Important Bank PO Exam - Latest Committees

Committee Set Up On Uttarakhand Floods : The committee will be headed by AK Ganju (Chairman, Ganga Flood Control committees Commission, Patna).

JS Mathur committee : to revise Newspaper Advertisement Rates. The committee will also look into different parameters on the basis of which advertisements are issued. JS Mathur is the Additional Secretary in the Ministry of Information and Broadcasting.

K. Ratna Prabha : Committee on indecent depiction of women in media.

Mukul Mudgal Committee: looking into US giant Walmart’s lobbying activities to enter India

Mukul Mudgal Committee: The Union Sports Ministry on 6 April 2011 formed a committee, headed by Justice Mukul Mudgal, retired Chief Justice of the High Court of Punjab and Haryana to fine-tune the draft National Sports Development Bill. The committee will also include badminton legend Prakash Padukone and former sprinter Ashwini Nachappa, who is also the Vice-President of Cleansports India.

MBN Rao Committee: The government has formed a six-member committee to draw up a blueprint for setting up India’s first women’s bank.

SK Srivastava Committee: The Central Government has constituted a panel to formulate a policy on public-private partnership framework with state-owned Coal India Ltd. as one of the partners to increase coal output. The development comes close on the heels of Finance Minister P. Chidambaram stating in his budget speech that there was a need to devise such a policy to reduce the country’s increasing dependence on imported coal.

K M Chandrasekhar Committee – The Securities and Exchange Board of India (Sebi) has set up a committee under former cabinet secretary KM Chandrashekhar to standardise and unify the rules regarding foreign investments made under various routes into the capital markets.

According to Sebi chairman UK Sinha, the committee will simplify and standardise the norms regarding investments into the capital markets by all overseas entities such as foreign institutional investors, foreign venture capital investors (FVCIs), qualified financial/ institutional investors (QFIs) and NRIs, and also strengthen surveillance over them.

Arvind Mayaram Committee – The Arvind Mayaram committee, set up to liberalise the country's foreign direct investment (FDI) policy, has recommended nine sectors be categorised as those where 'Indian ownership' and 'control' will be mandatory.

 Janakiraman Committee – To investigate the security transactions of the bank

Sitakant Mahapatra committee- for inclusion of Bhojpuri language in eighth schedule of constitution

N R Narayana Murthy committee – for evaluation of corporate sector participation in Higher Education.

C Rangarajan committee – The Prime Minister-appointed Rangarajan Committee has suggested mandating a price of domestically-produced natural gas at an average of international hub prices and cost of imported LNG instead of the present mechanism of market discovery.

- for poverty scale estimates in the country

MB Shah committee – The Government has extended the tenure of the Justice M. B. Shah Commission, which is enquiring into illegal iron ore and manganese ore mining, giving it time until October to submit its final report.

N Rangachary committee – to examine taxation policies for I.T. sector. the Prime Minister’s Office (PMO) said that a four-member panel headed by former CBDT (Central Board of Direct Taxes) Chairman N. Rangachary would hold consultations with stakeholders and government departments concerned to finalise the approach to taxation of ‘Development Centres’ and suggest appropriate measures.

Parthasarathi Shome committee – Parthasarathi Shome committee formed to look into the controversial GAAR (General Anti-Avoidance Rules) provisions and address the thorny issues to the satisfaction of foreign investors and all other stakeholders

Deepak Parekh committee – for Financing Infrastructure sector 

Naresh Chandra committee – 14 member task force on security issues 

Bhandari Committee – Reconstruction of RRBs 

RS Gujral Committee – suggest measures to boost MSME exports

Basel III - 3 Pillars

The Basel  III  Guidelines are based upon 3 very important aspects which are referred as 3 pillars of the Basel III .

• Minimum Capital  Requirement
• Supervisory review Process
• Market Discipline

First Pillar:  Minim um  Capital Requirement

Minimum capital requirements based on market, credit and operational risk to (a) reduce risk of failure by cushioning against losses and (b) provide continuing access to financial markets to meet liquidity needs, and (c) provide incentives for prudent risk management

Minimum capital requirement is 10.5% under Basel III which has been increased from 8% under Basel - II

Second Pillar:  Supervisory  Review Process

The second pillar i.e. Supervisory Review Process is basically intended to ensure that the banks have adequate capital  to support all the risks associated in their businesses. In India , the RBI  has issued the guidelines to the banks that they should have an internal supervisory process which is called ICAAP or Internal Capital Adequacy Assessment Process. With this tool  the banks can assess the capital adequacy in relation to their risk profiles as well as adopt strategies for maintaining the capital levels. 

Apart from that, there is another process stipulated by RBI which is actually the Independent assessment of the ICAAP of the Banks. This is called SREP or Supervisory  Review and Evaluation Process.The independent review and evaluation may suggest prudent measures and supervisory actions whatever is needed.

Third Pillar:  Market Discipline

The idea of the third pillar is to complement the first and second pillar. This is basically a discipline followed by the bank such as disclosing its capital  structure, tier-I  and Tier –II  Capital  and approaches to assess the capital  adequacy.

Narasimham Committee on banking Sector Reforms

First Narasimham  Committee was  formed  in  1991 while Second Narasimham  Committee  was established in 1998 and  both  committee were  related to Banking  Sector  Reforms.

Recommendation of First Narasimham Committees were -

• Reduction in the Statutory  Liquidity  Ratio (SLR) - The  Narasimham  Committee  had  recommended  that the SLR should  be reduced  to 25%  over  the period  of time.

• Reduction in the Cash  Reserve  Ratio (CRR) - Committee recommended  that CRR  should be reduced  to  10% over the period  of   time.

• Redefining  the priority  sector - Committee redefined priority sectors which can be boosted through credit extension. It also mentioned that priority sectors should include Marginal  farmers, Tiny  sector Small  business  and  transport   operators, village  and  Cottage  Industries.  Narasimham  Committee  recommended  that   there  should  be  a target of minimum 10% of the aggregate credit fixed  for the Priority Sector .

• Deregulation of the Interest   Rates.
• Asset   Classification and defining  the Non  Performing  Assets.
• Improve  transparency  in  the  banking  system
• Tribunals  for  recovery  of Loans.
• Tackling  doubtful  debts
• Restructuring  the  banks
• Allow  entry  of the new  private  Banks

Demand Deposits

1) Savings Account: This type of account is most popular and commonly used account by individuals. The main objective of saving account is to promote savings. This account provides cheque facility and money can be withdrawn from the account. This account also fetches nominal interest on the amount of money deposited. Saving account is of continuing nature and there is no maximum period of holding. At present, the rate of interest ranges between 4% to 6% per annum in India. The interest rates vary as per the amount of money deposited (lying) in the saving bank account, scheme opted, and its maturity range. It is also subject to current trend of banking policies in a country. Though banks can independently decide saving interest rate, banks have to follow RBI guidelines hence it is called that Saving bank interest is regulated by RBI.

Features of Saving Account

1. As depositors can claim/demand their deposits any time they want, Saving account is referred as "Demand Deposits" of banks
2. There is no restriction on the number and amount of deposits. However, in India, mandatory PAN (Permanent Account Number) details are required to be furnished for doing cash transactions exceeding र50,000.
3. Withdrawals are allowed subject to certain restrictions.
4. A minimum amount has to be kept on saving account to keep it functioning.
5. Loan against savings account cannot be provided.
6. As per RBI's manual of instructions, savings deposit account cannot be opened by banks among others in the name of government departments, municipal corporations/committees, political parties and any trading, business or professional concern (like firms of Chartered Accountants-and Lawyers) whether such a concern is a proprietary, partnership firm, company or association.

2) Current Account: This account is used mainly by business houses and is not for investment. The purpose of this account is to provide flexible liquidity and hence there is no limit on the amount of money that can be deposited/withdrawn on a single day or on the number of deposits/withdrawals within a certain period of time. No interest is paid on these accounts and bank actually levies service charges on such accounts.  It is also known as Demand Deposit Account.

Bank charges interest on the short-term funds borrowed (Over-draft facility) from the bank against current account.

Nationalisation of banks

Steps taken before Nationalization of banks

1   The Reserve Bank of India (Established in April, 1935) was nationalized on 1 January 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948.  In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India". (The Government of India came up with the Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No.23 of 1965).

3.   The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.

Indira Gandhi, the then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization. The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then prime minister. It nationalized 14 banks then. These banks were mostly owned by businessmen and even managed by them.

Before the steps of nationalization of Indian banks, only State Bank of India (SBI) was nationalized. It took place in July 1955 under the SBI Act of 1955. Nationalization of Seven State Banks of India (formed subsidiary) took place on 19th July, 1960.

After the nationalisation of banks in India, the branches of the public sector banks rose to approximately 800% in deposits and advances took a huge jump by 11,000%.

1955 : Nationalisation of State Bank of India.

1959 : Nationalisation of SBI subsidiaries.

1969 : Nationalisation of 14 major banks.

1980 : Nationalisation of seven banks with deposits over 200 crores.

In her broadcast to the nation on the eve of nationalisation of the fourteen leading Indian banks, she summed up the objectives of the nationalisation as, "The present decision to nationalise major banks is to accelerate the achievements of our objectives.

The purpose is to expand bank credit to priority areas which have hitherto been somewhat neglected. It also includes,

(i) The removal of control by a few

(ii) Provision of adequate credit facilities to agriculture, small industry and exports

(iii) The giving of professional bent to bank management

(iv) The encouragement of new classes of entrepreneurs, and

(v) The provision of adequate training as well as reasonable terms of service for bank staff ".

The second phase of nationalisation of Indian banks took place in the year 1980. Seven more banks were nationalised with deposits over 200 crores. Till this year, approximately 80% of the banking segment in India were under Government ownership.