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How to read the mutual fund offer documentsEvery mutual fund commercial ends with a few words of caution that read: Mutual Funds are subject to market risks - this bit is absolutely true and almost every investor knows this. However the latter part of the sentence - Please read the scheme related document carefully before investing - is easier said than done.The scheme related offer documents (ODs), can run in to tens of pages and carry legal and financial jargon that can put a retail investor off. That is why most of them rely on financial advisers and bank agents for recommending mutual fund schemes. However, with loads of information (sometimes contradictory) coming through various channels, it helps to be aware of what one should expect from the investment.When reading the ODs, do go through the following important aspects that will stand you in good stead:* Investment Objectives: Investment policies and objectives form the mainstay of the ODs. Scanning through these will enlighten the investor about the goals of the specific funds, their expected composition of the underlying portfolio. Investors can also get a fair idea of the strategies that the fund manager will use to achieve the said objectives. Match these objectives with your own expectations about income or long-term capital appreciation as well as your risk appetite.* Past Performance: Some of the important aspects to look at are the inception date of a scheme, the Assets Under Management (AUM) and its past performance. Investors should compare this with similar funds in the market as well as against the industry benchmark. Ideally, opt for schemes that have offered consistent returns over a long term. However, never use this information to predict future returns because - past performance is not an indicator of future returns.* Risk factors: The OD specifies the various types of risks that the scheme would be exposed to. Make an informed decision based on your own outlook and understanding of the markets. Study and understand these so that you can choose the right scheme as per your risk taking ability. A word of caution here - don't be overwhelmed by the various types of risks. Mutual fund companies are stipulated by law to highlight every type of financial risk you may be exposed to if you invest in a particular scheme.* Fees, Loads and Taxes: Read the ODs to learn about the minimum investments, charges applicable and services available to you. Some of the common charges applicable are Entry and Exit Loads, Transaction Charges, Security Transaction Tax (STT), various charges for managing the fund - together called the Total Expense Ratio (TER). It is important to know that all mutual funds do not have the same type of charges and that all these charges are regulated by the Securities and Exchange Board of India (SEBI).* Key Personnel/Fund Managers: The ODs also give you significant insights about the credentials of the fund managers, their experience and investment style.Let us now take a look at the various types of documents that makeup the ODs:1. SID [Scheme Information Document]: This is a compendium of all the scheme related information. It will list all the MF schemes available to the investor.2. SAI [Statement of Additional Information]: A supplementary document to a mutual fund's prospectus that contains additional information about the fund and includes further disclosure regarding its operations. This is also, known as "Part B" of the fund's registration statement.3. KIM [Key Information Memorandum]: The KIM sets forth the information, which a prospective investor ought to know before investing.4. Fund Fact Sheet: Self-explanatory, this document is a data mine. It provides a thorough analysis of the fund with comprehensive financials, graphs and other research which help investors gain insight into the fund's performance under varying market conditions.Source - How to read the mutual fund offer documentsOFFER DOCUMENTForm NS is the Standard Offer Document for schemes launched by Mutual Funds under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. All Mutual Funds should use Form NS for filing an offer document pursuant to sub regulation (1) of Regulation 28 of the SEBI (Mutual Funds) Regulations, 1996, (Regulations) along with filing fees as specified in the Second Schedule to these Regulations.The purpose of a scheme offer document is to provide essential information about the scheme in a way that will assist investors in making informed decisions about whether to purchase the units being offered. Since investors who rely on the offer document may not be sophisticated in legal or financial matters, care should therefore be taken to present the information in the offer document in simple language and in a clear, concise and easily understandable manner.The Standard Offer Document enumerates the minimum disclosure requirements to be contained in the offer document of a scheme. A Mutual Fund is free to add any other disclosure, which in the opinion of the Trustees of the Mutual Fund (Trustees) or the Asset Management Company (AMC) is material for the investor, provided that such information is not presented in an incomplete, inaccurate or misleading manner. Care should be taken to ensure that inclusion of such information does not, by virtue of its nature, or manner of presentation, obscure or impede understanding of any information that is required to be included under the Standard Offer Document.The Standard Offer Document prescribes only the nature of the disclosures that should be contained under various heads in the offer document of a scheme, and is not intended to describe the layout or the language to be contained therein, with the exception of Items I, II and III, which must appear in the same numerical order in the offer document of a scheme. If the Mutual Fund desires, it may include Item III as a part of Item I in the offer document.The instructions for filling up the Standard Offer Document form are given under each head.1. THE COVER PAGEThe cover page is required to contain the following information: (a) The name of the Mutual Fund;(b) The name of the scheme;(c) The type of the scheme;(d) The name of the asset management company;(e) The classes of units offered for sale;The price of units;The name of the guarantor in case of an assured return scheme;(h) Opening, closing and earliest closing date (if any) for the offer; (i) A statement to the effect that (A) the offer document sets forth concisely; the information about the scheme that a prospective investor ought to know before investing; (B) the offer document should be retained for future reference;(j) A statement to the effect that the scheme particulars have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended till date,and filed with SEBI, and the units being offered for public subscription have not been approved or disapproved by the Securities and Exchange Board of India nor has Securities and Exchange Board of India certified the accuracy or adequacy of the offer document.Instructions :The scheme shall not have a name or title which may be deceptive or misleading. If the scheme's name suggests a certain type of investment policy, its name should be consistent with its statement of investment policy.The type of the scheme would mean whether the scheme is a growth scheme, bond scheme, balanced scheme etc. and whether the scheme is open-ended, close-ended, an interval fund etc.In case of an open-ended scheme or a close-ended scheme with a reissue option, the currency of the offer document shall be clearly defined; for example, it should be stated that the offer document will remain effective till a ‘material change’ (other then a change in Fundamental Attributes and within the purview of the offer document) occurs and thereafter the changes shall be filed with SEBI and circulated to the unitholders along with the quarterly/half-yearly reports.(iv)Highlights of the scheme, irrespective of whether they appear on the Cover Page or not, shall make a specific disclosure in case of assured return schemes regarding the guarantee given either by the AMC or by the Sponsor to distribute income at the assured rate, and to redeem the capital invested, to the unitholder. This statement shall be in bold, legible fonts.DEFINITIONSAll terms used in the offer document shall be defined in this Section. Instructions :Language and terminology used in the offer document shall be as provided in the Regulations. Any new term if used shall be clearly defined.All terms shall be used uniformly throughout the text of the offer document e.g. the terms ‘sale price’ and ‘repurchase price’ shall be used uniformly to indicate ‘offer price’ and ‘bid price’ of units.The term ‘scheme’ shall be used uniformly to indicate the different schemes of a Mutual Fund.III. RISK FACTORSThis section shall describe the Risk Factors in the scheme.The scheme shall disclose the following risk factors in addition to scheme specific risk factors, if any, in legible fonts. These risks factors may be peculiar to the Mutual Fund as well as those attendant with specific investment policies and objectives of the scheme.The Standard Risk Factors :Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Mutual Fund will be achieved.As with any investment in securities, the NAV of the units issued under the scheme can go up or down depending on the factors and forces affecting the capital markets.Past performance of the sponsor/AMC/Mutual Fund does not indicate the future performance of the schemes of the Mutual Fund.'XYZ' is the name of the scheme and does not in any manner indicate either the quality of the scheme or its future prospects and returns.Scheme Specific Risk Factors:Scheme specific risk factors arising from the investment objective, the investment strategy and the asset allocation of the scheme;Risk arising from non-diversification, if any;Specific risk factors associated with investing in close-ended schemes (i.e. infrequent trading, possibility of market price of units being at a discount to NAV etc).In respect of assured return schemes, if assurance is till the maturity of the scheme, the risk factor must state that assurance is given on the basis of the guarantee provided by the sponsor/trustee/AMC. Further, the networth and the liquidity position of the guarantor and the source of the guarantee shall be disclosed. In case assurance is for a specific period, the risk factors shall stipulate the following: "These returns are assured only for a specific period by the guarantor. There is no guarantee that such returns may be generated for the remaining duration of the scheme, unless the Mutual Fund proposes to provide assured returns in the future."If the AMC has no previous experience in managing a Mutual Fund, a disclosure to the effect that this is the first scheme being launched under its management.IV. DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANYThe Asset Management Company shall confirm that a Due Diligence Certificate duly signed by the Compliance Officer/Chief Executive Officer/Managing Director/Wholetime Director/Executive Director of the Asset Management Company has been submitted to SEBI, which reads as follows :It is confirmed that :(i) the draft offer document forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time.(ii) all legal requirements connected with the launching of the scheme as also the guidelines, instructions, etc., issued by the Government and any other competent authority in this behalf, have been duly complied with.(iii) the disclosures made in the offer document are true, fair and adequate to enable the investors to make a well informed decision regarding investment in the proposed scheme.(iv) the intermediaries named in the offer document are registered with SEBI and till date such registration is valid.Instructions :With respect to Point (ii) , while submitting the due diligence certificate, the asset management company shall clarify the legal requirements which are yet to be complied with.V. EXPENSESThe description on expenses to be incurred under the scheme shall include a table, furnishing the following information, using the captions provided, in the format illustrated below :A. Unitholder Transaction Expenses or Sales Load :Maximum Sales Load imposed on purchases ______ %(as % of NAV)Sales Load, if any, on issue of units in lieu ______ %of dividends (as % of NAV)Contingent Deferred Sales Load Year 1 ______ %(give yearwise details as % of Year 2 ______ %NAV) Year 3 ______ %Year 4 ______ %Redemption / Repurchase Load ______ %(as % of NAV)Switchover/Exchange Fee ______ % (as % of NAV)Note : Wherever quantitative discounts are involved, this shall be disclosed. The Mutual Fund may charge the load within the stipulated limit of 7% and without any discrimination to any specific group of unitholders. However, any change at a later stage shall not affect the existing unitholders adversely.B. Initial Issue Expenses :(i) For the Present Scheme :Under this head, briefly describe the nature of initial issue expenses for launching the scheme such as Advertising Expenses, Commission to Agents/Brokers, Registrar's Expenses, Printing & Marketing Expenses and Postage & Miscellaneous Expenses. Other expenses, if any, may be specified. The offer document shall disclose that initial issue expenses would be approximately _____% of the resources raised.Estimate the amount that will be available to the scheme for every Rs.100 contributed by the investors.A statement to the effect that total Initial Issue Expenses shall not exceed 6% of the initial resources raised under the scheme, as prescribed in the Regulations, and any excess beyond 6% shall be borne by the Asset Management Company.(ii) Past Schemes : The Mutual Fund shall disclose total issue expenses at actuals for the schemes launched during the last one fiscal year. Expenses borne by the asset management company, if any, shall be disclosed. If no scheme has been launched during the last one fiscal year, the particulars may be provided in respect of the latest scheme launched by the Mutual Fund. Include a brief narration for the reasons for adverse variations if any, between the 'actual expenses' and 'estimated expenses'. C. Annual Scheme Recurring Expenses : (as a % of Average weekly Net Assets) Give a break-up of the recurring expenses chargeable to the scheme in the format illustrated below; however, certain items of expenditure may be clubbed together, if felt necessary by the Mutual Fund to give meaningful information to the investors :-Investment management & Advisory fees ________ %Additional Fees (if any) ________ %Trustee Fees ________ %Custodian Fees ________ %Registrar & Transfer Agent Fees ________ %Marketing & Selling Expenses includingAgents Commission ________ %Brokerage & Transaction Cost pertainingto the distribution of units ________ %Audit Fees ________ % Costs related to investor communications ________ %Costs of fund transfer from location to location________ %Cost of providing account statements anddividend redemption cheques and warrants ________ %Insurance premium paid by the Fund ________ %Winding up costs for terminating the Fund/scheme ________ %Costs of statutory advertisements ________ %Other expenses*TOTAL ANNUAL RECURRING EXPENSES ________ %(* To be specified as permitted under the Regulations)The regulatory limits on Annual Recurring Expenses and Investment Management & Advisory fees in terms of regulation 52 shall be disclosed.Instructions :Immediately after the table provide a brief narrative explaining that the purpose of the table is to assist the investor in understanding the various costs and expenses that an investor in the scheme will bear directly or indirectly. Include, where appropriate, cross-references to the relevant sections of the offer document for more complete descriptions of the various costs and expenses.If a particular caption is not applicable to the scheme of the Mutual Fund, the caption may be omitted from the table in the scheme offer document.Round all Rs. figures to the nearest lakh and all percentages to the nearest hundredth of one percent.List separately the data for schemes launched with two classes of units("load" and "no load") and also schemes launched on a "partial load" basis.Under Unitholder Transaction Expenses (Section V A), "Contingent Deferred Sales Load" includes the maximum contingent deferred sales load, expressed as a percentage of NAV. A tabular presentation, within the larger table, of the range of contingent deferred sales load over time may also be included.Switchover/Exchange Fee includes a maximum fee charged from any switchover of units between different schemes under the same AMC.Under Annual Scheme Recurring Expenses (Section V C), additional fee shall include fee charged, in case of a scheme launched on a 'no load' basis, in accordance with the Regulations.In case of a no-load scheme or where sales load is collected from investors, disclosure of marketing and selling expenses is not required.In case the scheme offers additional benefits by way of insurance, the premium paid and the manner in which the expenses will be met, shall be disclosed.VI. CONDENSED FINANCIAL INFORMATION(a)HISTORICAL PER UNIT STATISTICSSCHEME NAMEYR. 1YR. 2YR. 3NAV at the beginning of the yearNet Income per unitDividends :Transfer to reserves (if any)NAV at the end of the yearAnnualised returnNet Assets end of period (Rs. Crs.)Ratio of Recurring Expenses to net assetsThe information shall be presented schemewise for all the schemes launched by the Mutual Fund during the last three fiscal years (excluding redeemed schemes) in the above comparative columnar form for each of the last three fiscal years. In addition, upto date information for the current fiscal year such as half yearly unaudited results of the schemes shall also be furnished. The latest NAV and annualised return figures updated as of 30 days prior to the launch of the scheme shall be furnished.Instructions :In case a Mutual Fund has launched a scheme which has not completed a full year of operation nor has it been audited, the information shall be furnished upto a latest date and the offer document shall also include a statement to that effect.Per unit amounts shall be rounded off to two decimal places.Appropriate adjustments shall be made and indicated in a footnote to reflect rights/bonus issue, if any, during the period.Annualised returns in terms of rise/fall in NAV and dividends etc. paid to the unitholders of each scheme of the Mutual Fund from the date of allotment till the end of each financial year shall be disclosed. These returns shall be annualised and compounded. (For example, while giving figures for the thirdfiscal year, the comparison should be with the NAV prevailing at the time of allotment and not with that prevailing at the end of the second fiscal year.The NAV at the time of allotment should be taken at Rs.10 or face value i.e. the money that is given by the investor).(c) Furnish the following information as of the end of the last fiscal year for the Mutual Fund, schemewise.:Year Amount of Amt. as % of NAV Purpose of Time Period borrowing at the of borrowing(Rs. crs.) time of borrowing------ ----------------- ---------------------- ----------- ------------------------------VII. CONSTITUTION OF THE MUTUAL FUNDUnder this head, the following shall be discussed:(i) A brief description of the objectives of the Mutual Fund;(ii) Functions and responsibilities of the constituents of the Mutual Fund, viz. Sponsor, Asset Management Company, Trustees and Custodian;(iii) Note on the activities of the Sponsor and its financial performance for the last three fiscal years which shall include figures for turnover/total income, profit after tax, equity capital, free reserves, net worth, earnings per share, book value per share and percentage of dividend paid;(iv) Names and addresses of the Board of Trustees/Board of Directors of the Trustee Company and details of their principal occupations and current directorships. In case they are associates of the Sponsor or the Asset Management Company during the last three fiscal years, this shall be disclosed separately;(v) Summary of substantial provisions of the Trust Deed which may be of material interest to the unitholders;(vi) Trusteeship fees, if any.VIII. INVESTMENT OBJECTIVES AND POLICIESThe scheme's investment objective and policies (including the types of securities in which it will invest) shall be clearly and concisely stated in the offer document so that they may be readily understood by the unitholder. Because the circumstances of each scheme will vary, it may not be possible to define precisely the asset allocation pattern. But as a general rule, the level of disclosure regarding the asset allocation pattern shall be consistent with the objective of the scheme. The offer document shall emphasise the main types of investments the Mutual Fund proposes to make and the basic risks inherent in such investments. Accordingly, discussions of types of investments that will not constitute the scheme's principal portfolio shall be as brief as possible and may be limited to identifying the particular type of investments. Similar treatment shall be accorded to other types of practices such as borrowing money. In order to achieve the objective of clear and concise disclosure, the Mutual Fund shall avoid use of extensive legal and technical detail and need not discuss every possible contingency, such as remote risks;The disclosures under this head shall include the following:A short description of the types of securities in which the scheme will invest "principally" and if applicable, any special investment practice or technique that will be employed in connection with investing in such securities;Asset allocation pattern (as % of the assets) in tabular form in which indicative range of investments or the maximum investment in a certain class of instruments;The policy of diversification to be pursued by the scheme. If however, the scheme proposes to concentrate in a particular industry or a group of industries, the names of such industry or industries shall be disclosed. The policy on concentration should not be inconsistent with the scheme's name and objective.;If the scheme's name implies that it will invest primarily in a particular type of security, or in a certain industry or industries, the scheme shall have an investment policy that requires that, under normal circumstances, at least 65 percent of the value of its total assets be invested in the indicated type of security or industry. Further, the scheme's name may not be so similar to the name of an existing scheme of another Mutual Fund as to cause confusion in identifying the new scheme;Disclosure of the policy with respect to investment in non publicly offered debt securities (including convertible securities) as well as in unrated instruments ( of listed/unlisted companies) of any issuer;For open ended schemes, if the proposed aggregate holdings of assets considered "illiquid," including debt securities (for which there is no established market), is expected to be more than 10% of the value of net assets, then the offer document shall disclose the policy to be followed by the Mutual Fund with respect to illiquid investments, indicate such percentage and disclose the possible effect on the ability of the scheme to make payment within 10 days of the date its units are tendered for repurchase/redemption;If the scheme chooses to invest in another scheme managed by the same AMC or by the AMC of any other Mutual Fund, disclosure of the type of schemes with prudential limit as provided in the Seventh Schedule to the Regulations, as also the percentage of its assets which may be invested, and disclosure as to how such investment would enable the scheme to achieve its investment objective shall be made in the offer document. The offer document shall also disclose that no investment management fee shall be charged by the AMC on such investments;If the AMC chooses to invest in any of its schemes, full disclosure of its intention to invest, maximum extent of its investment, either in the initial issue or on an ongoing basis shall be disclosed. A statement that the AMC shall not charge any fees on its investment in that scheme, in accordance with sub clause (3) of regulation 24 of the Regulations shall also be included;In case of assured return schemes, the offer document shall disclose:how many schemes have assured returns, their number and corpus size;a justification as to how the networth and liquidity position of the guarantor would be adequate to meet the shortfall in these schemes;details of the schemes which did not pay assured returns in the past and how the shortfall was met.A concise description of those significant investment policies or techniques that are not described above but which the AMC of the Mutual Fund has the intention of employing in the foreseeable future;Discussion of types of investments that will not constitute the scheme’s principal portfolio emphasis, and of related policies or practices, shall generally receive less emphasis in the offer document and may be limited to the information necessary to identifying the type of investment policy or practice;In case a Mutual Fund is investing in debt securities, disclose briefly relevant regulations governing investments in debt securities and specific risks involved in such investments and the conditions under which such investments could be made. When the scheme chooses to use certain rating criteria in its offer document disclosure, the scheme shall also disclose what would be the minimal rating which that fund would find acceptable according to the rating criteria it has chosen.In case a Mutual Fund is investing in government securities issued by Central or State Government, the offer document shall disclose the extent to which the scheme intends to invest its assets in GOI/State Government securities. In addition, the following information should also be included whether such securities are:è supported by the ability to borrow from the Treasury.supported only by sovereign guarantee or of the State Government.supported by GOI/State Government in some other way.The Portfolio Turnover policy, particularly for equity-oriented schemes shall be disclosed separately under the head "Portfolio Turnover" under the section Investment Objectives". In discussing investment techniques, the scheme shall briefly discuss in the offer document the probable effect of such techniques on the rate of total portfolio turnover of the scheme, if such effects are significant and also other consequences which will result from the higher portfolio turnover rate e.g. higher brokerage and transaction costs.(vii) Fundamental AttributesThe following Fundamental Attributes of the scheme, in terms of sub-regulation (15) of regulation 18 of the Regulations, shall be disclosed in the offer document under the head "Investment Objectives" with a statement to the effect that the ‘Fundamental Attributes’ cannot be changed without the consent of less than 75% of the unitholders.:(a) Type of scheme.(b) Investment Objective (objective, investment strategy, investment pattern including the tentative Equity/Debt/Money Market portfolio break-up with minimum and maximum asset allocation, while retaining the option to alter the asset allocation for a short term period on defensive considerations).(c) Terms of the issue (provisions such as listing, repurchase/redemption, fees, expenses, guarantee/safety net).IX. MANAGEMENT OF THE FUNDThis section shall describe the manner in which the Mutual Fund is managed. The disclosure shall include -(i) Identification of Asset Management Company and the name of the Fund Manager(s) who would be responsible for managing the scheme along with his qualifications, experience and background;(ii) Name and address of the Investor Relations Officer;.(iii) Briefly state for the Asset Management Company of the Mutual Fund:(a) The name and the address of the Asset Management Company and the names and addresses of the Directors on the Board of the AMC with a brief description of the experience of the AMC;(b) Disclosure of the date of entering the Investment Management Agreement.(c) A brief description of the Asset Management Company's compensation. If the fee is paid in some manner other than on the basis of average weekly net assets, briefly describe the basis of payment.(iv) Name and business experience/exposure of the key personnel of the AMC;(v) The identity of any other person who provides significant administrative or business management services and a brief description of the services provided and the compensation to be paid therefore;.(vi) The identity of the Custodian and a brief description of the services provided and the compensation to be paid therefore;(vii) The name and principal business address of the Registrars, Transfer Agents and the dividend paying agent. A statement to the effect that the Board of the Trustees and the AMC have ensured that the Registrar has adequate capacity to discharge responsibilities with regard to processing of applications and despatching unit certificates to unitholders within the time limit prescribed in the Regulations and also has sufficient capacity to handle investor complaints;(viii) Identification and name and address of the statutory auditor for the scheme;(ix) State the Securities and Exchange Board of India's Registration Numbers of the Custodian, Registrar and Transfer Agents and Collecting Bankers for the Mutual Fund. It should be ensured that none of the intermediaries are prohibited by SEBI from carrying on their activities.X. UNITS AND OFFER.a) Describe concisely the nature and the most significant attributes of the units being offered, including : (i) The minimum amount to be raised as per sub regulation (1) of regulation 35 of the Regulations. In case of assured return schemes, the maximum target amount to be raised by the Mutual Fund and refund beyond this amount shall also be disclosed.(ii) The circumstances under which refund may take place and the period within which refunds must be carried out (in accordance with sub clause (2) and (3) of regulation 35).(iii)A calendar indicating opening, closing, earliest closing, allotment and despatch of certificates.(iv) The period within which allotment and despatch of certificates will be completed and relevant Regulations in this regard alongwith a statement to the effect that an advertisement will be published in a newspaper soon after completion of allotment procedure; provided that if allotment is assured to all applicants, such disclosure may not be required.(v) If listing of units is envisaged, the names of specific stock exchanges where the application for listing of the units of the scheme has been made/proposed to be made.(vi) The policy regarding reissue of repurchased units, including the maximum extent, the manner of reissue, the entity (the scheme or the AMC) involved in the same are to be disclosed. Where box trading is permitted and resorted to, the policy of the AMC on such trading including the policy on the cancellation of units in the box and reissue of such units including pricing of such units shall be disclosed.(vii) In case there is likely to be an option to convert the close ended scheme into open ended, this option, along with the option to unitholders to redeem their units in full, shall be disclosed in the offer document.The sale/redemption at fixed pre-determined intervals including the maximum/minimum amount of sale/ redemption of units and the periodicity, amount, restrictions, days etc.Restrictions, if any, on the right to freely retain or dispose of such units.(x) Maturity period of the scheme and the circumstances under which the duration of the scheme may be extended alongwith a statement that the extension shall be in accordance with the Regulations.(xi) The circumstances under which the scheme shall be wound up (in accordance with Regulations).(xii) Procedures to be followed for transfer and transmission of units.XI. SALE OF UNITSDescribe briefly the manner in which the units of the scheme being offered under the scheme offer document may be purchased by the prospective investor. The descriptions should emphasise the procedures to be followed. Include :(b) List any special purchase plans or methods such as letters of intent, accumulation plans, dividend reinvestment plans, withdrawal plans, exchange privileges, redemption reinvestment plans etc; and identify each class of individuals or transactions to which such plans apply.(c) Any minimum initial or subsequent investment.(d) If the scheme offers any additional facility to the investor such as insurance premium etc. pursuant to a plan adopted under a scheme:(i) a brief description of the plan(s);(ii) a listing of the principal types of activities for which payments will be made;(iii) a statement of claims pending i.e. claims filed by the Mutual Fund with the insurance company - the number of cases and the aggregate amounts involved shall be disclosed.(e) Details of who can invest, sales price fixation and nomination facilities may also be included here.XII. DIVIDENDS AND DISTRIBUTIONS.Describe briefly the scheme’s policy with respect to dividends and distributions, including any option that unitholders may have as to the receipt of such dividends and distributions.XIII. INTER-SCHEME TRANSFERSThis section shall disclose the policy that the Mutual Fund has been following or proposes to follow with respect to inter-scheme transfers.XIV. ASSOCIATE TRANSACTIONSThe following disclosures summarising historical information for the last three fiscal years of the schemes of the Mutual Fund under the management of the Asset Management Company reflecting associate transactions and the manner in which such transactions affected the performance of schemes of the Mutual Fund should be made. The disclosures shall include any underwriting obligations undertaken by the schemes of the Mutual Fund with respect to issues of associate companies, devolvement if any, of such commitments, subscription by the schemes in issues lead managed by associate companies, total business given to associate brokers and the percentage of brokerage commission paid to them and any distribution of units performed by associate companies.This section shall also disclose :(a) the policy for investing in group companies of the sponsor of a Mutual Fund that is followed/to be followed by the Mutual Fund, including(i) the aggregate market value of investments in group companies of the Sponsor and asset Management Company by all the schemes of the Mutual Fund and its percentage of the aggregate net asset value of the Mutual Fund,(ii) the maximum investments in those companies proposed by the scheme to be launched.(b) in case any scheme of the Mutual Fund has invested more than 25% of its net assets in group companies, this shall be disclosed.(c) names of associates of the Sponsor or the Asset Management Company with which the Mutual Fund proposes to have dealings, transactions and those whose services may be used for marketing and distributing the scheme and the commissions that may be paid to them.XV. BORROWING BY THE MUTUAL FUNDThis section shall disclose the borrowing policy of the Mutual Fund under the scheme including the intent and purpose of borrowing. Such disclosure will also include the circumstances under which borrowing will be resorted to, regulatory limits on borrowing, expected sources of borrowing, and possible collateral used if any. The potential risk of loss presented to the AMC and its unitholders by these transactions shall also be addressed.XVI. STOCK LENDING BY THE MUTUAL FUNDThis section shall disclose the policy that the Mutual Fund shall follow for stock lending.XVII. NAV AND VALUATION OF ASSETS OF THE SCHEMEDescribe briefly the policies of the Mutual Fund with regard to frequency of disclosure of NAV and Valuation of Assets and properties of the scheme in accordance with SEBI (Mutual Funds) Regulations, 1996. Briefly describe the evaluation norms with regard to non traded securities in accordance with clause 2 of Eighth Schedule of regulation 47.XVIII. REDEMPTION OR REPURCHASE(a) Describe briefly the basis and the manner of determination of redemption and repurchase price of the units in terms of the Regulations.(b) Describe briefly all procedures for determining the redeeming and/or repurchase price of the units, any restrictions thereon, and any charges that may be attendant upon redemption and for terminal redemptions.(c) Describe briefly the statutory restrictions governing the redemption and repurchase prices of units.(d) Disclose the names of the centres where redemption can be effected.XIX. ACCOUNTING POLICIESThis section shall briefly disclose the accounting policies to be followed by the Mutual Fund for the scheme.XX. TAX TREATMENT OF INVESTMENTS IN MUTUAL FUNDSThis section shall disclose the various tax benefits that are available and the taxes that are charged to the investors in the schemes of Mutual Funds.XXI. INVESTORS' RIGHTS AND SERVICES.This section shall include the following:- The rights of the investors under the scheme.- Documents available for Inspection. These documents include Trust Deed, Investment Management Agreement, Custodian Agreement, Agreement with Registrars & Share Transfer Agents, MOA and AOA of the Trustee Company and Asset Management Company, SEBI (Mutual Funds) Regulations, 1996, Indian Trusts Act, 1882 and Consent of the Auditors, Legal Advisors.- Access to information : Publication of NAV, its computation and unit price.- Investor friendly services including names, addresses and telephone number of the contact person/grievances officer who would take care of investor queries and complaints.XXII. INVESTOR GRIEVANCES REDRESSAL MECHANISMDescribe briefly the investors' complaints history for the last three fiscal years of existing schemes and the redressal mechanism thereof. The offer document should include data updated as of 30 days prior to the launch of the scheme on the number of complaints received, redressed and pending with the Mutual Fund.XXIII. PENALTIES, PENDING LITIGATION OR PROCEEDINGS, FINDINGS OF INSPECTIONS OR INVESTIGATIONS FOR WHICH ACTION MAY HAVE BEEN TAKEN OR IS IN THE PROCESS OF BEING TAKEN BY ANY REGULATORY AUTHORITY1. All cases of penalties awarded by SEBI under the SEBI Act or any of its regulations against the Sponsor of the Mutual Fund or any company associated with the Sponsor in any capacity including the Asset Management Company, Trustee Company/Board of Trustees, or any of the directors or key personnel (specifically the fund managers) of the Asset Management Company and Trustee Company. The nature of the penalty must be disclosed. For Sponsor and its associates, other than the penalties as mentioned above, the penalties awarded by any financial regulatory body, including stock exchanges, for defaults in respect of shareholders, debentureholders and depositors shall also be disclosed. Additionally, penalties awarded for any economic offence and violation of any securities laws shall be disclosed.2. Any pending material litigation proceedings incidental to the business of the Mutual Fund to which the Sponsor of the Mutual Fund or any company associated with the Sponsor in any capacity including the AMC, Board of Trustees /Trustee Company or any of the directors or key personnel is a party. Any pending criminal cases against the Sponsor or any company associated with the Sponsor in any capacity including the AMC, Board of Trustees/Trustee Company or any of the directors or key personnel should also be disclosed separately.3. Any deficiency in the systems and operations of the Sponsor of the Mutual Fund or any company associated with the sponsor in any capacity including the AMC or the Trustee Company which SEBI has specifically advised to be disclosed in the offer document, or which has been notified by any other regulatory agency, shall be disclosed.4. Any enquiry/adjudication proceedings under the SEBI Act and the Regulations made thereunder, that are in progress against the Sponsor of the Mutual Fund or any company associated with the Sponsor in any capacity including the AMC, Board of Trustees/Trustee Company or any of the Directors or key personnel of the Asset Management Company shall be disclosed.For and on behalf of the Board of the Directors of the Asset Management Company of the Mutual FundPlace :Name :Date :Designation :http://www.sebi.gov.in/cms/sebi_data/commondocs/cirann2_h.html

There may not be much questions on the subject especially on mathematics, chemistry or physics.There may be questions on the following subjects:CommerceEconomicsHistoryComputer scienceIt has to be noted that the interview is conducted by only retired bank executives and the following will be their main focus when it comes to questions:BankingEconomicsCapital marketCurrent affairsRecent budgetPersonalities who are in the news recentlyRecent happenings in the field of banking, politics and money mattersPlease read the following for better guidance:Tips for Interview for recruitment as Probationary Officers in banksInstructions to candidatesThe purpose of the interview:The purpose of any interview is to select one suitable individual for the concerned post. The person to be interviewed may be having higher qualifications; however, he may not be having the requisite potentials or caliber in handling the job offered namely; better communication ability, leadership quality, emotional strength and efficient interpersonal relationship. Banking demands people who are willing to work hard by mingling with customers freely and friendly apart from maintaining a cordial; social and friendly relationship with the colleagues and superiors.Phases of the interview:The interview is conducted in four phases namely;·the first phase during the course of which questions are asked about the individual and his specialization in any area;·the second phase wherein questions are asked about the bank for which the interview is conducted;·the third phase wherein questions are asked about general banking, economy, finance and latest developments and·the fourth phase is the final round for the interview.The interview committee:The interview committee consists of three to five imminent personalities who are well versed in banking matters and normally the services of executives or retired executives of various commercial banks are utilized for the purpose of conducting the interview. The following system is adopted by the committee members during the course of interview process:·While one member poses questions to the candidate, the remaining members observe the body language of the individual as to how he reacts to the questions and especially in respect of difficult questions;·They also review as to how the candidate comes forward in presenting his answers in a crisp manner thereby providing the relevant points expected by the committee members at the shortest possible time.·Basing upon the answering ability, communication ability, level of confidence, willingness to accept challenges etc., the committee members select the individuals by awarding better gradation.·When the candidate is found to be inattentive on account of low level of self confidence or some other factors, the committee members pose provoking questions so that the candidate is emotionally provoked and aroused to come forward with appropriate answers.The interview process:The interview process consists of the following stages:·Attendance marking by the candidate at the reception committee and filling up the relevant format thereby furnishing his details;·Verification of the certificates namely; qualification certificates, experience certificates, certificates relating to extracurricular activities etc., by the reception committee/team members;·Candidate waiting at the reception hall for his turn;·Once called, candidate entering into the interview room duly seeking permission of the team members;·Candidate thanking the interview members for permitting him/her inside the cabin;·Candidate sitting on the seat once offered by one/more members in the interview committee;·Candidate thanking the person who had offered the seat;·Candidate shaking his hands with the members, if offered;·Candidate eagerly awaiting for the questions from the members;·Candidate mentally preparing himself to attend the interview with full concentration maintaining regular eye contact with the committee members;·Candidate answering the questions posed by the members enthusiastically, till the entire process is treated as completed;·Candidate collecting all certificates and documents once the interview is treated as completed;·Candidate thanking the committee members and·Candidate politely raising from the chair, walking towards the entrance, opening the cabin door and gently closing the door behind him;·Candidate meeting other candidates awaiting at the reception hall cheerfully.Dress code:·Dress code is most important aspect and a person is judged by the dress he wears. Dress makes half man.·For men: Please wear a neat full length trouser and one full length shirt – preferably white or light shaded; Usage of “T” shirts greatly dampens the image of the candidate and the purpose of using any ‘T” shirt is to have better comfort during the course of walking, relaxing, jogging, running, partying and relaxing. As such “T” shirts are not considered to be a fit wear during professional meetings including interviews. Do not wear highly dark colored and checked dresses. The candidate has to wear a good quality shoes neatly polished. If possible he can wear a “tie” and this is purely optional and certain organizations pay more attention to the personality of an individual which gets improved by way of better dressing.·For girls: Under any circumstances girls should not wear provoking dresses namely; “T” shirts, jeans pants, trousers, half gowns and shirts with messages and blouses with low cuts. A neat chudithar is considered to be the best option and wearing of sarees improves the image of the individual.A.Questions during the first phase:·Initially the candidates are invited to tell about their personal life and interests, their family members, their ambitions, their qualifications, their achievements in studies, sports, music and any other extracurricular activities;·The second question is about the place to which the candidate belongs. In case the candidate belongs to Chennai, he will be asked to tell about Chennai and the importance of the place. Necessarily the candidate should have a thorough knowledge about the place from which he is hailing;·The interviewers will pose “ice breaking questions” in order to shift the focus of the candidate. This is for the purpose of finding out the reaction of the candidate during such “focus change”. (Banks demand people who are able to face any challenges);·During the first two to three minutes, more than 80 percent of the questions will be on the personal details and basic information about the candidate. It has to be remembered that – “The first impression is the best impression” and accordingly the candidate has to behave politely, calmly, courageously and confidently.Sample questions during the first phase:·01. My dear friend, now tell us about yourself: The candidate has to inform in a crisp manner about himself, his family, his qualifications, achievements if any etc. Unnecessary details should be avoided altogether and the candidates at no cost should provide information to the committee members with an intention to derive sympathy from the committee members. Such an attitude will prompt the members either to reject or award poor marks.·02. I see – you are from Chennai – please tell me about Chennai: Since the candidate belongs to Chennai, he is invited to tell about Chennai and he should have pre-hand information about Chennai and should come forward to tell about important places in Chennai namely; Marina beach, High Court, Kabaleeswarar Temple, Metro train facilities, Santhome church, International airport, Asia’s biggest bus station at Koyembedu and many more.·03. I find that you had studied in Presidency college. What was the reason for your preference of this college?. How was your life in the college? The candidate has to tell about the college; the achievements of the college in academic scenario as well as in sports and in other areas;·04. I find that you had studied “EEE” - why you had chosen the course? The candidate has to tell about the purpose and the potential available for the students who had opted to pursue EEE course.·05. You are in Chennai for a long period. What is your opinion about Chennai?·06. You are having “EEE” in engineering and why you are willing to get employed in banks? (Your reply should be – In fact by working in a bank, I can develop my relationship with public in a better manner; improve my knowledge and provide better service to as many people as possible since the banks are purely service oriented organisations. I find that I can have more career prospects in future by getting employed in the banks)·07. What are your strengths and weaknesses? – Your answer should be: I am always willing to work hard under all circumstances and since I have a good communication ability, I hope that I can surely develop friendship with my colleagues, clients and others in a fast manner so that I can contribute better to the society.·08. You are a highly qualified person having one MBA degree apart from a degree in Engineering. What is the guarantee that you will be in the bank without shifting your attention to some other employment potential after some time?: Your reply should not be: On account of unemployment problem, I am joining the bank; Your reply should be – even though I have better qualifications, I wish to work in the banking industry because I can have better opportunities to serve for the welfare of the society by working in the bank than any other organisations.Responsibilities of the candidates appearing for the interview:The candidate should do a home work and he should always depend upon his positive straits namely; his strength, achievements and abilities and necessarily he should believe in himself that he can accept and do the job in a better manner and he should altogether avoid any negative reply or angry reply under any circumstances; even when provoked or tempted by the interview board members and the candidate should remain calm and wear a broad smile during the entire interview process.A smile has the power to keep the individual in better spirits at all times.The following question may provoke the candidate –·Dear friend, considering your personality, I find that you look like a film actor. How do you feel yourself ?(You had not at all expected this question and you are tempted to provide an apt reply to them: Your reply should be– In fact I am fond of wearing a neat dress and I take care of my health by doing physical exercises regularly apart from eating moderate food and getting into the bed at the appropriate time. I always believe in the following proverb – “Health is wealth”. An individual may not be in a position to discharge his duties properly without adequate health. The habit of eating quality food, regular exercise and better dressing are the factors which are responsible for my personality.B.Second phase of the interview process:During this phase, questions will be asked about the bank for which the candidate is appearing for the interview and the following are some sample questions in case the candidate is appearing for a post in Punjab National Bank:·Do you know – where is the head office of Punjab National Bank?·Who is the present chairman of the bank?·How many branches are there in Punjab National Bank as on date?·Can you tell me about the total business of the bank?·Can you tell me about some deposit schemes available in the bank?·What do you know about the logo of Punjab National Bank?·What is the punchline of Punjab National Bank?·What is the position of Punjab National Bank among the commercial banks in the country as on date?(It is the responsibility of the candidate to collect the necessary information about the bank for which he is appearing for the interview by visiting the website of the bank and referring other material sources in order to get the required information about the bank namely; the headquarters, number of branches, total business, profit position, important schemes, tie up with another banks, achievements of the bank, if any; the present position and ranking of the bank in terms of business, profitability, non performing assets, productivity of the employee etc., In case the candidate is appearing for a group of banks, he should have information in general about all the banks in the group)C.Third phase of the interview:During this phase, questions will be asked on general banking practices as mentioned below:The following are the questions regarding the banks in general:·Have you visited any bank branch? What was your experience?·What is the business of any bank?·What are the essential/primary functions of any bank?·What are the secondary functions of any bank?·Who can open a savings bank account?·What do you know by KYC guidelines?·Why banks insist customers in adhering to KYC guidelines?·What is the difference between Current deposit account and Savings deposit account?·What do you mean by CASA account?·Who normally opens a current account?·What do you know by a fixed deposit account?·Can a company open a savings account?·Can the director of a company open a savings account?·Who is the controlling authority for the banks in India?·What is a foreign bank?·What is meant by a public sector bank?·Which is the largest private sector bank in the country?·Which is the largest bank in the country?·You are working as an officer in savings department. The customer complains about the irritating behavior of the clerk who is working under your supervision. What will you do in this situation?·Your manager delegates some work and you are failing in doing the work within the allotted time and your manager is not happy with your performance. How will you convince your manager?·Today there is some news about annual credit policy. What do you know by that?·What do you know by reverse repo rate?·What is called as inflation?·What is rupee convertibility?·What do you know by gross domestic product?·What do you know by ASBA?·What do you know by Sensex?·What do you know by a convertible debenture?·What is an initial public offer?·What do you know by facebook – whether it is good or bad for any individual and what is your opinion?·What are the advantages and disadvantages of Whatsapp?·What is your opinion about currency demonetization and how far the process helps in improving the economy of the country?(The above questions are illustrative and not exhaustive and the candidate should know fairly well about many banking as well as general aspects)D.The fourth phase of the interview:Like the initial phase or first phase, this fourth phase is also important wherein tricky questions will be asked as mentioned below:·You are hailing from Coimbatore. In case you are posted to Chennai whether you will be willing to work at Chennai?. (Your answer: If I am posted at Coimbatore, I shall try my level best to bring more business to the bank since I know the place and people well and I can take care of family members who are dependent on me. Even otherwise, I shall discharge my duties to the best when I am posted at Chennai)·Suddenly on account of computer crash, you have to sit late – whether you will be willing to sit late and finish the job or leave early without informing your superiors? (Definitely I will never mind in sitting late and I shall always cooperate with my superiors in finishing the day to day functions of the branch. I am one among the team members and I have the responsibility to cooperate with other members during critical situations)·What information are you willing to tell about yourself? (If I am selected, I shall work hard and I shall discharge my duties to the entire satisfaction of my superiors. I shall always do the best from my side for the growth of my organization.)Selected Interview QuestiomsCandidate: 00101.Why you are willing to join in a bank?I am willing to join in a bank since I hope that I may be having more opportunities to serve the public. Banks have better career opportunities by means of periodical promotions to higher cadre.02.What do you mean by appraisal of gold loans?Gold loans are granted against the security of gold jewellery namely gold chains, necklaces etc., The jewellery apart from gold contains certain amount of copper and stones. Appraiser is a person well versed in the art of appraising the jewellery and on appraisal of the jewellery, he will be finding out the approximate gold content so that the bank may be able to provide loans against the gold content.03.What are the different kinds of term deposits available in a commercial bank?The different kinds of term deposits available in a commercial bank are – fixed deposit, recurring deposit and reinvestment deposit. In the case of fixed deposit, a fixed amount is accepted for a definite period and interest is paid on quarterly basis. In the case of reinvestment deposit which is similar to fixed deposit, interest is paid on maturity since interest is reinvested. In the case of recurring deposit, monthly instalments are accepted for a fixed period.04.What is the minimum period for which a fixed deposit is accepted and the maximum period for which a fixed deposit is accepted?The minimum period for which fixed deposit is accepted is seven days and the maximum period is ten years.05.Whether a fixed deposit can be accepted for a period more than ten years?In the case of deposits in the names of minors on account of settlement of claims, the deposit can be for more than ten years06.What do you mean by FERA?FERA means foreign exchange regulations act and it came into effect from the year 1973. An act to regulate certain payments dealing in foreign exchange, securities, the import & export of currency and acquisition of immovable property by foreigners. Under Section 31 (1) of the Foreign Exchange Regulation Act ( FERA) of 1973, it is mandatory for foreign corporations, which are not incorporated in India to obtain permission from the Reserve Bank Of India (RBI) to acquire, hold, transfer or dispose off in any manner (expect by way of lease for a period not exceeding five years) any immovable property in India.07.What do you mean by ECS?ECS means electronic clearing service and the customer can authorize on periodical basis to make payment of certain utility bills like electricity charges, water charges etc., by debiting his account till such time he submits a revocation letter. Similarly, he can authorize corporate to credit the dividends on shares and interest on debentures as and when due to the credit of his account with the bank.08.What is the minimum amount that can be sent through RTGS?The minimum amount that can be sent through RTGS is Rupees two lakhs and there is no maximum limit09.What is the maximum amount that can be remitted through NEFT?There is no or maximum limit for remittances sent through NEFT10.What is the maximum amount that can be sent abroad by any resident individual?Under liberalized remittance scheme, all resident individuals including minors are allowed to freely remit an amount upto US dollars 250000 (or its equivalent freely convertible foreign currency) per financial year11..What is the name of apex bank which is responsible for the development of agriculture in the country?NABARD is the apex bank which is responsible for the development of agriculture in the country.12.What are the different kinds of schemes available in our country aiming towards poverty alleviation?National old age pension scheme; Jawahar Gramin Samruddi Yojana; National Family Benefit scheme; Mahatma Gandhi National Rural Employment Guarantee Scheme; National Maternal Benefit Schemel Annapurna etc.,13.What do you mean by crossing of any cheque?Writing of two parallel transverse lines drawn on the face of the cheque on top left hand corner with or without any words between the lines is known as crossing and it is for the purpose of making payment of the cheque through an account in the name of the payee or holder.14.What are the different kinds of crossing?Two parallel transverse lines drawn on the face of the cheque on top left hand corner of the cheque with any words or without any words is known as general crossing and the the payment can be made to the account of the payee or holder with any bank. In case the name of any bank is mentioned within the two parallel lines, it is known as special crossing and in this case, the payment should be made to the account of the payee or holder with the bank mentioned in the crossing only and not to any other bank.15.What do you mean by CASA?CASA means current and savings and this is applicable to computerized branches linked under core banking solution16.Whose signature is available in Rs. 100/- currency note?The signature of RBI governor is available in Rs. 100 currency note17.What do you know by dividend?Dividend is the return available in the form of money for the investments made by the shareholders in the equity shares and preference shares of any company.18.Bank holidays are declared according to which act?Holidays for banks are declared according to Negotiable Instruments act 1881 by the respective state governments in their states. However, all Sundays, all second and fourth Saturdays have been declared as holidays apart from the holidays permitted for religious and national ceremonies.19.Banks are functioning according to which act?Commercial banks in the country are functioning according to Banking Regulation act 1949 and to some extent as per Reserve Bank of India act 193420.RBI is functioning in the country as per which act?Reserve Bank of India is functioning according to Reserve Bank of India act 1934.Candidate: 00201.What do you mean by a guarantee?Guarantee is an undertaking executed by one person called as guarantor in favour of another person called as beneficiary expressing his intention to make payment in the event of failure of the principal debtor on payment of a debt or failure to perform any contract within the stipulated time or according to the terms of the contract.02.What are the different types of guarantees?The different types of guarantees are financial guarantee, performance guarantee and deferred payment guarantee03.What do you mean by letter of credit?Letter of credit is an undertaking executed by one banker on behalf of its customer to honour bills and documents drawn by another person as per the terms and conditions as mentioned in the letter of credit04.What do you know by packing credit advance?It is the preshipment advance granted by one bank to the exporter for the purpose of procuring raw materials; payment of various duties like customs duty, excise duty; packing charges; shipment charges etc.,05.What do you mean by special crossing?In case the name of any bank is mentioned within the two parallel lines, it is known as special crossing and in this case, the payment should be made to the account of the payee or holder with the bank mentioned in the crossing only and not to any other bank.06.What do you know by IFSC code ?IFSC means Indian Financial System Code and this is one alphanumeric code consisting of eleven digits of which the four alphabetic digits represent the name of the bank mentioned in abridged form and the next zero is known as control number and the last six numeric digits represent the branch code of the bank.07.Which is called as mother of deposits?Savings deposit is known as mother of deposits. Normally the first time customers will be advised to open savings deposits with the bank branch before availing any other facility with the bank08.Who is a called as natural guardian?Bother mother and father are known as natural guardian for the purpose of opening accounts in the name of minors represented by the guardian.09.Whether grandfathers and grandmothers can be natural guardians?Grand fathers, grandmothers grand grandfathers or grand grandmothers cannot represent as natural guardians on be behalf of the minors10.Which type of credit facility is available to a farmer for raising crops?For raising crops, the farmers are provided with crop loans, Kisan Credit Cards etc.,11.What do you mean by NULM?National Urban Livelihoods Mission (NULM) was launched by the Ministry of Housing and Urban Poverty Alleviation (MHUPA), Government of India in 24th September, 2013 by replacing the existing Swarna Jayanti Shahari Rozgar Yojana (SJSRY).The NULM will focus on organizing urban poor in their strong grassroots level institutions, creating opportunities for skill development leading to market-based employment and helping them to set up self-employment venture by ensuring easy access to credit. The Mission is aimed at providing shelter equipped with essential services to the urban homeless in a phased manner. In addition, the Mission would also address livelihood concerns of the urban street vendors12.What do you mean by Gram Sadak Yojana?The Pradhan Mantri Gram Sadak Yojana called as PMGSY was launched by the Government of India for the purpose of providing connectivity to unconnected habitations as part of a poverty reduction strategy. Government of India is endeavouring to set high and uniform technical and management standards and facilitating policy development and planning at state level in order to ensure sustainable management of the rural roads network.13.What are the salient features of MGNREGA?MGNREGA is known as Mahatma Gandhi National Rural Employment Guarantee act and according to this employment is guaranteed at least one person per household in rural areas. It aims at enhancing the livelihood security of people living in rural areas by guaranteeing hundred days of wage employment during each financial year to a rural household whose adult members volunteers to undertake unskilled manual work14.Which authority is supervising the functions of insurance companies?IRDA – Insurance Regulatory and Development Authority is the authority responsible for supervising the functions of insurance companies in our country15.What is meant by IPO?IPO means initial public offer and this is the first time public offer of equity shares, preference shares or debentures to the public for subscription16.What is meant by ASBA?ASBA means applications supported by blocked amount. Nowadays investors are permitted to remit the amount through ASBA demand drafts drawn in ASBA accounts for the purpose of subscribing shares or debentures through initial public offer and further public offer. When the demand draft is issued, instead of debiting the amount in the account, the amount is blocked till such time the shares or debentures are allotted. On allotment, the entire amount is debited; in the case of partial allotment, the amount is debited equivalent to the value of allotment and in the case of non allotment, the entire amount is allowed for further use. For the intervening period, the depositor earns interest as applicable to the category of deposits.17.What is meant by Performance guarantee issued by any commercial bank?In the case of contracts in favour of governments, the contractors are in a position to provide a bank guarantee by a reputed commercial bank, thereby undertaking to guarantee the government department to compensate the loss on account of failure of performance of the contract by the contractor within the due date or failure to perform the contract as per the terms and conditions of the contract. This is known as performance guarantee.18.What do you mean by packing credit facility issued by any commercial bank?Packing guarantee is known as preshipment advance provided by the commercial bank to the exporter for the purpose of procuring raw materials, packing materials or making payment towards customers duty, excise duty, transportation charges etc.,19.What do you mean by notice money?Notice money is money borrowed for a period of two days and more and upto fourteen days in the call money market.20.Treasury bills are issued by which authority and what are the different kinds of treasury bills available in the country?Treasury bills are issued by central government and state governments for the purpose of mobilizing funds from the public and others towards meeting the cost of various projects. There are three kinds of treasury bills as at present namely – 91 days, 182 days and 364 days. 91 days treasury bills are issued each Friday and the notified amount is Rupees one hundred crores. 182 day treasury bills are issued during alternative Wednesdays which is non reporting week and the notified amount is Rupees 100 crores and 364 days treasury bills are issued on alterntive Wednesdays which is a reporting week and the notified amount is Rupees 500 crores.Candidate: 00301.What do you know by PIN number?PIN number is four digit number expressed in numerical characters. PIN number is used for the transactions done using debit cards and credit cards through automated teller machines and point of sale terminals.02.What do you know by PAN number?PAN number is known as permanent account number. This is used for the purpose of remittance of income tax with income tax department. Tax payers should get one PAN number by sending an application along with relevant documents and by payment of specified sum of money to Income tax department or their agencies. It is ten digit number consisting and alphapetical and numerical characters.03.What are the functions of DICGC?DICGC means Deposit Insurance and Credit Guarantee Corporation and this corporation provides deposit insurance upto an amount of Rupees one lakh per depositor per bank in the event of insolvency of the bank and it also provides small loans guarantee upto certain limits04.What is the role played by ECGC?ECGC provides guarantee support to the exporters of the country in the form of several export guarantees05.Mention the Regional Rural Banks which are functioning in Tamilnadu?The Regional rural banks which are functioning in Tamilnadu are Pandiyan Grama Bank and Pallavan Gramin Bank. Pandiyan Grama Bank has been sponsored by Indian Overseas Bank and pallavan Gramin Bank has been sponsored by Indian bank.06.What do you mean by Mergers and what are the different kinds of mergers?When two independent units merge together to form a single unit, it is known as merger. The mergers can be vertical merger, horizontal merger, reverse merger, consolidation, amalgamation etc.,07.What do you mean by horizontal merger and reverse merger?When the business functions of two units are identical in nature and when the merger takes place between those units, it is known as horizontal merger. New Bank of India merged with Punjab National Bank and both are banking organizations. Industrial Credit and Investment Corporation of India Limited was instrumental in establishing ICICI bank as per LPG norms and subsequently Industrial Credit and Investment Corporation Limited merged with ICICI Bank and when a parent unit gets merged with an ancillary unit, it is known as reverse merger.08.Which are the top two private sector banks in our country?The top private sector banks in our country are HDFC bank limited and ICICI bank limited09.Whether housing loan is a priority sector advance and if so, upto what amount?Housing loans granted are treated as priority sector advances subject to certain conditions. Loans to individuals up to Rupees 28 lakh in metropolitan centres (with population of ten lakh and above) and loans up to Rupees 20 lakh in other centres for purchase/construction of a dwelling unit per family, are eligible to be considered as priority sector provided the overall cost of the dwelling unit in the metropolitan centre and at other centres does not exceed Rupees 35 lakh and Rupees 25 lakh, respectively. Housing loans to banks’ own employees are not eligible for classification under priority sector.10.Whether educational loan is a priority sector advance?Loans to individuals for educational purposes including vocational courses upto Rupees 10 lakh irrespective of the sanctioned amount are eligible for classification under priority sector.11.What do you mean by micro, small and medium enterprises?The classification is based on original investment in plant and machinery: For micro enterprises, upto Rs. 25 lakhs for manufacturing units and Rupees 10 lakhs for service units; For small enterprises, for manufacturing units above Rupees 25 lakhs and upto Rs. 5 crores and for service units above Rupees 10 lakhs and upto Rupees 2 crores; For medium enterprises, for manufacturing units above Rupees 5 crores and upto 10 crores and for service units above Rupees 2 crores and upto Rupees five crores12.What do you mean by KYC and name any two important documents which are obtained as per KYC?KYC means know your customer guidelines and these guidelines were prescribed by RBI for new customers who are willing to open accounts with commercial banks and according to KYC, any new customer who is willing to open accounts with commercial banks should submit the photocopy of anyone of the following namely; driving licence, voter id card, AADHAARA card, passport as address proof and photocopy of anyone of the following namely; driving licence, voter id card, AADHAAR card, passport, pancard as identity proof. KYC is antimony laundering device.13.What is the present repo rate and reverse repo rate?The present repo rate is 6.25% and reverse repo rate is 5.75%14.In the case of MICR code, the middle three digits represent what?MICR code consists of nine numerical digits and the middle three numerical digits represent bank name15.PAN number consists of how many alpha characters?PAN number consists of ten digits. The first three alpha characters are random alphapetical characters between AAA to ZZZ; next one alpha character represents the category of the cardholder; the next one alpha character represents the first character of the name of the cardholder; the next four numerical digits are auto generated sequential numbers and the last one single alpha character is a check digit.16.What do you know by biometric automated teller machines?In the case of automated teller machines, the four digit numerical PIN number is used for performing transactions using debit card and credit card. In the case of biometric automated teller machines, instead of PIN numbers, anyone of the following body parts is used – left hand thumb impression; eye retina and voice recognition. In India, the left hand thumb impression is the accepted mode and these kinds of automated teller machines are known as green label automated teller machines.17.What is the criteria by which a bank is considered as largest bank?For the purpose of ranking, a bank is considered to be largest or smallest taking into consideration the business position of the bank; namely – the total deposits and total advances as at the end of March each year.18.What do you mean by commercial paper?Commercial papers are issued by well rated organizations for mobilizing funds from the public and other corporate. They are issued at a discount and they are freely negotiable by endorsement and delivery. The minimum maturity period is seven days and the corporate should have earned credit rating equivalent to P2 issued by CRISIL19.What do you mean by FCNR?FCNR means foreign currency non resident accounts. Non resident Indians and Persons of Indian origin are eligible to invest in this deposit. It is a term deposit accepted in the currencies – US dollar, Sterling Pound, Euro, Japanese Yen, Canadian dollar and Australian dollar. The minimum period of deposit is one year and the maximum period is five years and the deposit is held in foreign currencies and the interest earned is free from income tax.20.What do you mean by Escheat?He is a person who dies without leaving any legal heirs and in this case, his estate will revert to the state government.Candidate: 00401.What do you mean by money laundering?Using the banking channel for the purpose of bringing illegal money is known as money laundering.02.What do you mean by subprime lending?Mass lending by commercial banks to the borrowers without ascertaining the credit worthiness of the borrowers03.What is meant by LPG and who is responsible for introduction of LPG strategy in our country?LPG means liberalization, privatization and globalization and this was coined by Dr. Manmohan Singh, the then finance minister of our country. The salient highlights of the Liberalisation, Privatisation and Globalisation Policy in India are: Foreign Technology Agreements; Foreign Investment; MRTP Act, 1969 (Amended); Industrial Licensing; Deregulation Beginning of privatization; Opportunities for overseas trade; Steps to regulate inflation; Tax reforms; Abolition of License -Permit Raj04.What do you mean by PURA?PURA means providing urban amenities in rural areas. This concept was coined by Dr. A.P.J. Abdul Kalam, the then president of India.05.What do you know by current ratio?It is one equation between current assets and current liabilities. This ratio provides the liquidity position of the organization. When the ratio is more than one it is known as positive current ratio and the unit is having sufficient working capital and when it is less than one, the unit is found to have more current liabilities than current assets and the liquidity position is found to be very weak.06.What do you know about negotiable instruments act?In India, the negotiable instruments act was passed during 1881 which came into force with effect from March 01, 1882. Negotiable instruments means and include promissory note, bills of exchange and cheque payable to order or bearer. Promissory note, bill of exchange, cheque and demand draft are negotiable instruments.07.What do you know by MICR?MICR means magnetic ink character recognition. MICR code is available in MICR bank at the bottom of the cheque or demand draft. It consists of nine numerical digits of which the first three digits represent the centre/city; the middle three digits represent the bank and the last three digits represent the branch of the bank.08.When it comes to rural lending, which are all considered to be priority sector advances?When it comes to rural lending, the loans granted to the following are considered to be priority sector advances – Loans granted to all agriculture related activities; self help group; Differential rate of interest; Loans to SC/ST beneficiaries; Loans provided to doctors for setting up clinics in rural areas; Loans to dealers in fertilizers and pesticides; loans to dealers of springler irrigation and drip irrigation equipments etc.,09.Who is called as an authorized dealer?Authorised dealer is at present known as authorized person. Authorised person is an individual or organization permitted to deal in foreign exchange business in the country.10.What do you know by financial inclusion?Financial inclusion means the following: Providing formal banking services to poor people in urban and rural areas; Promoting the habit of money savings, insurance, pension-investment among poor people; Helping the people in getting loans at reasonable rates from commercial banks so that they do not become victims to local moneylenders11.What are the important initiatives taken through financial inclusion in the country?The following are the important initiatives taken through financial inclusion in our country: Lead banking scheme; No frill accounts; Basic savings bank deposit accounts; JANDHAN accounts; business correspondent and business facilitator facilities; Swabhiman campaign;12.What do you mean by MCLR?MCLR replaces the base rate system. RBI introduced the system with effect from 01.04.2016 in order to determine the base rate by commercial to improve the efficiency of monetary policy transmission. All rupee loans sanctioned and credit limits renewed with effect from 01.04.2016 to be priced with reference to MCLR and it will be an internal benchmark for the banks. It consists of marginal cost of funds, negative carry on account of CRR, operating costs and tenor premium. The marginal cost of funds consists of two components namely; marginal cost of borrowings and return on networth13.What are the major money market instruments?Certificate of deposits; Commercial paper; Inter Bank participation certificates; iner bank term money; Treasury bills; Bills rediscounting and call/notice money14.What are the differences between NEFT and RTGS?Both are two categories of online remittance facilities through CBS enabled branches of commercial banks. The minimum balance that can be sent through RTGS is Rupees two lakhs whereas in the case of NEFT, there is no such limit. The beneficiary gets his funds at real time and it means instantaneously without any loss of time. In the case of the beneficiary gets his funds in between batches15.Who is deciding the rate of interest for savings deposit accounts?Rate of interest for savings deposits is decided by respective commercial banks only and RBI has permitted full freedom in this connection.16.Who cannot open savings deposit accounts?Proprietorship concerns, partnership firms, limited liability partnership firms, private limited companies and public limited companies are not permitted to open savings accounts17.What is meant by memorandum of association?Memorandum of association is the parent document for any company whether it is a private limited company or private limited company. It contains the details of formation of the company, policies, objectives, registered office and more.18.What is known as power of attorney?Power of attorney is an authorization given by one person called as principal in favour of another person called as an agent authorizing the agent to perform certain activities on behalf of the principal and it can be specific power of attorney or particular power of attorney.19.In which currencies FCNR accounts can be opened in our country?FCNR account can be opened in the following currencies namely; US dollars, Sterling Pounds; Euro; Japanese Yen; Australian dollars and Canadian dollars.20.What are the differences between NRE and FCNR?NRE and FCNR accounts are opened by non resident Indians and Persons of Indian Origin in India. NRE accounts are to be opened in rupees whereas FCNR is opened in foreign currencies. NRE accounts can be opened in the form of savings account, current account, reinvestment deposit and fixed deposit whereas, FCNR account is permitted to be opened as fixed deposit or reinvestment deposit. NRE term deposits can be opened for a minimum period of seven days and maximum period of ten years. FCNR accounts can be opened for a minimum period of one year and maximum period of five years.Candidate: 00501.What do you mean by masala bonds?Masala bonds are the bonds issued for rupee denominated borrowings by Indian companies in overseas markets02.What do you mean by secondary market in our country?Secondary market pertains to capital market and it is also known as stock exchange or old issues market. Shares, debentures and bonds can be bought and sold from the stock exchange through registered brokers.03.What do you mean by fund based limits and non fund based limits?The loans provided to the borrowers in the form of term loans, overdrafts, cash credits and bills discounting limits are known as fund based limits since funds are released to the borrowers. Guarantees and letter of credits are non fund based limits since no funds are provided for the time being since they are contingent liabilities.04.What do you mean by off balance sheet items?Guarantees, letter of credits and bills sent for collection for which proceeds are yet to be realized are known as off balance sheet items05.What do you mean by closed ended scheme?This is one form of mutual fund scheme. Like initial public offer, the scheme is open for a certain period only and after which the public cannot invest their amount in the units under this scheme.06.What do you mean by open ended scheme?This is one mutual fund scheme and the units under scheme can be purchased and sold at any time07.What do you mean by overdraft facility granted by a bank?Overdraft is a facility granted by the banks towards meeting the working capital requirements of a borrower. This is provided by means of credit limit over and above the current account balance and the borrower has to pay the interest as and when due.08.What do you mean by collateral security?Collateral security is an additional security provided by the borrower in addition to the primary security. For example, in the case of vehicle loan, the car purchased out of loan is known as the prime security and the insurance policy obtained by the bank from the borrower for the sanction of this loan is known as collateral security.09.In regard to educating a customer, what are the different kinds of information boards displayed in a bank branch?The following boards are available in the bank branches – Working hours and business hours; Interest rates on various deposits; Interest rates for loans; Service charges; Time norms for various services; Details of schemes available in the branch10.Who is the present RBI Governor?The present governor of RBI is Shri Urjit Patel and he is functioning as the governor of RBI since 04th September, 201611.What do you mean by unclaimed deposits?The deposits which are not in operation for more than ten years are known as unclaimed deposits. For the purpose of this classification, the customer induced transactions are only taken into account.12.How many regional centres are available for RBI in the country?Reserve Bank of India has four regional centres at the following places – Chennai, Kolkatta, New Delhi and Mumbai.13.What do you mean by white label automated teller machines?The automated teller machines which are maintained and managed by non bank entities are known as white label automated teller machines. In our country TATA Indicash and Muthoot finance are having such machines installed at various centres.14.What are the advantages of CTS?CTS means cheque truncation scheme. This is used for clearing purpose. Normally commercial banks used to send the physical cheques through their15.What do you mean by certificate of deposits?Certificate of deposits are issued by scheduled commercial banks (except Regional Rural Banks) and all financial institutions within their umbrella limits. Individuals, corporate, companies, trusts, funds and associations can invest in certificate of deposits and they are issued for a minimum period of seven days and maximum period of twelve months in the case of commercial banks and in the case of financial institutions the minimum period is one year and maximum three years, Minimum amount for investment is Rupees one lakh and in multiples of Rupees one lakh.16.RBI is called by which names – mention four names?RBI is called by the following names – banker to banker; lender of the last resort; custodian of banks; banker to government;17.What do you mean by ways and means advances?Ways and means advances were introduced as per an agreement between Reserve Bank of India and Government and they are temporary overdraft facilities provided by RBI to central government and state governments and the purpose is to bridge the time interval of mismatch the government expenditure and receipts. The duration of the limit is ten days for central government and 14 days for state government departments.18.Who is banking ombudsman and by whom he is appointed?Banking Ombudsman is an arbitrary authority who resolves the complaints received from the customers of commercial banks in regard to bank related issues.19.What do you mean by EEFC account?Exchange Earner’s Foreign Currency account is an account maintained in an account maintained in foreign currency with an authorized dealer ; i/e/ a bank dealing in foreign exchange. Professionals, exporters, trainers etc., who are in receipt of foreign exchange for the services extended by them in foreign countries can invest the amount in EEFC account and the account will be in the form of current account and no interest is paid for the balance held in EEFC account.20.What do you know by NBFC?NBFC means non banking finance companies. It is a company registered under Indian Companies act 1956 and presently 2013 engaged in the business of providing loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire purchase, insurance business, chit fund business etc.,Candidate: 00601.What do you mean by arbitrage?It is the process of purchase of one security from one market and selling the same security for earning a profit at the same time at another market.02.What do you mean by Bonus shares?It is the free allotment of shares in certain proportion to the existing shares held by the shareholders of a company and this is a means of providing reward to the investors for their contribution to the growth of the organization by capital investment03.What do you mean by Bull?It is a term given to a speculator on stock exchange who buys the securities in expectation of a rise in the prices. The market is called as bullish when there is a domination of buyers over the sellers04.What is known as dematerialization?Dematerialisation is the process by which shares in the physical form are cancelled and they are issued in electronic form. The certificates are known as demat shares. This process eliminates the time and manpower involved in transfer and registration of shares from the seller to the buyer05.What do you mean by moorat trading?It is the auspicious trading on a special day, say Diwali during some specified hours.06.What do you mean by rights issue?It is the issue of new shares to the existing shareholders in a fixed ratio to those already held at a price which is generally below the market price of the old shares.07.What do you mean by futures?It is a standard contract issued on an agreement to buy or sell an asset at a certain price at a certain time in future. It is an obligation on the buyer to purchase the underlying instrument and the seller to sell it.08.What do you mean by forward?The forward is a contract that is traded off the stock exchange and it is self regulatory and has certain flexibility unlike future which are traded at stock exchange only and it do not have flexibility of quantity and quality of commodity to be delivered and these are regulated by Securities Exchange Board of India, Reserve Bank of India or other agencies.09.What do you mean by factoring?Factoring is an arrangement in which short term domestic receivables on sale of goods or services are sold to a company called as factor and this scheme came into existence during 1991 based on the report of Kalyanasundaram Committee10.What do you mean by forfeiting?Forfaiting represents the purchase of obligations, which fall due at some future date and arise from the delivery of goods in export transactions, without recourse to the previous holder of the obligations.11.What do you mean by leasing?A lease is a contract where the owner of the assets transfers the right to another person to use the assets against the payment of fixed lease rentals. In the case of one lease contract, there are two parties namely – the lessor or the owner and the lessee or user. The lessor remains owner and the leased property remains with the possession of the lessee.12.What do you mean by debt market?It is a market wherein the debt instruments are issued to the public by any company for investment and such debt instrument bears a fixed interest rate payable half yearly on specific dates and principal amount repayable on particular date on redemption. Debentures are normally secured/charged against the asset of the company in favour of debenture holder. The following are some debt instruments – debenture; bond; zero coupon bond; convertible bond; security receipts etc.,13.What do you mean by greenshoe option?It is an option provided by Securities and Exchange Board of India to a company which is coming out with one initial public offer to the public. By this option, the company can retain certain portion of the applications received through IPO in case of oversubscription.14.What do you mean by equity market?Equity market consists of investment by the public in different kinds of shares issued by the company and by subscribing for the shares, the investors are expressing their willingness to stand as owners of the company. The equity market consists of equity shares, preference shares, rights shares, bonus shares etc.,15.What do you mean by sweat equity?Directors and employees contribute intellectual property rights to the company in the form of providing technical know-how captured by way of research or contributed by way of strategy software developed for the company or adding profit and economic value. To compensate the directors and employees, the concept of sweat equity has come into existence.16.What do you mean by participatory notes?A participatory note is a financial derivative instrument issued against an underlying security and it allows the holder, to get dividend or capital gains earned from the underlying security although some of the holders may not be eligible to trade in stock markets in India.17.What do you mean by book building?Book building is the process to assess the demand for a particular public issue of various prices, based on which the issue is priced and sold to the investors.18.What do you mean by sensex?It is a stock market index provided by Bombay Stock Exchange for the information of the investors. The positive or negative variation in the index provides an insight for investment or dis-investment to the general public and especially the investors in the stock market. It is based on the market capitalization of top thirty shares earmarked by BSE19.What do you mean by Nifty?It is a stock market index provided by National Stock Exchange for the information of the investors. The positive or negative variation in the index provides an insight for the investment or dis-investment to the general public and especially the investors who are participating in stock market trading. It is based on the market capitalization of top fifty shares earmarked by NSE20.What do you mean by swap?A swap is a contract that binds two counterparties to exchange the different streams of payments over the specified period at specified rate.