ALM is a comprehensive and dynamic framework for measuring, monitoring and managing the market risk of a bank. It is the management of structure of balance sheet (liabilities and assets) in such a way that the net earnings from interest is maximized within the overall risk-preference (present and future) of the institutions. The ALM functions extend to liquidly risk management, management of market risk, trading risk management, funding and capital planning and profit planning and growth projection.
Benefits of ALM – It is a tool that enables bank managements to take business decisions in a more informed framework with an eye on the risks that bank is exposed to. It is an integrated approach to financial management, requiring simultaneous decisions about the types of amounts of financial assets and liabilities – both mix and volume – with the complexities of the financial markets in which the institution operates.
RBI is considering replacement of the existing system of settlement of payment on the basis of physical cheques by a new procedure called “ Cheque Truncation System” (CTS). It is an online image-based cheque clearing system where cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting bank branch and transmitted electronically eliminating the actual cheque movement.
CTS is protected by a comprehensive PKI-based security architecture which incorporates basic security and authentication controls such as dual access control, user ID and passwords with crypto box and smart card interfaces.
Shorter clearing cycle.
Superior verification and reconciliation process
No geographical restrictions as to jurisdiction
Operational efficiency for banks and customers alike
Reduction in operational risk and risks associated with paper clearing
CTS is Initially to be taken up as a Pilot Project in NCR before extending to the rest of the country.
National informatics Centre (NIC) would develop software in consultation with RBI and CGA by September 2006.
NIC would study and suggest mode of transmission of data from banks and ensure security system for tamper free data transfer.
NIC would provide a uniform procedure for adoption by Government Departments for archiving the cheque images.
The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently. Banks should frame their KYC policies incorporating the following four key elements:
Customer Acceptance Policy;
Customer Identification Procedures;
Monitoring of Transactions; and
Customer Identification Procedure
Features to be verified and documents that may be obtained from customers
Accounts of individuals
Legal name and any other names used
Correct permanent address
(i) Passport (ii) PAN card (iii) Voter’s Identity Card (iv) Driving licence
(v) Identity card (subject to the bank’s satisfaction) (vi) Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of bank
(i) Telephone bill (ii) Bank account statement (iii) Letter from any recognized public authority
(iv) Electricity bill (v) Ration card
(vi) Letter from employer (subject to satisfaction of the bank)
( any one document which provides customer information to the satisfaction of the bank will suffice )
Accounts of companies
Name of the company
Principal place of business
Mailing address of the company
(i) Certificate of incorporation and Memorandum & Articles of Association (ii) Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account (iii) Power of Attorney granted to its managers, officers or employees to transact business on its behalf (iv) Copy of PAN allotment letter (v) Copy of the telephone bill
Accounts of partnership firms
Names of all partners and their addresses
Telephone numbers of the firm and partners
(i) Registration certificate, if registered (ii) Partnership deed (iii) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf (iv) Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses (v) Telephone bill in the name of firm/partners
Accounts of trusts & foundations
Names of trustees, settlers, beneficiaries and signatories
Names and addresses of the founder, the managers/directors and the beneficiaries
(i) Certificate of registration, if registered (ii) Power of Attorney granted to transact business on its behalf (iii) Any officially valid document to identify the trustees, settlors, beneficiaries and those holding Power of Attorney, founders/managers/ directors and their addresses (iv) Resolution of the managing body of the foundation/association (v) Telephone bill
Transfer – any amount of Rs. 1, 00,000 and above within 2 Hours to Any Bank. The RTGS system is primarily for large value transactions. The minimum amount to be remitted through RTGS is Rs.1 lakh. There is no upper ceiling for RTGS transactions.
RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a “real time” and on “gross” basis.
This is the fastest possible money transfer system through the banking channel.
Settlement in “real time” means payment transaction is not subjected to any waiting period.
The transactions are settled as soon as they are processed.
Information Needed for RTGS.
Amount to be remitted.
Account number which is to be debited.
Name of the beneficiary bank.
Name of the beneficiary customer.
Account number of the beneficiary customer.
Sender to receiver information, if any.
The IFSC code of the receiving branch.