JAIIB/CAIIB Preparation Guidance

Dear Jaiib/Caiib Aspirants ,


Hai to everyone.you have choosen the right path i.e entering into  banking industry .For climbing of

ladder in banking you need to clear some exams namely JAIIB/CAIIB which are treated as backbone

for promotions in future in addition you will get increment once these exams are cleared.

For clerks you will have two increments in you basic

For officer one increment in there basic


Firstly these exams are conducted by IIBF which is governing body for these exams.You need to get

membership from the institute by paying fees, later you need to pay exam fees separately.Generally

exams will be conducted twice in year month of May and November

Once you pay the fee for jaiib, you have to complete the three subjects in four attempts ie two slots.


The subjects in Jaiib are as follows

1.Principles and Practices of banking

2.Accounts and finance for bankers

3.legal and regualtory Aspects of banking


Recently syllabus is changed for Jaiib i will provide you the Module wise notes in my blog.


Firstly I will start with Principles and Practices of Banking Module A followed by next Modules and

so on......



                                                              MODULE A: 

                                              1.  INDIAN FINANCIAL SYSTEM

• In  general financial system follows some structure which mobilize the money from the area where there is a surplus and allocate or distribute to the needy.
• Financial system means SAVINGS   -----------> Investments.
• Investors --------- Financial system (Intermediates)----------- Spenders
• Examples of FI's are Banks,Financial Institutions, Mutual Funds

      Financial Markets are classified into Money Market, Debt Market, Forex Market, Capital Market

      Debt Market classified as Govt Sec and Bonds

    

      Govt securities may be state govt and central govt

      Bonds may be FI bonds, PSU bonds, Corporate securities

      Money Market  are classified as call/notice,T.bills,Term Money,CD, ICD, CP, Repo ,Commerical       Bills

     Roles Played by Central  Banking Authority:  Two important Roles

• Monetory Control includes controlling inflation and banking supervision and used CRR and SLR
• Prime rates are controlled by bank rate repo rate CRR SLR
• it acts lender of last resort
• helps in efficient payment and settlement system
• Dept of supervision of rbi will look after commercial banks in india

     Commercial banks means public sector banks foreign banks old and new private sector banks.

     They accept the deposits from the public for the purpose of lending.

     There are non banking financial institutions who accepts deposits from the public and also do the        lending. They are governed by RBI and doesnot require license to operate.

    Primary Dealers:

    They deal with primary and secondary markets.They will be engaged in Govt securities and also         play an important role in strengthening of  govt securities market.

   Financial Institutions are under offsite and  onsite surveillance of rbi. FI provide long term funds to    industry and agriculture.

   To help rural based industries cooperative banks have come into existence.Urban Cooperative  are      controlled by State govt and Rbi other cooperative banks are controlled by NABARD and State          Govt

   Central bank maintain accounts and deposits of government and carry out their cash management        through issue of bonds and Treasury Bills

   As per sec 42(1) of rbi act 1934 CRR is mandatory deposit that should be maintained by                      commercial banks. it is the percentage of Net Demand and Time liabilites

  SLR should be in the form of government securities ie gold cash. The ratio of liquid assets to  demand and time liabilities is known as Statutory Liquidity Ratio. The increase or decrease in the  CRR and SLR contracts or expands credit creation

  All securities quoted on stock exchanges and freely bought and sold on these exchanges can be           issued only after obtaining approval of the capital market regulator viz., SEBI.
  

 A stock exchange is for sale and purchase of securities on behalf of investors. They provide clearing house facilities for netting of payments and securities delivery. Clearing houses guarantee all payments and deliveries. Securities include equities, debt and derivatives.

Brokers approved by the capital market regulator can operate on the stock exchange. Brokers perform the job of intermediating between buyers and sellers of securities.

Companies wishing to raise equity or debt through stock exchanges have to approach a capital market regulator with the prescribed applications and a *proforma prospectus for permission to raise equity and debt and to get them listed on a stock exchange.

Merchant banks undertake a number of activities such as undertaking the issue of stocks, fund raising and management. They also provide advisory services and counsel on mergers and acquisitions etc. They are licensed by the capital market regulators.

FIIs are foreign-based funds authorised by the Capital Market Regulator to invest in the Indian equity and debt market through stock exchanges.

Depositories hold securities in demat form (as opposed to physical form), maintain accounts of depository participants who, in turn, maintain sub-accounts of their customers. On instructions of the stock exchange clearing house, supported by documentation, a depository transfers securities from the buyers to sellers accounts in electronic form.

A mutual fund is a form of Collective Investment that pools money from investors and invests in Stocks, Debt and other Securities. It is a less risky investment option for an individual investor. Mutual funds require the regulators approval to start an asset management company (the fund) and each scheme has to be approved by the regulator before it is launched.

Registrars maintain a register of share and debenture holders and process share and debenture allocation, when issues are subscribed

Regulator for Insurance business, both general and life assurance. Regulates all aspects of insurance business, including licensing of insurance companies, framing regulations about the conduct of business and supervising all insurance activities in the country etc.

Multi commodity exchange in india started in Nov 2003 it is the first listed exchange in india


                                                  2   BANKING REGULATION
 

•  Banking system in India is regulated by the Reserve Bank of India as the central banking authority in  the country.
• In India  the banking system is regulated by the Reserve Bank of India, in terms of the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949.
• The Reserve Bank of India (RBI) was constituted under the Reserve Bank of India Act, 1934 and started functioning with effect from 1 April, 1935
• RBI is a state owned institution under the Reserve Bank (Transfer of Public Ownership) of India Act, 1948. This Act empowers the Union Government, in consultation with the Governor of the RBI, to issue such directions to RBI as considered necessary in public interest. The Governor and four Deputy Governors of RBI are appointed by the Union Government. The control of the RBI vests in the Central Board of Directors, that comprises the Governor, four Deputy Governors and 15 Directors nominated by the Union Government. 
• The main objectives of the RBI are contained in the preamble of the RBI Act, 1934. It reads 'Whereas it is expedient to constitute a Reserve Bank for India to regulate the issue of bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage'. The main objectives of RBI may be stated as follows in specific terms:
  I. To maintain monetary stability such that the business and economic life of the country can deliver the welfare gains of a mixed economy,
  II. To maintain financial stability and ensure sound financial institutions so that economic units can conduct their business with confidence,
  III. To maintain stable payment systems, so that financial transactions can be safely and efficiently executed,
  IV.To ensure that credit allocation by the financial system broadly reflects the national economic priorities and social concerns,
  V.  To regulate the overall volume of money and credit in the economy to ensure a reasonable degree of price stability,
  VI. To promote the development of financial markets and systems to enable itself to operate/regulate efficiently.

The following are the functions perfromed by RBI

• Monetary Authority
• Issuer of Currency
• Banker and Debt Manager to government
• Bankers to bank
• Regulatory of banking system
• Manager of foreign exchange
• Maintaining Financial stability
• controlling payment systems

Urban cooperative banks are  included in the second schedule of  rbi based on following conditions

• DTL should be greater than 750 cr
• Min CRAR 12%
• profit should be for continuous previous three years
• Gross NPA not exceeding 5%
• CRR and SLR requirement 

 3   RETAIL BANKING WHOLESALE BANKING INTERNATIONAL BANKING ADR GDR                                                            AND PARTICIPATORY NOTES