CBM NOTES

1. Qualities required for a successful bank manager?

ANSWER:
Becoming a successful manager is not an easy task. It is not only a matter of
making the right decisions for your company, but you need to be a good leader. This
means that you need to know how to encounter and handle various problems.
Knowledge is necessary but more important is a good vision on the future of your
company and the ability to create a good working team. The most important qualities
that a successful manager needs are:
1. Planning
A manager wants to reach some goals. When he wants to succeed he needs a
visualized plan for the short time, but this is more important for the long term. A plan
consists of investments which can be useful for the long term. Maybe these
investments will have a negative impact on the profit of the company the first years but
will result in a higher profit and a rise in the turnover.
2. A good teacher
A manager needs a good team. The manager knows which goals need to be
reached. Communication with your team is important. Teach your employees what
their tasks and responsibilities are and give them the chance to share their ideas to
work on the most efficient way. Giving commands in a respectful way is the key to
succeed.
3. A good listener
Working with a team means that you need to understand the attitudes of your
employees. Try to understand their motivations and in case of problems try to find
solutions for their problems. A good listener is always someone who has an open mind
for suggestions of employees of his team.
In the case one of more of your employees disagree your decision it is important
you can listen to them and come to an acceptable compromise. Managers need to treat
his or her employees equal no matter the race, religion, age, sex or any other factor.
4. Delegation
A manager is the leader of the company and is responsible for all the work
which will happen in the company. A manager needs to delegate some tasks to his
employees but he can't give away the ultimate responsibility.
He will build a staff team with different responsibilities and these staff members
need to care for the final result of their tasks. Communication is important and when
the tasks are done there is need of conversation and discussion.
5. Self confidence
Believe in yourself and your capacities. Don't become nervous when something
fails and be optimistic for your next plans. Try to avoid stress and don't fear that you
can't reach your goals.
6. Motivation of your employees
A manager needs to show respect to his employees. They want that their work
will be appreciated. Figure out a reward system to motivate your employees. A good
idea is to determine what kind of rewards your employees respond to; maybe some
bonuses if they reach goals or a kind of classification so that they can get more
responsibility and receive more money.
7. Flexibility and patience
A good manager needs to give commands about the necessary tasks but it is
important that you are flexible with your team. Give your employees the possibility to
give their opinion how the work will be executed. Flexibility means that there is a
possibility of making an agreement. Don't take an attitude that you are the boss and
only you know the right decisions. Give your employees the necessary time for their
work. Patience is the key to have success!
A successful manager is the motor of a company. He needs to work hard and to
figure out where a good team work is possible. Honesty and teamwork where everyone
has his positive input is the key to success. A successful manager works together with
the team like the proverb said "there is no I in the team". Each member of the team is
necessary to be successful and good managers realize the importance of teamwork.

8. Dealing with changes
There are several managers who exactly know the whole working process. They are
doing things almost automatically. The true manager should be flexible and adaptable.
He is able to react quickly when facing any obstacles. Stress shouldnt be a factor to
prevent him from taking the right decisions.
9. Domain knowledge
A good manager has to understand what kind of process he is managing. How his team
members are working. What kind of tasks they perform. This skill is not as important
as the others but without it, in some cases, the team and the manager will never work at
full capacity, using the whole potential due to lack of mutual understanding.

2. Explain the credit control techniques adopted by RBI to regulate the
commercial banks in India?
Ans. A) MONETARY POLICY OF RBI :-
The Monetary Policy of RBI is not merely one of credit restriction, but it has also the
duty to see that legitimate credit requirements are met and at the same time credit is not
used for unproductive and speculative purposes RBI has various weapons of monetary
control and by using them, it hopes to achieve its monetary policy.

I) General I Quantitative Credit Control Methods :-

In India, the legal framework of RBIs control over the credit structure has
been provided Under Reserve Bank of India Act, 1934 and the Banking
RegulationAct, 1949. Quantitative credit controls are used to maintain proper
quantity of credit o money supply in market. Some of the important general credit
control methods are:-

1. Bank Rate Policy :-
Bank rate is the rate at which the Central bank lends money to the commercial
banks for their liquidity requirements. Bank rate is also called discount rate. In other
words bank rate is the rate at which the central bank rediscounts eligible papers (like
approved securities, bills of exchange, commercial papers etc) held by commercial
banks.
Bank rate is important because its is the pace setter to other marketrates of
interest. Bank rates have been changed several times by RBI to control inflation
and recession. By 2003, the bank rate has been reduced to 6% p.a.

2. Open market operations :-
It refers to buying and selling of government securities in open market in order to
expand or contract the amount of money in the banking system.This technique is
superior to bank rate policy. Purchases inject money into the banking system while sale
of securities do the opposite. During last two decades the RBI has been undertaking
switch operations. These involve the purchase of one loan against the sale of another
or, vice-versa. This policy aims at preventing unrestricted increase in liquidity.

3. Cash Reserve Ratio (CRR)
The Gash Reserve Ratio (CRR) is an effective instrument of credit control. Under
the RBl Act of, l934 every commercial bank has to keep certain minimum cash
reserves with RBI. The RBI is empowered to vary the CRR between 3% and 15%. A
high CRR reduces the cash for lending and a low CRR increases the cash for lending.
The CRR has been brought down from 15% in 1991 to 7.5% in May 2001. It further
reduced to 5.5% in December 2001. It stood at 5% on January 2009. In January 2010,
RBI increased the CRR from 5% to 5.75%. It further increased in April 2010 to 6% as
inflationary pressures had started building up in the economy. As of March 2011, CRR
is 6%.

4. Statutory Liquidity Ratio (SLR)
Under SLR, the government has imposed an obligation on the banks to ,maintain a
certain ratio to its total deposits with RBI in the form of liquid assets like cash, gold
and other securities. The RBI has power to fix SLR in the range of 25% and 40%
between 1990 and 1992 SLR was as high as 38.5%. Narasimham Committee did not
favour maintenance of high SLR. The SLR was lowered down to 25% from
10
th
October 1997.It was further reduced to 24% on November 2008. At present it is
25%.

5. Repo And Reverse Repo Rates
In determining interest rate trends, the repo and reverse repo rates are becoming
important. Repo means Sale and Repurchase Agreement. Repo is a swap deal
involving the immediate Sale of Securities and simultaneous purchase of those
securities at a future date, at a predetermined price. Repo rate helps commercial banks
to acquire funds from RBI by selling securities and also agreeing to repurchase at a
later date.

Reverse repo rate is the rate that banks get from RBI for parking their short term
excess funds with RBI. Repo and reverse repo operations are used by RBI in its
Liquidity Adjustment Facility. RBI contracts credit by increasing the repo and reverse
repo rates and by decreasing them it expands credit. Repo rate was 6.75% in March
2011 and Reverse repo rate was 5.75% for the same period. On May 2011 RBI
announced Monetary Policy for 2011-12. To reduce inflation it hiked repo rate
to,7.25% and Reverse repo to 6.25%

II) SELECTIVE / QUALITATIVE CREDIT CONTROL METHODS :-

Under Selective Credit Control, credit is provided to selected borrowersfor selected
purpose, depending upon the use to which the control try to regulate the quality of
credit - the direction towards thecredit flows.
The Selective Controls are :-


1. Ceiling On Credit
The Ceilingon level of credit restricts the lending capacity of a bank to grant
advances against certain controlled securities.

2. MarginRequirements :-
A loan is sanctioned against Collateral Security. Margin means that proportion
of the value of security against which loan is not given. Margin against a particular
security is reduced or increased in order to encourageor to discourage the flow of credit
to a particular sector. It varies from 20% to 80%. For agricultural commodities it is as
high as 75%. Higher the margin lesser will be the loan sanctioned.

3. Discriminatory Interest Rate (DIR)
Through DIR, RBI makes credit flow to certain priority or weaker sectors by
charging concessional rates of interest. RBI issues supplementary instructions
regarding granting of additional credit against sensitive commodities, issue of
guarantees, making advances etc. .

4. Directives:-
The RBI issues directives to banks regarding advances. Directives are regarding
the purpose for which loans may or may not be given.

5. Direct Action
It is too severe and is therefore rarely followed. It may involve refusal by RBI to
rediscount bills or cancellation of license, if the bank has failed to comply with the
directives of RBI.

6. Moral Suasion
Under Moral Suasion, RBI issues periodical letters to bank to exercise control over
credit in general or advances against particular commodities. Periodic discussions are
held with authorities of commercial banks in this respect.
3. What is Internet Banking & Mobile Banking? Explain its Merits and Demerit?
Ans: FEATURES OF ONLINE BANKING
1. Electronic Bill Notification
With electronic bills, your merchant (credit card company, gas company, electric
company, etc.) sends an electronic bill to your bank. You can set it up to pay
automatically or notify you for approval. This can be particularly good for people
who are on the road because it reduces the amount of physical mail you have to
somehow get read or forwarded to you.
2. Online Check Images
Most banks will show you an image of the check, which makes it really easy to
balance your account if you cant remember what a particular payment was for.
(Ideally, you should minimize the number of physical checks you write to reduce
fraud.)
3. Online Deposit Slip Images
Most banks just record the total with no image. It will let you see an image of
each deposit slip. Having the images available can be very helpful if you ever have
to prove something for tax purposes or need to remember where that $2581 deposit
came from.
4. Reporting Tools
Most banks offer basic reporting tools that will let you see how much you have
spent in each category youve created. This may not be an issue if you use desktop
money management software, but it still can be handy if you are traveling and want
to see how much youve paid on your mortgage over the past 12 months.
5. Convenient Deposit Methods
Since you may not be anywhere near the physical location of your bank, make
sure you understand how to deposit money. Payroll can be set up on direct deposit,
but there will be times when you need to deposit checks. Does the bank provide
postage paid envelopes and deposit slips? Some banks work with FedEx or UPS
stores to allow you to send in a deposit overnight for free.
6. Integration with Desktop Software
If you use Microsoft Money, Quicken or something similar, youll want to make
sure your bank supports it. Make sure you understand if downloading transactions
require you to login and manually download a file, or if your money management
software can directly connect and download new transactions. If you are using
Quicken on a Mac, make sure the bank is paying Quickens extortion fee so the files
will work with Mac users.
7. Free Money Transfers
Be sure to consider how easy it is to move money in and out of the account. You
should be able to set up links with your accounts from other institutions to transfer
money back and forth as necessary. Make sure you understand what type of fees are
associated with these transfers. Good banks should allow a certain number of
transfers per month with no fee.
8. Security Balanced with Convenience
Some banks spend so much effort trying to keep things secure that youll find
yourself automatically logged out of their website while you try to balance your
account. You want security but you dont want it to get in the way of you doing your
banking. Also check into what type of additional security features are available. For
example, some banks will offer you an RSA keychain with a number that changes
every 60 seconds. In addition to your password, you will need the number from that
key in order to get access to your account.


Advantages of online banking:
Convenience: Unlike your corner bank, online banking sites never close; they're
available 24 hours a day, seven days a week, and they're only a mouse click away.
Ubiquity: If you're out of state or even out of the country when a money problem
arises, you can log on instantly to your online bank and take care of business, 24/7.
Transaction speed: Online bank sites generally execute and confirm transactions at
or quicker than ATM processing speeds.
Efficiency: You can access and manage all of your bank accounts, including IRAs,
CDs, even securities, from one secure site.
Effectiveness: Many online banking sites now offer sophisticated tools, including
account aggregation, stock quotes, rate alerts and portfolio managing programs to
help you manage all of your assets more effectively. Most are also compatible with
money managing programs such as Quicken and Microsoft Money.
Disadvantages of online banking:
Start-up may take time: In order to register for your bank's online program, you
will probably have to provide ID and sign a form at a bank branch. If you and your
spouse wish to view and manage your assets together online, one of you may have
to sign a durable power of attorney before the bank will display all of your holdings
together.
Learning curve: Banking sites can be difficult to navigate at first. Plan to invest
some time and/or read the tutorials in order to become comfortable in your virtual
lobby.
Bank site changes: Even the largest banks periodically upgrade their online
programs, adding new features in unfamiliar places. In some cases, you may have to
re-enter account information.
The trust thing: For many people, the biggest hurdle to online banking is learning
to trust it. Did my transaction go through? Did I push the transfer button once or
twice? Best bet: always print the transaction receipt and keep it with your bank
records until it shows up on your personal site and/or your bank statement.












Mobile Banking
Mobile banking is the performing of finance related functions on a mobile device like a
Smartphone or tablet. With the use of a mobile device, the user can perform mobile
banking via call, text, website, or app.
There are both advantages and disadvantages of mobile banking some of which have
been highlighted below.
Advantages
It utilizes the mobile connectivity of telecom operators and therefore does not
require an internet connection.
With mobile banking, users of mobile phones can perform several financial
functions conveniently and securely from their mobile.
You can check your account balance, review recent transaction, transfer funds, pay
bills, locate ATMs, deposit cheques, manage investments, etc.
Mobile banking is available round the clock 24/7/365, it is easy and convenient
and an ideal choice for accessing financial services for most mobile phone owners
in the rural areas.
Mobile banking is said to be even more secure than online/internet banking.
Disadvantages
Mobile banking users are at risk of receiving fake SMS messages and scams.
The loss of a persons mobile device often means that criminals can gain access to
your mobile banking PIN and other sensitive information.
Modern mobile devices like Smartphone and tablets are better suited for mobile
banking than old models of mobile phones and devices.
Regular users of mobile banking over time can accumulate significant charges
from their banks.