of OD:

• SMA 0: 0-90 days.
• SMA-1: 91-135 days
• SMA -2: 135 to 180 days

➢ SMA for Agriculture Credit:

Type of advance Norms for Delinquencie
classification as stress
account
Loans to allied SMA-0 1-30 days
activities like Dairy, SMA-1 31-60 days
Poultry etc SMA-2 61-90 days

To Long Duration SMA-0 Upto 180 days

Crops
SMA-1 181-274 days
SMA-2 275-365 days

To short duration SMA-0 Up to 365 days

crops
SMA-1 366-640 days
SMA-2 641-730 days

➢ Types of Risk:

• Credit Risk: is the risk of default on a debt that may arise from a borrower
failing to make required payments on time. In the first resort, the risk is that of
the lender and includes lost principal and interest, disruption to cash flows,
and increased collection costs.

• Market Risk: is the possibility for an investor to experience losses due to factors
that affect the overall performance of the financial markets in which he is
involved. Market risk, also called "systematic risk," cannot be eliminated
through diversification, though it can be hedged against.

• Liquidity Risk that a company or bank may be unable to meet short term
financial demands. This usually occurs due to the inability to convert a security
or hard asset to cash without a loss of capital and/or income in the process.

• Operational risk is the prospect of loss resulting from inadequate or failed

procedures, systems or policies. Employee errors. Systems failures. Fraud or
other criminal activity. Any event that disrupts business processes.

NRI BANK ACCOUNTS facilities:

 34

1. Rupee Accounts: Ordinary Non-Resident Account (NRO) and Non-Resident

(External) Rupee Account (NRE).
2. Foreign Currency Accounts: .Foreign Currency (Non-Resident) Accounts (FCNR)
and Resident Foreign Currency Accounts (RFC) (for returning Indians).

➢ Pradhan Mantri Awas Yojana (PMAY):

It is Credit-Linked Subsidy Scheme is to expand institutional credit flow to
the housing needs (for acquisition/ construction of house) of urban poor. under
the mission should be in the name of the female head of the household or in the
joint name of the male head of the household and his wife, and only in cases
when there is no adult female member in the family, the house can be in the
name of male member of the household. Wherever spouse is available, spouse
may be taken as joint borrower. Beneficiaries of Economically Weaker section
(EWS) and Low Income Group (LIG) seeking housing loans would be eligible
for an interest subsidy at the rate of 6.50% for tenure of 15 years or during
tenure of loan whichever is lower

The credit linked subsidy will be available only for loan amounts up to Rs 6.00
lakhs and additional loans beyond Rs. 6.00 lakhs, if any, will be at
nonsubsidized rate. Interest subsidy will be credited upfront to the loan
account of beneficiaries through lending institutions resulting in reduced
effective housing loan and Equated Monthly Instalment (EMI). Hence, the EMI
shall be calculated for the loan amount net of subsidy for the period of loan or
15 years whichever is lower

Economically Weaker Section: Annual Household Income Up to Rs.3 lakh and

house sizes upto 30 sq.m
Low Income Group: Annual Household Income Between Rs.3-6 lakhs and
house sizes upto 60 sq.m

➢ CGTMSE (Credit Guarantee Fund Trust for Micro & Small Enterprises):
Rs.10.00 lakhs no collateral/third party guarantee, limit up to Rs.200.00 lakhs.

➢ Banks Xpress Loans: Personal Loan, Home Loans (including Home Comfort,
Home Top Up & Ghar Niveshan) , Car Loans, Easy Ride, MSME & Mortgage
Loans.

➢ SCHEMES LAUNCHED DURING THE CURRENT YEAR 2021-22:

• KBL KRISHI SAMUDAY” for financing Farmer Producer
Organizations/Companies (FPO’s/FPC’s): To meet the financial needs
of the Farmer Producer Organizations (FPO’s)/FPC’s by way of Term
Loan or Working Capital as per the requirement. & To improve income
and reduce the poverty of the small and marginal farmers and making
their lives sustainable through agribusiness ventures.
 35

• KBL – KUSUM: As a part of Intended Nationally Determined

Contributions (INDCs), India is committed to increase the share of
installed capacity of electric power from non-fossil-fuel sources to 40%
by 2030. In line with this, Ministry of New and Renewable Energy
(MoNRE), GoI is planning for scaling-up of solar power target from
20,000 MW of Grid Connected Solar power Projects to 1,00,000 MW by
2022. The scheme proposes to develop decentralized solar energy and
other renewable energy generation Plants of capacity up to 2 MW which
could be connected directly to existing sub-stations of Distribution
Company (DISCOM). The decentralized solar energy and other
renewable energy generation plants may be developed, preferably by
farmers, via giving them an opportunity to increase their income by
utilizing their barren and uncultivable land for solar or other renewable
energy based power plants. The scheme is for To provide Loan against-
Installation of decentralized ground mounted grid connected
Renewable Energy Power Plants (REPP) of individual plant size up to 2
MW.

• KBL ParyaTan: As a part of relief measures, Department of Financial

Service has introduced the “Loan Guarantee Scheme for the Covid
Affected Tourism Service Sector (LGSCATSS) scheme for providing
100% guarantee coverage for financial assistance to eligible borrowers
under Tourism Service Sector. The fund and scheme will be managed
and operated by the National Credit Guarantee Trustee Company
(NCGTC), which is a wholly owned trustee company of Government of
India. The main purpose of this scheme is to provide financial
support/assistance for eligible Tourist Guides and Travel and Tourism
Stakeholders likes, Tourist Hotels, Restaurants, Rest Houses, Tour
operators, Travel Agent etc. who have been adversely impacted by the
COVID-19 pandemic.

➢ Banks Schematic Loans Bouquet (Except Mentioned above):

1. KBL APNA GHAR/ELITE (Finance for purchase/renovate house)
2. KBL HOME COMFORT (Finance for furnishing house)
3. KBL GHAR NIVESHAN (Finance for purchase of house site)
4. KBL HOME TOP UP (Finance for meeting personal requirements)
Who have already availed loan under KBL-Apna Ghar/Elite scheme/KBL
Home Comfort and where the related property is already can avail the facility
for Meeting variety of personal needs. (Other than for speculative purpose).
5. KBL CAR FINANCE (Finance for purchase of New/ Second Hand Cars)
6. KBL EASY RIDE (Finance for purchase of Two Wheeler)
7. KBL Salaried Persons Loan (Scheme for Financing Salaried persons)
8. KBL INSTA CASH (For Consumption Purposes)
9. KBL MSME (Finance for Micro, small and Medium Enterprises) for WC,
fixed assets etc.
10. KBL MORGTAGE (Finance for meeting business/personal requirements)
 36

11. KBL MORGTAGE OD(Finance for meeting business/professional/working

capital requirements)
12. KBL SUVIDHA OD (Finance for meeting Personal requirements)- Like
Personal Loan by taking mortgage security
13. KBL LEASE N CASH (Finance for meeting credit requirement of property
owners)
14. KBL MAHILA UDYOG (Finance for women entrepreneurs)
15. KBL RAVI KIRAN (Finance for reaping of Solar Energy)
16. KBL VIDYANIDHI (Finance for Education)
17. KBL AGRI GOLD To Meet short term agricultural operation primary
security Hyp of crops and collateral security pledge of gold not exceeding 50
gram.
18. KBL KRISHIK BHANDAR: Financing against the pledge of farm produce
kept in approved warehouses.FOR All types of individual farmers HUF, Group
of farmers, Partnership firms, Company and group of farmers engaged in farm
activity.
19. KBL KRISHIK SARATHI: Purchase of farm machineries/ Two wheeler/
Jeep/ Van and innovative equipments used by the agriculturists for
transporting agriculture produce and farm operations. Individual, Firm,
Company, HUF or Trust engaged in Agri Activities.
20. KBL Vyapar Mithra: For Working Capital as well as establishment/
Improvement/ Repairs & Renovations/Acquiring Machineries/Vehicles/
Other fixed assets, Or any other need based credit requirement (non
speculative) of the applicants
21. KBL KRISHIK GODHAM: Construction, including renovation and running
of storage facilities like Warehouses, market yards, godowns, silos and cold
storage units designed to store agriculture produce/products. firms, Non-
Government Organizations (NGO's), Self Help Groups (SHGs), Companies,
Corporations, Co-operatives, Local Bodies other than Municipal Corporations,
Federations, Agricultural Produce Marketing Committees, Marketing Boards
and Agro Processing Corporations
22. KBL KRISHIK PUSHPANKAR Establishment and maintenance of
floriculture, nurseries and tissue culture activities. Individual, Firm, Company,
HUF, and SHG etc engaged in Agriculture Activities.
23. KBL KRISHIK SINCHANA: Financing all types of minor irrigation projects.
Individual, Firm, Company, HUF, and Trust engaged in Agriculture Activities
24. KBL Business Quick Loan
25. KBL Micro Mithra

➢ Investment Portfolio:
❖ Held to Maturity: MTM not required.
❖ Available for Sale: MTM is required on daily basis (The next clause of holding
period is not there).
❖ Held to Trade: Shall me marked to Market on daily basis (Securities cannot be held
for more than 90 days)

➢ Commercial Paper:
 37

Commercial Paper (CP) is an unsecured money market instrument issued in

the form of a promissory note. CP was introduced in India in 1990 with a view
to enabling highly rated corporate borrowers to diversify their sources of short-
term borrowings and to provide an additional instrument to investors.

Highly rated corporate borrowers, primary dealers (PDs) and satellite dealers
(SDs) and all-India financial institutions (FIs) which have been permitted to
raise resources through money market instruments under the umbrella limit
fixed by Reserve Bank of India are eligible to issue CP.

Maturity: CP can be issued for maturities between a minimum of 15 days and

a maximum upto one year from the date of issue. If the maturity date is a
holiday, the company would be liable to make payment on the immediate
preceding working day.

➢ “Co-Lending Model:
Banks are permitted to co-lend with all registered NBFCs (including HFCs)
based on a prior agreement. The co-lending banks will take their share of the
individual loans on a back-to-back basis in their books. However, NBFCs shall
be required to retain a minimum of 20 per cent share of the individual loans on
their books.

The revised framework allows two options for co-lending, first involves the
bank and the NBFC sanctioning the loan together on the basis of mutually
agreed-upon underwriting norms. The second option involves direct
assignment without the need for the NBFC to adhere to a minimum holding
period.

The banks and NBFCs shall formulate Board approved policies for entering
into the CLM and place the approved policies on their websites. Based on their
Board approved policies, a Master Agreement may be entered into between the
two partner institutions which shall inter-alia include, terms and conditions of
the arrangement.

➢ Merchant discount rates (MDR):

The rate charged to a merchant by a bank for providing debit and credit card
services. The rate is determined based on factors such as volume, average ticket
price, risk and industry.

➢ TReDS: Trade Receivables Discounting System or TReDS is a welcome step by

RBI to secure finances for micro, small and medium enterprises. It has been set
up under the regulatory framework set up by RBI under Payment and
Settlement Systems Act 2007.
 38

This is to facilitate financing of Trade Receivables of MSME’s from corporate

buyers through multiple financers is known as TReDS.

➢ GST: The Goods and Services Tax bill, touted to be India's biggest tax reform,
will simplify the current system of taxation. The bill will convert the country
into a unified market by replacing all indirect taxes with one tax. GST (Goods
and Services Tax) is a tax levied when a consumer buys a good or service. The
current tax regime is riddled with indirect taxes which the GST aims to
subsume with a single comprehensive tax, bringing it all under a single
umbrella.

Which means, Various Taxes like Excise Duty, Value Added Tax (VAT), Central
Sales Tax, Counter Vailing duty, Octroi, Luxury Test and Entry Tax will all be
included under a single roof by GST. The very important Feature of GST bill is
that instead of collection of Taxes at every step, it will be collected in one step.
Goods and Services will be treated equally and will be taxed similarly

➢ Small Bank and Payment Banks:

In order to expedite financial inclusion, Finance Minister Arun Jaitley in his last
budget speech (July,2014) had said that RBI will create a framework for
licensing Payments Banks / Small Banks and other differentiated banks.

➢ SMALL BANKS: They cater to deposits and loans particularly in small areas.
They are meant for financial inclusion of small farmers, MSMEs, and the
unorganised sector. The firms must have a capital of ₹100 crore.

Resident individuals/professionals with 10 years of experience in banking and

finance; and Companies and Societies owned and controlled by residents will
be eligible as promoters to set up small finance banks.

The annual branch expansion plans of the small finance banks for the initial
five years would need prior approval of RBI. The annual branch expansion
plans should be in compliance with the requirement of opening at least 25 per
cent of its branches in unbanked rural centers (population upto 9,999 as per the
latest census).

The small finance bank will be subject to all prudential norms and regulations
of RBI as applicable to existing commercial banks including requirement of
maintenance of CRR and SLR. No forbearance would be provided for
complying with the statutory provisions.

The maximum loan size and investment limit exposure to a single and group
obligor would be restricted to 10 per cent and 15 per cent of its capital funds,
respectively. Further, in order to ensure that the bank extends loans primarily
to small borrowers, at least 50 per cent of its loan portfolio should constitute
loans and advances of upto Rs.25 lakh.
 39

1. Au Financiers (India) Ltd., Jaipur

2. Capital Local Area Bank Ltd., Jalandhar
3. Disha Microfin Private Ltd., Ahmedabad
4. Equitas Holdings P Limited, Chennai
5. ESAF Microfinance and Investments Private Ltd., Chennai
6. Janalakshmi Financial Services Private Limited, Bengaluru
7. RGVN (North East) Microfinance Limited, Guwahati
8. Suryoday Micro Finance Private Ltd., Navi Mumbai
9. Ujjivan Financial Services Private Ltd., Bengaluru
10. Utkarsh Micro Finance Private Ltd., Varanasi

➢ PAYMENTS BANKS are a new model of banks conceptualized by the Reserve

Bank of India (RBI). These banks can accept a restricted deposit which is
currently limited to INR 1 lakh per customer account. These banks cannot issue
loans and credit cards. Both current account and savings accounts can be
operated by such banks

The objectives of setting up of payments banks will be to further financial

inclusion by providing (i) small savings accounts and (ii) payments/remittance
services to migrant labour workforce, low income households, small
businesses, other unorganised sector entities and other users.

Threat to Our Bank: There is threat for our business in terms of CASA and
other para banking business. We have history of 93 years where we have
earned loyal customer base.
 40

Scope of activities:
a. Acceptance of demand deposits. Payments bank will initially be restricted to
holding a maximum balance of Rs.1,00,000 per individual customer.
b. Issuance of ATM/debit cards. Payments banks, however, cannot issue credit cards.
c. Payments and remittance services through various channels.
d. BC of another bank, subject to the Reserve Bank guidelines on BCs.
e. Distribution of non-risk sharing simple financial products like mutual fund units
and insurance products, etc.

For Payment bank’s, the CRR and SLR requirements and the various disclosures and
statutory/regulatory reports will be as applicable to commercial banks.

List:
1. Aditya Birla Nuvo
2. Airtel M Commerce Services
3. Cholamandalam Distribution Services
4. Department of Posts
5. FINO PayTech
6. National Securities Depository
7. Reliance Industries
8. Sun Pharmaceuticals
9. Paytm
10. Tech Mahindra
11. Vodafone M-Pesa

➢ NII: Net Interest Income is the difference between the revenue that is
generated from a bank's assets and the expenses associated with paying out its
liabilities. A typical bank's assets consist of all forms of personal and
commercial loans, mortgages and securities. Interest earned less Interest
expended.

➢ NIM (Net Interest Margin) = Net Interest Income/ Average Working Funds

➢ FTP (Fund Transfer Pricing): is a method used to individually measure how

much each customer (source of funding) is contributing to overall profitability.
The FTP process is most often used in the banking industry as a means of
outlining the areas of strength and weakness within the funding of the
institution. In Simple it is to measures the profitability from a particular
customer to the bank.

➢ Liquidity Coverage Ratio:

The liquidity coverage ratio is an important part of the Basel Accords, as they
define how much liquid assets have to be held by financial institutions. Because
banks are required to hold a certain level of highly liquid assets, they are less
able to lend out short-term debt.
 41

The liquidity coverage ratio (LCR) refers to the proportion of highly liquid
assets held by financial institutions, to ensure their ongoing ability to meet
short-term obligations. This ratio is essentially a generic stress test that aims to
anticipate market-wide shocks and make sure that financial institutions possess
suitable capital preservation, to ride out any short-term liquidity disruptions,
that may plague the market.

The LCR is a requirement under Basel III whereby banks are required to hold
an amount of high-quality liquid assets that's enough to fund cash outflows for
30 days.
The LCR is a stress test that aims to anticipate market-wide shocks and make
sure that financial institutions possess suitable capital preservation to ride out
any short-term liquidity disruptions.

It is calculated as Total High Quality Liquid assets/ Total Net cash outflows.

As per RBI guidelines, the bank’s have to maintain minimum 60% w.e.f.
01.01.2015 and step up of 10% every year to reach 100% by 01.01.2019.

As on 31.03.2022, the LCR of our bank stood at 272.78% (March 2020 - 219.25%
& March 2021 – 317.92%)

➢ Net Stable Funding Ratio (NSFR): The NSFR promotes the resilience of the
bank over the long term time horizon by requiring banks to fund their activities
with more stable sources on an ongoing basis. While the LCR promotes the
resilience of the bank over the short term time horizon to potential liquidity
disruptions ensuring that they have sufficient high quality liquid assets
(HQLA) to survive an acute stress scenario lasting 30 days. NSFR
implementation is effective from 01.10.2021. The minimum requirement is
100%. As on 31.03.2022 it was 106.27% (118.97% as on 31.03.2021).

➢ Provision Coverage Ratio: The provision coverage ratio (PCR), a measure of

the funds set aside by banks to cover bad loans. Provisions (SS + DS + Loss
Assets) divided by total Gross NPA.

Our Bank’s PCR as on 31.03.2022 was 73.47% (Previous year 69.99%)

The regulator has not prescribed minimum PCR (initially once it was fixed at
70% for September 2010) and now there is no such prescribed limit. Higher
the ratio is good and displays soundness/preparedness of the bank for any
adverse situation.

➢ Adjusted Net bank Credit: It is the net bank credit plus investments made
by banks in non-SLR bonds held in the held-to-maturity category or credit
equivalent amount of off-balance-sheet exposure, whichever is higher.
 42

➢ Deferred Tax Liability: A deferred tax liability is an account on a company's

balance sheet that is a result of temporary differences between the company's
accounting and tax carrying values, the anticipated and enacted income tax
rate, and estimated taxes payable for the current year.

➢ Benefits of External rating: The bank has to maintain capital adequacy ratio on
the basis of risk weighted assets. To arrive at the risk weight the external rating
is considered.

➢ Share value of the bank is around Rs.65 last three months from Rs.60 to 68

➢ Book Value: Networth (Share capital + Reserves)/No of Shares: Our Book

Value is Rs.214.84.
Our banks Share Value is less than Book Value: The bank’s share value less
because of market perception about our future income. As our NPA’s are on a
higher side and profitability is on the lower side, the market value is less. If we
reduce the NPA’s which will in turn increase our income, the perception will
change in the market which in turn will increase the market value of the shares
of the bank.

➢ Capital Structure of our Bank: Tier I: Share capital + Free Reserves & Tier II:
Revaluation Reserve, Undisclosed reserves, Subordinate Debts (Bonds),
(Rs in Crores)
Heads As on As on As on
31.03.2022 31.03.2021 31.03.2020
Tier I capital 6,558.19 6,140.39 5,619.43
Tier II capital 1,560.35 1,246.65 1,169.92
Total Capital 8,118.54 7,387.04 6,789.35
Funds

➢ Components/Elements of Tier 1 Capital:

i. Paid-up capital (ordinary shares), statutory reserves, and other disclosed free
reserves, if any;
ii. Perpetual Non-cumulative Preference Shares (PNCPS) eligible for inclusion as
Tier I capital - subject to laws in force from time to time;
iii. Innovative Perpetual Debt Instruments (IPDI) eligible for inclusion as Tier I
capital; and
iv. Capital reserves representing surplus arising out of sale proceeds of assets.

➢ Components/Elements of Tier 2 Capital:

The elements of Tier II capital include undisclosed reserves, revaluation
reserves, general provisions and loss reserves, hybrid capital instruments,
subordinated debt and investment reserve account.
 43

Hybrid Debt Capital Instruments: Those instruments which have close

similarities to equity, in particular when they are able to support losses on an
ongoing basis without triggering liquidation, may be included in Tier II capital.
At present the following instruments have been recognized and placed under
this category:

i. Debt capital instruments eligible for inclusion as Upper Tier II capital ; and
ii. Perpetual Cumulative Preference Shares (PCPS) / Redeemable Non-
Cumulative Preference Shares (RNCPS) / Redeemable Cumulative
Preference Shares (RCPS) as part of Upper Tier II Capital.

➢ Limit for Tier II elements: Tier II elements should be limited to a maximum of

100 per cent of total Tier I elements for the purpose of compliance with the
norms.

➢ Deductions from Tier I and Tier II Capital: Equity/non-equity investments in

subsidiaries and Credit Enhancements pertaining to Securitization of Standard
Assets.

➢ Return on Equity: Is a measure of profitability in relation to shareholders'

equity. The formula for ROE is: ROE = Net Income/Shareholders' Equity.
ROE is sometimes called "return on net worth."

➢ Return on Networth (difference to Return On Equity): PAT/Tangible

Networth, name as Return on Equity

➢ Return on capital Employed: is a financial ratio that measures a company's

profitability and the efficiency with which its capital is employed. ROCE is
calculated as: ROCE = Earnings before Interest and Tax (EBIT) / Capital
Employed (Means all the funds employed to earn the income which includes
capital + reserves + LT debts).

➢ Return on Assets: Return on assets (ROA) is an indicator of how profitable a

company is relative to its total assets. ROA gives an idea as to how efficient
management is at using its assets to generate earnings.

➢ Deposit Rates: 3.40% to 5.70% for Deposit Senior citizen 0.40% extra. No
penalty shall be levied for premature closure upto 2 Cr and 1% above 2 Cr.

➢ Savings Bank Rate of Interest: 2.70% to 4.50% with different slabs.

 44

Upto & including ₹ 1 Lakh 2.75

Above ₹ 1 lakh up to ₹ 10 Lakh 2.75

Above ₹ 10 lakh up to ₹ 50 Lakh 2.75

₹ 50 lakh up to ₹ 100 Lakh 3.50

Above ₹ 100 lakh 4.50

➢ FTP (Foreign Trade Policy) 01.04.2019 to 31.03.2020: Foreign trade policies are
government actions, especially tariffs, import quotas, and export subsidies,
designed to increase net exports by promoting exports or restricting imports.

It is detailed guidelines for the country explaining the vision, goals, objectives
and road map for India’s global trade engagement in the coming years
prepared by Directorate General of Foreign Trade (DGFT).

The existing Foreign Trade Policy 2015-20 which is valid up to March 31, 2022
is extended up to September 30, 2022

➢ Peer to Peer lending: sometimes abbreviated P2P lending, is the practice of

lending money to individuals or businesses through online services where
lenders deal with prospective borrowers directly. Since the peer-to-peer
lending companies offering these services operate entirely online, they can run
with lower overhead and provide the service more cheaply than traditional
financial institutions. As a result, lenders often earn higher returns compared
to savings and investment products offered by banks, while borrowers can
borrow money at lower interest rates, even after the P2P lending company has
taken a fee for providing the match-making platform and credit checking the
borrower.

➢ Restricted Cover Countries: ECGC has been periodically reviewing all the
African countries and has been upgrading those wherever the risk perception
has improved. The continuous stepping up has in fact resulted in a reduction
of almost 35% to 40% of applicable premiums. This move along with liberal
underwriting policy viz. removal of most of the countries from "Restricted
Cover" list have in fact even resulted in ECGC's exposure to Africa going up
considerably.

➢ Money Trail: It is tracking the origin of money which has gone through chain
of transactions.

➢ Anti Money laundering: Refers to a set of procedures, laws or regulations

designed to stop the practice of generating income through illegal actions .
There are three stages involved in money laundering; placement, layering and
 45

integration. Placement –This is the movement of cash from its source. On

occasion the source can be easily disguised or misrepresented.

Placement –This is the movement of cash from its source.

Layering – The purpose of this stage is to make it more difficult to detect and
uncover a laundering activity.
Integration – This is the movement of previously laundered money into the
economy mainly through the banking system and thus such monies appear to
be normal business earnings

➢ Gold Card Status: It is accorded to exporters an impetus to manufacturing

exports by lowering trade barriers and reducing the transaction costs and
easy availability of finance.

All credit worthy exporters with good track record and whose accounts have
been classified as “Standard” continuously for a period of three years are
eligible for the benefits under the scheme provided they satisfy the following
conditions.

1. Exporter is not blacklisted by ECGCI or is included in Reserve Bank of India’s

caution list/ defaulters list for the past three years
2. The overdue export bills in not in excess of 10% of the current year’s turnover.
3. The exporter is not making losses for the past three years
4. No irregular features in the conduct of the account such as return of cheques
for want of funds, frequent overdrawing, drawings in excess of drawing
power, Devolvement in case of non fund based facilities, arrears in Term loan
etc.
5. In respect of any new take over accounts, the minimum rating shall be KB-3
and/or they should be the existing Gold Card holders with their erstwhile
banks.

➢ Uniform Customs and Practice for Documentary Credits (UCPDC 600): It

gives broader guidelines about the Uniformity to be followed while opening of
Documentary credits. There are 39 articles guiding the bank’s in respect of
various aspects of the documentary credit.

➢ URC: Uniform Rules for Collection, ICC Publication No 522 shall be

applicable to all collections

➢ Corporate Governance: It is the Best practice code and ethics by which a

company is directed and controlled and it essentially involves balancing the
interests of a company's stakeholders, such as shareholders, management,
customers, suppliers, financiers, government and the community.
 46

➢ RIDF Deposits: Rural Infrastructure Development Fund. If there is a shortfall

in the stipulated levels prescribed by RBI, they have instructed us to invest in
RIDF. The rate of interest is Reverse Repo rate.

➢ SWAP: A swap is a derivative contract through which two parties exchange

financial instruments.

➢ OPTION: An option is a financial derivative that represents a contract sold by

one party (the option writer) to another party (the option holder). The contract
offers the buyer the right, but not the obligation, to buy (call) or sell (put) a
security or other financial asset at an agreed-upon price (the strike price) during
a certain period of time or on a specific date (exercise date).
➢ BASEL II: Basel II has three pillars: Minimum capital, supervisory review and
market discipline. Minimum capital is the technical, quantitative heart of the
accord. Banks must hold capital against 8% of their assets, after adjusting their
assets for risk. RBI has prescribed 9%.

➢ BASEL III is a comprehensive set of reform measures, developed by the Basel

Committee on Banking Supervision, to strengthen the regulation, supervision
and risk management of the banking sector".

➢ Three Pillars of Basel III. The Basel III Guidelines are based upon 3 very
important aspects which are called 3 pillars of the Basel II. These 3 pillars are
Minimum Capital Requirement, Supervisory review Process (Risk
Management & Supervision) and Market Discipline

➢ BASEL III: According to new Basel-III norms, which kick in from March 2019,
Indian banks need to maintain a minimum capital adequacy ratio (CAR) of 9%,
in addition to a capital conservation buffer, which would be in the form of
common equity at 2.50 per cent of the risk weighted assets going ahead. The
total Capital adequacy (CRAR) required as on 31.03.2022 is 11.50%.

➢ Fair Value Provision: Fair Value = (Present value of the cash flows
{representing the repayment schedule along with previous rate of interest}
discounted at a rate*) less (Present value of the cash flows {representing the
repayment schedule along with present rate of interest} discounted at the rate*).

* Discount rate = Rate of interest charged before restructuring for both schedules
mentioned above

If it is negative we have to make provision for the full amount.

➢ White label ATM’s: Non-bank entities that intend setting up, owning and
operating ATMs, would be christened "White Label ATM Operators" (WLAO)
and such ATMs would be called "White Label ATMs" (WLAs).
 47

➢ Brown label ATM’s: 'Brown label' ATM are those Automated Teller Machines
where hardware and the lease of the ATM machine is owned by a service
provider, but cash management and connectivity to banking networks is
provided by a sponsor bank whose brand is used on the ATM.

➢ Mission Statement: To be technology savvy, customer centric progressive

bank with national presence driven by highest standards of corporate
governance and guided by sound ethical values.

➢ Vision Statement: To be progressive, prosperous and well governed bank.

➢ SARFAESI: Securitization and Reconstruction of Financial Assets and

Enforcement of Security Interest. Above 1 lakhs O/s balance, lesser than 80%
of the total limit.

➢ DRT: Above 20 lakhs with security or without security can go to DRT before
expiry of documents. Can go along with SARFAESI. Below 20 lakhs shall go to
local Civil Court.

➢ PE Investor: In finance, private equity is a type of equity and one of the asset
classes consisting of equity securities and debt in operating companies that are
not publicly traded on a stock exchange. A private equity investment will
generally be made by a private equity firm, a venture capital firm or an angel
investor.

➢ Venture Capital: is a type of private equity, a form of financing that is provided

by firms or funds to small, early-stage, emerging firms that are deemed to have
high growth potential, or which have demonstrated high growth (in terms of
number of employees, annual revenue, or both).

➢ Dividend Pay out Ratio: Out of the total Net profit earned, a portion is declared
as dividend to the share holders and balance amount is retained for growth in
the company. The dividend payout ratio is the amount of dividends paid to
share holders divided by the amount of total net income (Net profit after tax)
of a company.

➢ Dividend Coverage Ratio: The Dividend Coverage Ratio, also known as

dividend cover, is a financial metric that measures the number of times that a
company can pay dividends to its shareholders. The dividend coverage ratio is
the ratio of the company’s net income divided by the dividend paid
to shareholders.

The dividend coverage ratio is calculated by dividing a company's annual EPS

(Earning Per Share) by its annual DPS (Dividend Per Share) or dividing its net
income by the amount of dividends payable to common stockholders.
 48

➢ Dividend %: Stood at 40% for 31.03.2022, 18% for 31.03.2021, Nil for
31.03.2020.

➢ e-KYC refers to electronic KYC: e-KYC is possible only for those who have
Aadhaar numbers. e-KYC is the procedure wherein the customer gives his
explicit consent to UIDAI ( to release his identity/address through biometric
authentication to open a bank account with Aadhaar based e-KYC and also to
provide his biometrics and his/her 12 digit Aadhaar number, which can be
verified through the UIDAI’s Central Identities Data Repository (CIDR). If the
Aadhaar number matches, UIDAI responds and provides the encrypted
demographic information [Name, year/date of birth, Gender, Address, Phone
and email (if available)] and photograph of the customer. Information thus
provided through e-KYC process is permitted to be treated as an ‘Officially
Valid Document’ under PML Rules and is a valid process for KYC verification.

➢ Yield on Advances: Total Interest earned on advances divided by average

advances. The yield on advance as on 31.03.2022 (8.84%), As on 31.03.2021
(9.05%)

➢ Cost of Deposit: Interest paid on deposit divided average deposits. The cost of
deposit as on 31.03.2022 (4.66%), As on 31.03.2021 (5.29%).

➢ The difference between Yield on Advance and Cost of Deposit is Net Interest
Spread

➢ Liberalised Remittance Scheme (LRS) of USD 2,50,000 for resident

individuals
Under the Liberalised Remittance Scheme, Authorised Dealers may freely
allow remittances by resident individuals up to USD 2,50,000 per Financial
Year (April-March) for any permitted current or capital account transaction or
a combination of both. The Scheme is not available to corporates, partnership
firms, HUF, Trusts, etc. It is mandatory to have PAN card to make remittances
under the Scheme for capital account transactions. However, PAN card need
not be insisted upon for remittances made towards permissible current account
transactions up to USD 25,000.

The applicants should have maintained the bank account with the bank for a
minimum period of one year prior to the remittances for capital account
transactions. If the applicant seeking to make the remittances is a new customer
of the bank, Authorised Dealers should carry out due diligence on the opening,
operation and maintenance of the account. Further, the Authorised Dealers
should obtain bank statement for the previous year from the applicant to satisfy
themselves regarding the source of funds. If such a bank statement is not
available, copies of the latest Income Tax Assessment Order or Return filed by
the applicant may be obtained.

➢ VAPT: Vulnerability Assessment & Penetration Testing.

 49

➢ ICAAC: Internal Capital adequacy and Assessment Committee.

➢ IMAP: Inspection Monitor able Action Plans

➢ IRMC: Integrated Risk management committee.

➢ Foreign-exchange reserves (also called forex reserves or FX reserves) is money

or other assets held by a central bank or other monetary authority so that it can
pay if need be its liabilities, such as the currency issued by the central bank, as
well as the various bank reserves deposited with the central bank by the
government other financial institutions.

In a strict sense, foreign-exchange reserves should only include foreign

banknotes, foreign bank deposits, foreign treasury bills, and short and long-
term foreign government securities.[2] However, the term in popular usage
commonly also adds gold reserves, special drawing rights (SDRs), and
International Monetary Fund (IMF) reserve positions.

➢ IEPF: Investors Education and Protection Fund. Investor Education and

Protection Fund (IEPF) is for promotion of investors’ awareness and protection
of the interests of investors. This website is an information providing platform
to promote awareness, and it does not offer any investment advice or
evaluation.

If Dividend remains unclaimed for seven years, it gets transferred to the

government account, primarily to the Investor Education and Protection Fund
(IEPF), a fund which is managed by the ministry.

➢ DEAF is the acronym for Depositor Awareness and Education Fund.

Banks have to transfer all unclaimed deposits for more than 10 years, to RBI at
the end of every month. If a depositor turns up to claim his money, a refund
for the same can be claimed from RBI, after giving all details.

➢ Lead Bank Scheme: The lead bank scheme, introduced towards the end of
1969, envisages assignment of lead roles to individual banks for the district
allotted to them. A bank having relatively large network of branches in the
rural areas of a given district and endowed with adequate financial and
manpower resources are generally entrusted with the lead responsibility for
that district. The LEAD BANK acts as a leader for coordinating the efforts of
all credit institutions in the allotted district to increase the flow of credit to
agriculture, small-scale industries and other economic activities included in the
priority sector in the rural and semi-urban areas, with the district being the
basic unit in terms of geographical area.
 50

➢ Gold Deposit Scheme: Gold Deposit Scheme is a fixed deposit in gold. It lets
the customer to deposit the gold that is lying idle under this scheme and in
return get safety, earn interest and tax benefits. The Gold deposit scheme is
offered to mobilise the idle gold in the country and put it in productive use and
to provide the customer an opportunity to earn interest on the idle gold
holdings. It earns interest rate of 2.50%.

➢ Sovereign Gold Bond (SGB)’s are government securities denominated in

grams of gold. They are substitutes for holding physical gold. Investors have
to pay the issue price in cash and the bonds will be redeemed in cash on
maturity. The Bond is issued by Reserve Bank on behalf of Government of
India. The quantity of gold for which the investor pays is protected, since he
receives the ongoing market price at the time of redemption/ premature
redemption. The SGB offers a superior alternative to holding gold in physical
form. The risks and costs of storage are eliminated. Investors are assured of the
market value of gold at the time of maturity and periodical interest. SGB is free
from issues like making charges and purity in the case of gold in jewellery form.
The bonds are held in the books of the RBI or in demat form eliminating risk of
loss of scrip etc.

The Bonds are issued in denominations of one gram of gold and in multiples
thereof. Minimum investment in the Bond shall be one gram with a maximum
buying limit of 500 grams per person per fiscal year (April – March). In case of
joint holding, the limit applies to the first applicant.

The Bonds bear interest at the rate of 2.75 per cent (fixed rate) per annum on
the amount of initial investment. Interest will be credited semi-annually to the
bank account of the investor and the last interest will be payable on maturity
along with the principal.

➢ REIT: Real Estate Investment Trust. A real estate investment trust (REIT) is a
company that owns, operates, or finances income-generating real estate.
Modeled after mutual funds, REITs pool the capital of numerous investors.
This makes it possible for individual investors to earn dividends from real
estate investments—without having to buy, manage, or finance any properties
themselves.

➢ INFRASTRUCTURE INVESTMENT TRUSTS (“InvITS”):

Infrastructure Investment Trusts (“InvITs”) are collective investment vehicles
that enable developers of infrastructure assets (generally held under various
special purpose vehicles or SPV’s) to monetise their assets by pooling multiple
assets under a single entity (trust). They are regulated by SEBI. For the purposes
of the InvIT Regulations, “Infrastructure” includes all the
infrastructure sub-sectors

➢ Price to Earnings ratio: Present market price divided by Earning Per share.
 51

➢ Payments Infrastructure Development Fund (PIDF ):

The PIDF Scheme, operationalised by the Reserve Bank from January 01, 2021,
subsidises deployment of Points of Sale (PoS) infrastructure (physical and
digital modes) in tier-3 to tier-6 centres and north eastern states of the country.
From August 26, 2021, beneficiaries of PM Street Vendor’s AtmaNirbhar Nidhi
(PM SVANidhi Scheme) in tier-1 and tier-2 centres are also covered.

2. The contribution to the PIDF is made by the Reserve Bank, authorised card
networks and card issuing banks; the corpus currently stands at ₹811.4 crore.

➢ Burden Ratio: The Burden Ratio is the measure of the difference between Non-
Interest Income and Non-Interest Expenses expressed as a ratio to Average
Assets.

➢ RATIOS as per RBI:

1. Definitions of the ratios are as follow:

i. Cash-Deposit ratio = (Cash in hand + Balances with RBI) / Deposits
ii. Ratio of secured advances to total advances = (Advances secured by tangible assets +
Advances covered by bank or Govt. guarantees) / Advances
iii. Ratio of interest income to total assets = Interest earned / Total assets
iv. Ratio of net interest margin to total assets = (Interest earned - Interest paid) / Total
assets
v. Ratio of non-interest income to total assets = Other income / Total assets
vi. Ratio of intermediation cost to total assets = Operating expenses / Total assets
vii. Ratio of wage bill to intermediation costs (Operating Expenses) = PPE / Operating
Expenses
viii. Ratio of wage bill to total expenses = PPE / Total expenses
ix. Ratio of wage bill to total income = PPE / Total income
x. Ratio of burden to total assets = (Operating expenses - Other income) / Total assets
xi. Ratio of burden to interest income = (Operating expenses - Other income) / Interest
income
xii. Ratio of operating profits to total assets = Operating profit / Total assets
xiii. Return on assets for a bank group (for Table 2.6) is obtained as weighted average of
return on assets of individual banks (from Table B12) in the group, weights being the
proportion of total assets of the bank as percentage to total assets of all banks in the
corresponding bank group
xiv. Return on Equity = Net Profit / (Capital + Reserves and Surplus)
xv. Cost of Deposits = IPD / Deposits
xvi. Cost of Borrowings = IPB / Borrowings
xvii. Cost of Funds = (IPD + IPB) / (Deposits + Borrowings)
xviii. Return on Advances = IEA / Advances
xix. Return on Investments = IEI / Investments
xx. Return on Advances adjusted to Cost of Funds = Return on Advances – Cost of Funds
 52

xxi. Return on Investment adjusted to Cost of Funds = Return on Investments – Cost of

Funds

Abbreviations used in the above definitions are as follows.

PPE = Payment to and provisions for employees
IPD = Interest paid on deposits
IPB = Interest paid on borrowings from RBI and other agencies
IEA = Interest earned on advances and bills
IEI = Interest earned on investments

➢ Fat Finger: used to refer to clumsy or inaccurate typing, typically resulting from
one finger striking two keys at the same time. This expression is used to
describe someone making a mistake when they are typing. It can also be used
to describe somebody pressing the wrong numbers on a number pad. Someone
with fat fingers is a clumsy typist. Fat fingers cause a keyboard input error.

➢ Wind Fall Gain: Windfall gain (or windfall profit) is an unexpected gain in
income which could be due to winning a lottery, unforeseen inheritance or
shortage of supply. Windfall gains are an unexpected, unearned, or sudden
gain or advantage.

➢ Wind Fall Gain Tax: The government has announced taxes on windfall gains
made by crude oil producers. The government slapped a ₹23,230 per tonne
additional tax on domestically produced crude oil to take away windfall gains
accruing to producers from high international oil prices. The government has
introduced export duties for petrol, diesel and aviation turbine fuel (ATFs) on
Friday to help boost domestic supplies, while also imposing a windfall tax on
oil producers that have benefitted from higher global crude oil prices. It has
also mandated exporters to meet the requirements of the domestic market first.

➢ Stagflation: Stagflation is characterized by slow economic growth and

relatively high unemployment—or economic stagnation—which is at the same
time accompanied by rising prices (i.e., inflation). Stagflation can be
alternatively defined as a period of inflation combined with a decline in the
gross domestic product (GDP).

➢ RAROC: Risk Adjusted Return on Capital: It is a risk-based profitability

measurement framework for analysing risk-adjusted financial performance
and providing a consistent view of profitability across businesses.

Risk-adjusted return on capital (RAROC) is a risk-adjusted measure of the

return on investment. It does this by accounting for any expected losses and
income generated by capital, with the assumption that riskier projects should
be accompanied by higher expected returns.
 53

RAROC= Expected Return/Value at Risk

RAROC = (Revenues - Costs - Expected Losses) / Economic Capital. Revenues

in the equation refer to bank revenues in the form of interest and transaction-
related fees. Therefore, for the loan or the credit portfolio that the bank holds,
the annual revenue would be an annualized value of the bank's interest
earning.

➢ CGTMSE: Credit Guarantee Fund Scheme for Micro & Small Enterprises in
respect of credit facilities extended by lending institution to borrowers.
Amount covered is Rs.50 lakh in case of RRB/Small Finance Bank and Rs.200
lakh in case of scheduled commercial bank and select NBFC by way of TL and
WC facilities. Earlier Traders were not covered now the same is also covered
upto Rs.100 lakh (Initially only Retail trade was covered and now Wholesale
Wholesale Trade is also covered as of now). Further recently
Educational/Training Institution is also covered upto Rs.200.00 lakhs. The
period of cover is for 5 years (block of 5 years) for a maximum of 10 years.

Partial/Hybrid collateral security where the unsecured portion of the credit

facility also can be covered upo Rs.200 lakh or 100 lakhs as the case may be.
The maximum ROI cannot be more than 14% including the cost of guarantee
cover.

Applicable Guarantee Fee for coverage of loan accounts under CGTMSE

Guarantee Scheme during 2020-21.

A. Annual Service Fee (ASF) for loan/limit Guarantee covered prior to 31.12.2012(
vide : HO/CREDIT/CIR/GF/7/46/2009-10 dated 03.11.2009) and continued for 2020-
21.
Annual Service Fee (ASF) [% p.a.] for the FY 2020-21
Credit facility upto Rs.5 lakhs per borrower. 0.55% P.A. +GST*

Credit facility above Rs.5 lakhs up to Rs.100 0.83% P.A. +GST*

lakhs per borrower.
(* GST at 18% at present)

B. Annual Guarantee Fee (AGF) for loan/limit sanctioned on or after 01.01.2013

up to 31.03.2018,( vide : HO/CREDIT/CIR/GF/7/85/2012-13 dated 29.12.2012 and
HO/CrMD/CIR LETTER/GF/110/48/2017-18 dated 27.03.2018)
Annual Guarantee Fee (AGF) [% p.a.]for the FY 2020-21
Credit Facility Women, Micro Enterprises
Per borrower and units in North East Others
Region (incl. Sikkim)
 54

Upto Rs.5 lakhs 0.83 + GST* 1.10 +GST

Above Rs.5
lakhs and upto 0.94 + GST 1.10 + GST
Rs.200 lakhs
(*GST at 18% at present)

C. AGF for Facilities sanctioned/renewed from 01.04.2018:

Sl. Credit Facility/Loan Annual Guarantee Fee [% p.a.] including Risk
No. Limits sanctioned on/after premium for 2020-21
01.04.2018 Women, Micro Enterprises Others
& Units in NE Region
1. Up to Rs.5 Lakhs 1.10+ GST* 1.10+ GST*
2. Above Rs.5 Lakhs and up 1.49+ GST* 1.65+ GST*
to Rs. 50 Lakhs
3. Above Rs. 50 Lakhs and 1.98+ GST* 1.98+ GST*
up to Rs.200 Lakhs
( * GST at 18% at present)

D.AGF f or Retail trade loans/limit sanctioned on or after 01.01.2019, vide :

HO/CREDIT/CIR/GF/7/48/2018-19 dated 29.12.2018.
Sl. Credit Facility/Loan Annual Guarantee Fee [% p.a.] including Risk
No. Limits sanctioned on/after premium for 2020-21
01.01.2019 2.20 +GST*
1. Up To 100 lakhs
(* GST at 18% at present)
➢ NPA CLASSIFICATION & PROVISION RATES:
Particulars Period of Default Provision
Standard Assets Upto 90 days (3 Months) Agriculture, Individual
Housing Loan, SME
(Small & Micro only) –
0.25%

CRE – 1.00%
CRE RH – 0.75%
Home Loan (Teaser Rate)
– 2.00%
Restructured Adv- 5%
Others: 0.40%

The provisions on
standard assets should
not be reckoned for
arriving at net NPAs.
 55

Substandard which has remained NPA A general provision of 15

for a period less than or percent on total
equal to 12 months outstanding should be
made without making
(Next 12 Months) any allowance for ECGC
guarantee cover and
securities available.

The ‘unsecured
exposures’ which are
identified as
‘substandard’ would
attract additional
provision of 10 per cent,
i.e., a total of 25 per cent
on the outstanding
balance.

In respect of
infrastructure lending,
infrastructure loan
accounts which are
classified as sub-standard
will attract a provisioning
of 20 per cent instead of
the aforesaid prescription
of 25 per cent. To avail of
this benefit of lower
provisioning, the banks
should have in place an
appropriate mechanism
to escrow the cash flows
and also have a clear and
legal first claim on these
cash flows
Doubtfull 1 (DS 1) An asset would be 25% for secured portion
classified as doubtful if it and 100% for Unsecured
has remained in the portion
substandard category for
a period of 12 months
(Next 12 Months)
Doubtfull 2 (DS 2) 40% for secured portion
and 100% for Unsecured
(Next 24 Months) portion
 56

Doubtfull 3 (DS 3) After above (i.e. More 100% for both secured
than 36 months (3 Years) portion and Unsecured
from classified as portion
Doubtfull or 48 months
(4 Years) after classified
as NPA/Substandard
Loss Asset In case of secured loans Loss assets should be
after 4 years of becoming written off. If loss assets
NPA and in case of are permitted to remain in
unsecured loans 1 year the books for any reason,
after becoming NPA 100 percent of the
outstanding should be
provided for

Note:
1. The provisioning requirement for unsecured ‘doubtful’ assets is 100 per cent.
Unsecured exposure is defined as an exposure where the realisable value of the
security, as assessed by the bank/approved valuers/Reserve Bank’s inspecting
officers, is not more than 10 percent, ab-initio, of the outstanding exposure.
‘Exposure’ shall include all funded and non-funded exposures (including
underwriting and similar commitments). ‘Security’ will mean tangible security
properly charged to the bank and will not include intangible securities like
guarantees (including State government guarantees), comfort letters etc.
2. Housing loans at teaser rates: It has been observed that some banks are following
the practice of sanctioning housing loans at teaser rates i.e. at comparatively lower
rates of interest in the first few years, after which rates are reset at higher rates. This
practice raises concern as some borrowers may find it difficult to service the loans
once the normal interest rate, which is higher than the rate applicable in the initial
years, becomes effective. It has been also observed that many banks at the time of
initial loan appraisal, do not take into account the repaying capacity of the borrower
at normal lending rates. Therefore, the standard asset provisioning on the
outstanding amount of such loans has been increased from 0.40 per cent to 2.00 per
cent in view of the higher risk associated with them. The provisioning on these
assets would revert to 0.40 per cent after 1 year from the date on which the rates are
reset at higher rates if the accounts remain ‘standard’.

➢ PRIORITY SECTOR:

The categories under priority sector are as follows:

i. Agriculture (Farm Credit - Individual farmers, Farm Credit - Corporate
farmers, Farmer Producer Organisations (FPOs)/(FPC) Companies of
Individual Farmers, Partnership firms and Co-operatives of farmers engaged
in Agriculture and Allied Activities, Agriculture Infrastructure, Ancillary
Services, Small and Marginal Farmers, Lending by banks to NBFCs and MFIs
for on-lending in agriculture
 57

ii. Micro, Small and Medium Enterprises (MSME Definition):

Category Investment in P & M Turnover
Micro Enterprises Upto 1 Crore Upto 5 Cr
Small Enterprises Upto 10 Crore Upto 50 Cr
Medium Enterprises Upto 50 Crore Upto 250 Cr

iii. Export Credit: Export credit under agriculture and MSME sectors are allowed
to be classified as PSL in the respective categories viz. agriculture and MSME.
Export Credit (other than in agriculture and MSME) will be allowed to be
classified as priority sector Incremental export credit over corresponding date
of the preceding year, up to 2 per cent of ANBC or CEOBE whichever is
higher, subject to a sanctioned limit of up to ₹ 40 crore per borrower.

iv. Education: Loans to individuals for educational purposes, including

vocational courses, not exceeding ₹ 20 lakh will be considered as eligible for
priority sector classification. Loans currently classified as priority sector will
continue till maturity.

v. Housing: Loans to individuals up to ₹35 lakh in metropolitan centres (with

population of ten lakh and above) and up to ₹25 lakh in other centres for
purchase/construction of a dwelling unit per family provided the overall cost
of the dwelling unit in the metropolitan centre and at other centres does not
exceed ₹45 lakh and ₹30 lakh respectively.

Loans up to ₹10 lakh in metropolitan centres and up to ₹6 lakh in other centres

for repairs to damaged dwelling units conforming to the overall cost of the
dwelling unit as mentioned above.

vi. Social Infrastructure: Bank loans up to a limit of ₹5 crore per borrower for
setting up schools, drinking water facilities and sanitation facilities including
construction/ Master Directions - Priority Sector Lending – Targets and
Classification – 2020 14 refurbishment of household toilets and water
improvements at household level, etc. and loans up to a limit of ₹10 crore per
borrower for building health care facilities including under ‘Ayushman
Bharat’ in Tier II to Tier VI centres. In case of UCBs, the above limits are
applicable only in centres having a population of less than one lakh.

vii. Renewable Energy: Bank loans up to a limit of ₹30 crore to borrowers for
purposes like solar based power generators, biomass-based power generators,
wind mills, micro-hydel plants and for non-conventional energy based public
utilities, viz., street lighting systems and remote village electrification etc., will
be eligible for Priority Sector classification. For individual households, the
loan limit will be ₹10 lakh per borrower.

viii. Others: Loans not exceeding ₹1.00 lakh per borrower provided directly by
banks to individuals and individual members of SHG/JLG, provided the
 58

individual borrower’s household annual income in rural areas does not

exceed ₹1.00 lakh and for non-rural areas it does not exceed ₹1.60 lakh, and
loans not exceeding ₹2.00 lakh provided directly by banks to SHG/JLG for
activities other than agriculture or MSME, viz., loans for meeting social needs,
construction or repair of house, construction of toilets or any viable common
activity started by the SHGs.

Loans to distressed persons Loans to distressed persons Loans sanctioned to

State Sponsored Organisations for Scheduled Castes/ Scheduled Tribes and
Loans up to ₹50 crore to Start-ups, as per definition of Ministry of Commerce
and Industry, G

Categories Domestic commercial banks (excl. RRBs & SFBs) & foreign banks
with 20 branches and above
Total Priority 40 per cent of ANBC
Sector
Agriculture 18 per cent of ANBC
Micro 7.5 per cent of ANBC
Enterprises
Advances to 12 percent# of ANBC
Weaker
Sections
Small and 2020-21 – 8% of ANBC
Marginal 2021-22 – 9%
Farmers 2022-23 - 9.5%
2023-24 – 10%
Weaker 2020-21 – 10%
Sections 2021-22 – 11%
2022-23 – 11.50%
2023-24 – 12%

***********************************************************************************************
 59

➢ RISK WEIGHTS:
Based on External Long Term rating:
Long term ratings of the chosen Standardised approach risk weights
credit rating agencies (in per cent)
AAA 20%
AA 30%
A 50%
BBB 100%
BB & Below 150%
Unrated 100%

➢ Internal Capital Adequacy Assessment Process (ICAAP)

➢ Capital adequacy ratio prescribed by the RBI under the Pillar 1 of the
Framework is only the regulatory minimum level, addressing only the three
specified risks (viz., credit, market and operational risks), holding additional
capital might be necessary for the banks, on account of both – the possibility of
some under-estimation of risks under the Pillar 1 and the actual risk exposure
of a bank vis-à-vis the quality of its risk management architecture.

Illustratively, some of the risks that the banks are generally exposed to but
which are not captured or not fully captured in the regulatory CRAR would
include: (a) Interest rate risk in the banking book; (b) Credit concentration risk;
(c) Liquidity risk; (d) Settlement risk; (e) Reputational risk; (f) Strategic risk; (g)
Risk of under-estimation of credit risk under the Standardised approach; (h)
“Model risk” i.e., the risk of under-estimation of credit risk under the IRB
approaches; (i) Risk of weakness in the credit-risk mitigants; (j) Residual risk of
securitisation, etc. It is, therefore, only appropriate that the banks make their
own assessment of their various risk exposures, through a well-defined internal
process, and maintain an adequate capital cushion for such risks.

➢ BASEL NORMS:
While the Basel - I framework was confined to the prescription of only
minimum capital requirements for banks, the Basel II framework expands this
approach not only to capture certain additional risks in the minimum capital
ratio but also includes two additional areas, namely, the Supervisory Review
Process and Market Discipline through increased disclosure requirements for
banks. Thus, the Basel II framework rests on the following three mutually-
reinforcing pillars:

Pillar 1: Minimum Capital Requirements — which prescribes a risk-sensitive

calculation of capital requirements that, for the first time, explicitly includes
operational risk in addition to market and credit risk.
 60

Pillar 2: Supervisory Review Process (SRP) — which envisages the

establishment of suitable risk management systems in banks and their review
by the supervisory authority.

Pillar 3: Market Discipline — which seeks to achieve increased transparency

through expanded disclosure requirements for banks.

Supervisory Review Process: Four key principles in regard to the SRP

envisaged under Pillar 2

Principle 1: Banks should have a process for assessing their overall capital
adequacy in relation to their risk profile and a strategy for maintaining their
capital levels.

Principle 2: Supervisors should review and evaluate the banks’ internal capital
adequacy assessments and strategies, as well as their ability to monitor and
ensure their compliance with the regulatory capital ratios. Supervisors should
take appropriate supervisory action if they are not satisfied with the result of
this process.

Principle 3: Supervisors should expect banks to operate above the minimum

regulatory capital ratios and should have the ability to require the banks to hold
capital in excess of the minimum.

Principle 4: Supervisors should seek to intervene at an early stage to prevent

capital from falling below the minimum levels required to support the risk
characteristics of a particular bank and should require rapid remedial action if
capital is not maintained or restored

• Credit Risk: A bank should have the ability to assess credit risk at the portfolio
level as well as at the exposure or counterparty level. Banks should be
particularly attentive to identifying credit risk concentrations and ensuring that
their effects are adequately assessed. This should include consideration of
various types of dependence among exposures, incorporating the credit risk
effects of extreme outcomes, stress events, and shocks to the assumptions made
about the portfolio and exposure behavior. Banks should also carefully assess
concentrations in counterparty credit exposures, including counterparty credit
risk exposures emanating from trading in less liquid markets, and determine
the effect that these might have on the bank’s capital adequacy.
• Market Risk: A bank should be able to identify risks in trading activities
resulting from a movement in market prices. This determination should
consider factors such as illiquidity of instruments, concentrated positions, one-
way markets, non-linear/deep out-of-the money positions, and the potential
for significant shifts in correlations. Exercises that incorporate extreme events
and shocks should also be tailored to capture key portfolio vulnerabilities to
the relevant market developments.
 61

• Operational Risk: A bank should be able to assess the potential risks resulting
from inadequate or failed internal processes, people, and systems, as well as
from events external to the bank. This assessment should include the effects of
extreme events and shocks relating to operational risk. Events could include a
sudden increase in failed processes across business units or a significant
incidence of failed internal controls.

• Interest rate risk in the banking book (IRRBB): A bank should identify the
risks associated with the changing interest rates on its on-balance sheet and off-
balance sheet exposures in the banking book from both, a short-term and long-
term perspective. This might include the impact of changes due to parallel
shocks, yield curve twists, yield curve inversions, changes in the relationships
of rates (basis risk), and other relevant scenarios. The bank should be able to
support its assumptions about the behavioral characteristics of its non-maturity
deposits and other assets and liabilities, especially those exposures
characterised by embedded optionality. Given the uncertainty in such
assumptions, stress testing and scenario analysis should be used in the analysis
of interest rate risks. While there could be several approaches to measurement
of IRRBB.

• Credit concentration risk: A risk concentration is any single exposure or a

group of exposures with the potential to produce losses large enough (relative
to a bank’s capital, total assets, or overall risk level) to threaten a bank’s health
or ability to maintain its core operations. Risk concentrations have arguably
been the single most important cause of major problems in banks.
Concentration risk resulting from concentrated portfolios could be significant
for most of the banks.

➢ Asset Reconstruction Company (ARC) Funding:

Asset Reconstruction Companies (ARC) which are registered with RBI and are
externally rated with rating of ‘AA’ and above. It shall be ensured that the
minimum Net Owned Funds of the ARC is Rs.100.00 crore. Further, the Capital
to Risk Weighted Asset (CRAR) of the Company shall be above the regulatory
prescription of 15%.

The facility shall be secured primarily by way of pledge of Security Receipts

excluding the assets sold by our Bank to the Company, if any. It shall be
ensured that Asset Reconstruction Companies are not acquiring financial assets
from the following on a bilateral basis:
a. A bank/financial institution which is the sponsor of the ARC
b. A bank/financial institution which is either a lender to the ARC or a
subscriber to the fund if any raised by the ARC for its operations
c. An entity in the group to which the ARC belongs
 62

However, ARCs may participate in auctions of the financial assets provided

such auctions are conducted in a transparent manner, on arm’s length basis and
the prices are determined by market forces.

➢ RBI’s Financial Stability Report (Released every half yearly June &
December): The latest FSR was released on 30.06.2022 and highlights are as
under:
• The outlook for the global economy is shrouded by considerable uncertainty
because of the war in Europe, front-loaded monetary policy normalisation by
central banks in response to persistently high inflation and multiple waves of
the COVID-19 pandemic.
• Notwithstanding the challenges from global spillovers, the Indian economy
remains on the path of recovery, though inflationary pressures, external
spillovers and geopolitical risks warrant careful handling and close monitoring.
• Banks as well as non-banking financial institutions have sufficient capital
buffers to withstand shocks.
• The capital to risk weighted assets ratio (CRAR) of scheduled commercial
banks (SCBs) rose to a new high of 16.7 per cent, while their gross non-
performing asset (GNPA) ratio fell to a six-year low of 5.9 per cent in March
2022.
• Macro stress tests for credit risk reveal that SCBs would be able to comply with
the minimum capital requirements even under severe stress scenarios.

➢ Lease Finance:
Lease financing is a contractual agreement between the owner of the asset who
grants the other party the right to use the asset in return for a periodic payment
and the other party who is the user of such assets.

Two types of Lease Financing:

➢ Operating Lease
➢ Finance Lease

Finance Lease:
A finance lease (also known as a capital lease or a sales lease) is a type
of lease in which a finance company is typically the legal owner of the asset for
the duration of the lease, while the lessee not only has operating control over
the asset, but also some share of the economic risks and returns from the change
in the valuation of the underlying asset.

A finance lease has similar financial characteristics to hire purchase agreements

and closed-end leasing as the usual outcome is that the lessee will become the
owner of the asset at the end of the lease, but has different accounting
treatments and tax implications. There may be tax benefits for the lessee to lease
an asset rather than purchase it and this may be the motivation to obtain a
finance lease.
 63

Operating Lease:
Operating lease is a contract wherein the owner, called the Lessor, permits the
user, called the Lessee, to use of an asset for a particular period which is shorter
than the economic life of the asset without any transfer of ownership rights.

➢ Types of External Audit:

a) Legal Audit
b) Forensic Audit
c) Credit Audit
d) Stock Audit
e) Concurrent Audit
f) Statutory Audit
g) Management Audit

• Legal Audit:
Legal audit is the process of verification of the documents and records of the
company. The auditor checks whether the figures, documents and other
financial statements released by the company are reliable and true.

In our bank, legal audit is the process of verification of the documents and
records in respect of immovable properties by our bank’s panel advocate on
periodical basis.

• Forensic Audit:
A forensic audit is an examination and evaluation of a firm's or individual's
financial information for use as evidence. in the court of law. A forensic audit
can be conducted in order to prosecute a party for fraud, embezzlement or
other financial claims.

• Credit Audit:
Credit Audit examines compliance with extant sanction and post-sanction
processes / procedures laid down by the bank from time to time.

• Stock Audit:
Stock audit or inventory audit is a term that refers to physical verification of a
company or institution's inventory assets. There are types of stock audits
depending on the purpose and every stock audit will require a different
approach.

• Concurrent Audit:
Concurrent audit is a systematic and timely examination of financial
transactions on a regular basis to ensure accuracy, authenticity, compliance
 64

with procedures and guidelines. The emphasis under concurrent audit is not
on test checking but on substantial checking of transactions.

• Statutory Audit:
Statutory audit is an independent assessment of the financial accounts of a
company or institution. The auditor's role is to report on whether the financial
statements issued by an organisation are 'true and fair', and meet all relevant
guidelines or legal requirements.
• Management Audit: A management audit is an assessment of how well an
organization's management team is applying its strategies and resources. A
management audit evaluates whether the management team is working in the
interests of shareholders, employees, and the company's reputation. It attempts
to evaluate the performance of various management processes and functions.
It is an audit to examine, review and appraise the various policies and actions
of the management on the basis of certain objectives standards.

➢ The four types of auditor opinions are:

• Unqualified opinion-clean report.
• Qualified opinion-qualified report.
• Disclaimer of opinion-disclaimer report.
• Adverse opinion-adverse audit report.

➢ Exit Policy Accounts:

For ensuring healthy credit portfolio, identification of problems in the initial
stage itself and if there is less chances of putting the account in right track,
moving of such high risk and less profitable relations on exit route is called Exit
Policy. This is a policy measure to weed out potential NPAs through
appropriate action at right time. It relates to standard accounts showing signs
of stress.

Advantages of Exit Policy:

i) To improve the mechanism for early detection of problem in accounts and
avoid such accounts becoming NPA.
ii) To prevent such irregular and high-risk loan assets from becoming NPAs and
terminating such unprofitable relationships by providing an exit route at an
appropriate time.
iii) To improve quality of loan assets by avoiding high-risk, irregular accounts
turning into NPA.
iv) To improve interest income, reduce level of provisioning and thereby improve
the profitability of the Bank.

➢ Draw-down Schedule:
 65

Drawdown Schedule means the expected schedule of Disbursements of the

Loans to be made during the Availability Period, prepared by the Borrower
and delivered on the Closing Date to the Facility Agent.

Draw-down schedule will be obtained in order to know the stage-wise

requirement of the funds expected by the borrower from bank out of the total
Sanctioned Term Loan Limit which will help the bank to create capital charge
on the amount to the said extent on periodical basis.

➢ EWS: Early Warning Signal:

Early Warning Signal is a robust MIS mechanism for early detection of signs of
distress at individual account level as well as at segment level (asset class,
industry, geographic, size, etc.)

Few Examples of Early Warning Signals:

1. Default in undisputed payment to the statutory bodies as declared in the
Annual report.
2. Bouncing of high value cheques.
3. Frequent change in the scope of the project to be undertaken by the
borrower.
4. Delay observed in payment of outstanding dues.
5. Frequent invocation of BGs and devolvement of LCs.
6. Under insured or over insured inventory.
7. Funds coming from other banks to liquidate the outstanding loan amount
unless in normal course.

➢ RED FLAG ACCOUNT: The concept of a Red Flagged Account (RFA) is being
introduced in the current framework as an important step in fraud risk control.
A RFA is one where a suspicion of fraudulent activity is thrown up by the
presence of one or more Early Warning Signals (EWS). There is a framework
and it is to be reported to CRILC and if found any fraudulent activity, the
account is to be reported as Fraud.

The threshold for EWS and RFA is an exposure of Rs.500 million (Rs.50.00 Cr)
or more at the level of a bank irrespective of the lending arrangement (whether
solo banking, multiple banking or consortium). All accounts beyond Rs.500
million classified as RFA or ‘Frauds’ must also be reported on the CRILC data
platform together with the dates on which the accounts were classified as such.
The modalities for monitoring of loan frauds below Rs.500 million threshold is
left to the discretion of banks.

The forensic audit must be completed within a maximum period of three

months from the date of the JLF meeting authorizing the audit. Within 15 days
of the completion of the forensic audit, the JLF will reconvene and decide on
the status of the account, either by consensus or the majority rule as specified
above.
 66

It may be noted that the overall time allowed for the entire exercise to be
completed is six months from the date when the first member bank reported
the account as RFA or Fraud on the CRILC platform.

➢ Start up India:
Startup India is an initiative of the Government of India. The campaign was
first announced by Indian Prime Minister, Narendra Modi during his speech
on 15 August 2015. The action plan of this initiative is focussing on three areas:
Simplification and Handholding. Funding Support and Incentives.

➢ STAND –UP INDIA: The Hon’ble Prime Minister, in his Independence Day
address on August 15, 2015 unveiled the new scheme” Start-Up India; Stand-
Up India” to promote entrepreneurship at grass root level for economic
empowerment and job creation. the Stand-Up India scheme has been formally
launched by Hon’ble Prime Minister on April 05, 2016.
Stand-Up India Scheme for financing SC/ST and/or Women Entrepreneurs.
The objective of the Stand-Up India scheme is to facilitate bank loans of above
Rs.10.00 lakh to Rs.100.00 lakh to at least one Scheduled Caste (SC) or
Scheduled Tribe (ST) borrower and at least one woman borrower per bank
branch for setting up a greenfield enterprise. This enterprise may be in
manufacturing, services or the trading sector. In case of non-individual
enterprises, at least 51% of the shareholding and controlling stake should be
held by either an SC/ST or Woman entrepreneur.
100% on value of security of mortgaged property/liquid security offered as
prime/collateral exclusively under the scheme. Agricultural property is not
accepted as security. The loan is repayable in 7 years with a maximum
moratorium period of 18 months. The account is treated as Priority Sector
advance.

➢ Take-over:
Entry Level Rating:
Internal Rating: KB-4 for priority sector (including MSE) and KB-3 for other
than priority Sector

External Rating: Investment Grade (i.e., not less than BBB)

External Rating (Compulsory for exposure of Rs.50.00 crore and above)

➢ Out of Order: CC/OD account shall be treated as ‘out of order’ if:

• The outstanding balance in the CC/OD account remains continuously in excess
of the sanctioned limit/drawing power for 90 days, or
• The outstanding balance in the CC/OD account is less than the sanctioned
limit/drawing power but there are no credits continuously for 90 days, or the
outstanding balance in the CC/OD account is less than the sanctioned
 67

limit/drawing power but credits are not enough to cover the interest debited
during the previous 90 days period.

➢ Bad Bank:
The bad bank in India will be called National Asset Reconstruction Ltd
(NARC). This NARC will work as an asset reconstruction company. It will buy
bad loans from the banks, thereby relieving them from the NPA. NARC will
then attempt to sell the stressed loans to buyers of distressed debt.

➢ Metal Loan:
Gold Metal Loan (GML) is a mechanism under which a jewellery manufacturer
borrows gold metal instead of rupees and settles the GML with the sale
proceeds.

As per the extant instructions, nominated banks authorized to import gold and
designated banks participating in Gold Monetization Scheme, 2015 (GMS) can
extend Gold (Metal) Loans (GML) to jewellery exporters or domestic
manufacturers of gold jewellery. These loans are repaid in INR, equivalent to
the value of gold borrowed, on the relevant date/s.

➢ RBS Rating (Risk Based Supervision Rating):

The risk based supervision process ('RBS') is designed to work as a structured
process that identifies the most critical risks faced by an individual bank and
systemic risks in the financial system. It is conducted and monitored by RBI.

➢ Agency for specialized monitoring:

As per extant guidelines, Agencies for Specialised Monitoring (ASM) to be
appointed on common engagement basis in case of consortium lending , having
large credit exposure (above Rs. 250.00 crores) and exposures of a Specialised
nature.

Agency for Specialized Monitoring (ASM) is a recently added vertical of

ITCOT's services. Indian Banks' Association (IBA) has empanelled ITCOT as
an Agency for providing ASM services to Bank/Consortium of Banks having
large credit exposures and exposures of a specialized nature.

A critical strategy in reducing NPAs, ASM audits involve extensive analysis

of a company's transactions, operations, and financial health. Auditors spend
weeks going through ledgers, bank statements, project reports and other
information to prepare their quarterly report.

➢ Insider Trading:
 68

Insider trading refers generally to buying or selling a security, in breach of a

fiduciary duty or other relationship of trust and confidence, on the basis of
material, nonpublic information about the security. Insider Trading is illegal.

➢ Digital Banking Units (DBUs):

Digital Banking refers to present and future electronic banking services
provided by a licensed bank for the execution of financial, banking and other
transactions and/or orders/instruments through electronic devices /
equipment over web sites (i.e online banking), mobile phones (i.e mobile
banking) or other digital channels as determined by the bank, which involve
significant level of process automation and cross-institutional service
capabilities running under enhanced technical architecture and differentiated
business model / strategy.

Digital banking products and services would generally mean those financial
products/services whose designs and fulfilments have nearly end-to-end
digital life cycle with the initial customer acquisition / product delivery
necessarily taking place digitally through self-service or assisted self-service

DBU is a specialised fixed point business unit / hub housing certain minimum
digital infrastructure for delivering digital banking products & services as well
as servicing existing financial products & services digitally, in both self-service
and assisted mode, to enable customers to have cost effective/ convenient
access and enhanced digital experience to/ of such products and services in an
efficient, paperless, secured and connected environment with most services
being available in self-service mode at any time, all year round.

Each DBU must offer certain minimum digital banking products and services.
Such products should be on both liabilities and assets side of the balance sheet
of the digital banking segment.

➢ DURATION & MODIFIED DURATION:

Duration measures a bond's (or fixed income portfolio's) price sensitivity to
interest rate changes. Macaulay duration estimates how many years it will take
for an investor to be repaid the bond's price by its total cash flows.

The interest rate risk of the Bank’s Investment portfolio is measured by the
Duration of the Portfolio. Longer the term to maturity of a security, larger will
be its duration and consequently higher market risk. Hence it is essential to
keep the duration of the portfolio at an optimum level in order to control the
market risk associated with the portfolio. However, very low portfolio duration
reduces the interest yield on investments. It also makes trading on price
volatility unattractive, as low duration securities are less volatile.

Modified duration measures the price change in a bond given a 1% change in

interest rates.
 69

➢ FATF: The Financial Action Task Force (FATF) is the global money laundering
and terrorist financing watchdog. The inter-governmental body sets
international standards that aim to prevent these illegal activities and the harm
they cause to society.

India became an Observer at FATF in 2006. Since then, it had been working
towards full-fledged membership. On June 25, 2010 India was taken in as the
34th country member of FATF. FATF's role in combating terror financing
became prominent after the 9/11 terror attacks in the US.

There are currently 39 members of the FATF; 39 Countries and 2 regional

organisations (the Gulf Cooperation Council and the European Commission).
These 39 Members are at the core of global efforts to combat money laundering
and terrorist financing.

➢ FATCA: The Foreign Account Tax Compliance Act (FATCA), which was
passed as part of the HIRE Act (Act passed in America), generally requires that
foreign financial Institutions and certain other non-financial foreign entities
report on the foreign assets held by their U.S. account holders or be subject to
withholding on with holdable payments.

In short, FATCA aims to bring in transparency and curb tax evasion by

monitoring the income earned by NRIs living in USA from their non-US
investments and assets. The Indian government agreed to implement the
FATCA in 2015 by way of inter-government agreement between India and
USA.

➢ India Mortgage Guarantee Corporation (IMGC) is India's first Mortgage

Guarantee Company (MGC). IMGC came into being with a vision of
facilitating early home ownership by mitigating credit risk for home loan
lenders. IMGC started operations in 2014. It is regulated by the Reserve Bank
of India under the Mortgage Guarantee guidelines issued in 2008. The company
now works with 17 lender partners including the top 5 originators.

Mortgage Guarantee is a credit default guarantee taken by mortgage lenders

against borrower's payment defaults. The mortgage guarantee becomes
payable when a specified loan becomes non-performing. The intention of
taking mortgage guarantee is to mitigate the risk taken by the lenders. his helps
the lenders to explore alternate lending opportunities and loan products while
transferring their home loan portfolio risk to Mortgage Guarantee Company
(MGC).

Mortgage Guarantee on a loan enables a lender to receive cash flows on

delinquent contracts once classified as NPA i.e. 90+ days overdue. After a claim
is filed and approved, IMGC clears all overdue (principal and interest) and
makes payment of EMIs of the housing loan till
 70

• Borrower restarts paying EMIs

• Settlement of incurred loss following disposal of the collateral
• Total claim payments equal maximum amount of coverage under MG
agreement

Mortgage Guarantee is recognised as a valid Credit Risk Mitigant for capital

adequacy computation purposes.

➢ Geo Tagging:
Geo-tagging is adding geographic identification to photographs, videos,
websites, and SMS messages using GPS enabled device. Geotagging can help
users find a wide variety of location-specific information from a device. For
instance, someone can find images taken near a given location by entering
latitude and longitude coordinates into a suitable image search engine. It is
used in our valuation reports.

Recently, the Audit Committee of the Board, while reviewing the report on
frauds has advised to take additional safeguards wherever vacant sites are
taken as security. They have further advised that, the branch officials should
mandatorily provide location-based geo-tagging details of the vacant site
offered as security in their site visit report for all proposals where vacant sites
are offered as security. Hence, the branches are advised to take the location-
based geo-tagging and submit the same along with their certificate.

➢ Robo Advisory: A robo-advisor is a digital financial advisor that provides

financial advice or manages investments with moderate to minimal human
intervention. Robo-advisors are designed to deliver advice digitally based on
inputs received from the investor.

➢ CAMELS Rating: CAMELS is an international rating system used

by regulatory banking authorities to rate financial institutions, according to
the six factors represented by its acronym. The CAMELS acronym stands for
"Capital adequacy, Asset quality, Management, Earnings, Liquidity, and
Sensitivity. Earlier the RBI inspection when rating was assigned under
CAMELS, it was called as Annual Financial Inspection and now it is replaced
with Supervisory Program for Assessment of Risk and Capital (SPARC).

➢ Universal Banking: Universal banking is a system in which banks provide a

wide variety of comprehensive financial services, including those tailored to
retail, commercial, and investment services to its clients.

Applicants under Guidelines for ‘on tap’ Licensing of Universal Banks

• UAE Exchange and Financial Services Limited
 71

• The Repatriates Cooperative Finance and Development Bank Limited

(REPCO Bank)
• Chaitanya India Fin Credit Private Limited
• Shri Pankaj Vaish and others

➢ Loan to Value: A Loan-to-Value (LTV) ratio in a Home Loan is the percentage

of the property value that a bank or financial institution can lend to a property
buyer. Lenders are not permitted to lend/finance the full property value.
Loan Amount LTV Risk Weight
(a) Individual Housing Loans
Upto ₹ 30 lakh < 80 35
> 80 and < 90 50
Above ₹ 30 lakh & upto < 80 35
₹ 75 lakh
Above ₹ 75 lakh < 75 50

(b) CRE – RH NA 75

➢ Small Farmer & Marginal farmer: Farmers having less than two hectares (five
acres) of land are called small farmers and those having less than one hectare
(2.5 acres) are called marginal farmers.

➢ Consortium Finance: Several banks agree to jointly supervise a single

borrower with a common appraisal, documentation, and follow-up and own
equal shares in the transaction with one bank/lender taking the lead and is
referred as Lead Bank.

➢ Loan Syndication: Loan syndication occurs when two or more lenders come
together to fund one loan for a single borrower. Syndicates are created when a
loan is too large for one bank or falls outside the risk tolerance of a bank. The
banks in a loan syndicate share the risk and are only exposed to their portion
of the loan. Loan Syndication is generally called as multiple banking
arrangement. It is also called when a single bank underwrites the entire loan
with one single documentation and then down sells it to other lenders. Unlike
in a loan syndication, there is not one lead bank that manages the financing
project; all of the banks play an equal role in managing the project.

➢ A Credit Information Company (CIC) is an organization which collects and

analyses credit and loan related data about individuals and companies and
generates its products and services on the basis of this data. This data is
provided to CICs by their member banks and other financial institutions. There
are 4 credit bureaus in India – TransUnion CIBIL, Equifax, Experian and CRIF
Highmark.
 72

➢ VCIP is a process of Video KYC (know your customer) facility, which allows
an applicant to open an account from anywhere by incorporating its Video-
Based Customer Identification Process (VCIP) technology, on its web-based
platforms.

➢ Recovery of Technical Written Off account on Banks Balance Sheet: It helps

the bank in reversing its provision requirement of 100% for TW accounts and it
will directly add to the profit of the bank which improves the Net profit.

➢ Crypto Currency: A digital currency in which transactions are verified and

records maintained by a decentralized system using cryptography (Blockchain
technology), rather than by a centralized authority. The four major types
include utility, payment, security, and stablecoins. There also are DeFi tokens,
NFTs, and asset-backed tokens. Major Cryptos are Bitcoin, Dogecoin,
Ethereum, Tether, USD Coin.

➢ Entry Level rating: General its KB-4, MSME its KB-4, Takeover (excluding
MSME & Export) its KB-3.

➢ External rating agencies:

Sl Name Short Name
No
1 The Credit Rating Information CRISIL
Services of India Limited
2 ICRA Limited ICRA
3 Credit Analysis & Research CARE
Limited
4 Fitch Ratings India Private FITCH
Limited
5 Brickwork Ratings India Private Brickwork
Limited
6 Acuite Ratings & Research ACUITE
Limited
7 Infomerics Valuation and Rating Infomerics or IVR
Private Limited