20-01-4 - Mortgage Bankers Association: Fill & Download for Free

I wrote this article some time ago:Don't Insure for the Mortgage Amount (Regardless of What the Bank Says)Author: Bill WilsonEvery agency has experienced this to one degree or another: A client buys a house and the replacement cost of the dwelling is considerably less than the mortgage amount. The insurer refuses to issue a policy with a Coverage A amount greater than the replacement cost, but the lender insists on a policy limit equal to the mortgage amount.Here's a typical situation:"We need your help! We're getting beat up by lenders insisting that we insure a home for the loan amount rather than replacement value. In our area, selling price values are soaring but replacement values are steady. People are refinancing with lower interest rates, starting a vicious battle between the loan officer (representing the lender) and us (representing the insurance company)."Here lies the problem: the loan officer will absolutely accept nothing short of the loan amount and they become angry and very threatening if we don't do exactly as they demand. The insurance companies demand some type of proof as to why we are requesting an increase (and a refinance is not the reason)."A typical situation is as follows: The bank faxes our office a request to change the mortgage clause and increase coverage to the loan amount. We respond that we need an appraisal showing replacement value from them to increase coverage. They normally supply an appraisal which agrees with our current coverage. We then advise them that we cannot increase coverage as we currently insure at replacement value and that their appraisal agrees. Now the trouble starts. We normally receive multiple calls from the loan officer calling us illegal, unprofessional, not serving our client, threatening to take the business away from us, and on and on. The calls start at the CSR level, then move up to the personal lines manager, and sometimes moves up to me, the owner, with each one of us explaining the same thing."This problem is only getting worse and I'm afraid it could get a lot worse. I'm concerned that banks will use this issue as leverage to rewrite our policies into their markets."I contacted the local insurance department office and he advised I could lodge an individual complaint on each situation with them. We're getting about 7 to 8 requests per day of which 1 or 2 can get real ugly."The lender's position is understandable, but misguided. Clearly, they want to protect their investment. That investment consists of two components: (1) the real estate (land, home, outbuildings, etc.), and (2) the loan itself. Insurance is the mechanism designed to protect against the pure risk of loss to the real property. However, the loan itself is a speculative business risk...that's not the function of insurance.As an example, let's say the purchase price and loan amount for a home is $200,000...for the sake of simplicity, we'll forget about any down payment. This $200,000 represents market value, not insurable value. The cost to rebuild the home itself might be $140,000, with the $60,000 balance being the value of the land and other structures. The purchase price includes the value of land, all structures, and even other property that may not be covered by a homeowners policy.The purchase price may also include the "value" of the location. I once looked at two new homes, both built from the same floor plan by the same contractor. The asking price for one of the homes was 50% higher than the other based SOLELY on the location of the home in a "preferred" neighborhood. The cost to rebuild the homes would be virtually identical.Under a homeowners policy, the insurance company would never pay more than $140,000 if the home was completely destroyed unless required to by a state's valued policy law (which is another reason for not insuring the loan amount). There has been no damage to the land or the "location value" (or at least the policy isn't going to pay that amount), so it would largely be pointless to insure the property for more than the structural replacement costs.It does not serve the bank's interest in any way to be the mortgagee on a policy with a policy limit equal to the loan amount because neither the insured nor the bank will ever collect that amount. The policy will only pay an amount based on the valuation method included in the contract. Again, this is the case if no valued policy law applies...if it does, then the insured could actually profit from the loss by insuring the loan amount rather than the replacement cost of the property. This would violate one of the fundamental tenets of insurance and, conceivably, could create a moral hazard.If an insurance company issues a replacement cost (or, worse, an ACV) policy with a limit greater than the actual cost to repair or replace, they may be in violation of the insurance laws in most states. I'm pretty sure all states require that rates/premiums be adequate, not excessive, and not unfairly discriminatory. What these banks are asking is that the insurance company issue a policy with an excessive premium (payment for coverage the insured can never collect without a total loss and triggering of a valued policy law, which has a likelihood of maybe 1-3%) and that's probably illegal.For example, TENNESSEE has an "Unfair Competition and Deceptive Practices" statute regarding loan amounts that exceed the value of a building or structure:"Lenders of money - Extenders of credit."(a) No person who lends money or extends credit may:"(8) Require, in connection with a loan or extension of credit secured by real property, that the debtor procure insurance for the protection of the property for an amount that exceeds the replacement cost of the structures existing on the secured property at the time of the loan or extension of credit or, in the case of a construction or improvement loan, insurance which exceeds the value the structures are expected to have upon completion of the construction or improvements."This law was enacted by an initiative of IIABA's state affiliate, the Insurors of Tennessee, in response to the situation described above.So, as you can see, a lender should not be permitted to demand an insurance limit that exceeds the value of the property insured as defined by the insurance contract. The insured or lender should never receive more than the actual value of the damaged property. In addition, "over-insuring" the property could be illegal, by statute or contract.Note: For another excellent article on this subject, and specific to FLORIDA law, check out Insuring for the Mortgage Amount on the Florida Association of Insurance Agents web site. As the article explains, Florida Administrative Code prohibits a mortgage lender from requiring insurance in an amount that exceeds the replacement cost of the home:"4-167.009 Mortgage Fire Insurance Requirements LimitedNo mortgage lender shall, in connection with any application for a mortgage loan in this state which is secured by a mortgage on residential real estate located in this state, require any prospective mortgagor to obtain by purchase or otherwise a fire insurance policy in excess of the replacement value of the covered premises as a condition for granting such a mortgage."Another state that has responded to this situation via insurance department directive is GEORGIA. According to Georgia Directive 98-PC-1, Establishment of Property Values and Corresponding Insurance Amounts on Mortgaged Properties Insured in Georgia (June 26, 1998):"Land values may not be included in the computation when determining the amount of appropriate homeowners insurance because homeowners insurance does not insure the land on which the home is located. Therefore, such activities are in violation of O.C.G.A. 33-6-5(6)(A) which provides as follows: 'No person shall knowingly collect any sum as premium or charge for insurance, which insurance is not then provided or not in due course to be provided subject to acceptance of the risk by the insurer by an insurance policy issue by an insurer as permitted by this title.'"The directive goes on to say that agents engaged in this practice can be fined from $1,000-$5,000 for each act and/or have his licensed suspended, revoked or placed on probation. Any insurer in violation of the law may have its certificate of authority suspended, revoked or placed on probation.Following the publication of this article, we heard from several other states who have similar "over insurance" laws besides Florida, Georgia, and Tennessee...below is a summary listing of the other states we're aware of with "over insurance" prohibitions.ArizonaARS 44-1208. Loans secured by real estate; prohibited practices; insurance. Except for consumer lender loans regulated pursuant to section 6-636, for any loan that is secured by real property, a person shall not require as a condition of the loan that the borrower obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer.[Note: The statute covers only real property (not mobile homes) and does not include commercial buildings. For more information, go to: http://www.azleg.state.az.us/ars/44/01208.htm]CaliforniaCalifornia Civil Code § 2955.5 says, in part:(a) No lender shall require a borrower, as a condition of receiving or maintaining a loan secured by real property, to provide hazard insurance coverage against risks to the improvements on that real property in an amount exceeding the replacement value of the improvements on the property.(b) A lender shall disclose to a borrower, in writing, the contents of subdivision (a), as soon as practicable, but before execution of any note or security documents.(c) Any person harmed by a violation of this section shall be entitled to obtain injunctive relief and may recover damages and reasonable attorney's fees and costs.(d) A violation of this section does not affect the validity of the loan, note secured by a deed of trust, mortgage, or deed of trust.ConnecticutStatute 360-757 originated with public act PA 84-212 which prohibits a mortgage lender from requiring a prospective home buyer to obtain a fire insurance policy in excess of the home's replacement value, as a condition of granting a mortgage loan on residential property located in the state and secured by such a mortgage. The act was effective on October 1, 1984. On October 1, 2000, the statute was broadened by PA 00-95 to include flood insurance, extended coverage insurance, or any combination of insurance, including fire insurance.IllinoisPublic Act 093-1021 Effective August 24, 2004:Section 5. The mortgage Insurance Limitation and Notification Act is amended by adding Section 17 as follows:Sec. 17. Insurance coverage.(a) No lender shall require a borrower, as a condition of receiving or maintaining a loan secured by real property, to provide hazard insurance coverage against risks to the improvements on that real property in an amount exceeding the replacement value of the improvements on the property.(b) Any person harmed by a violation of this Section shall be entitled to obtain injunctive relief and may recover damages and reasonable attorney's fees and costs.(c) A violation of this Section does not affect the validity of the loan, note secured by a deed of trust, mortgage, or deed of trust.MassachusettsGeneral Law, Chapter 183, Section 66 says, in part:A bank, lending institution, mortgage company or any mortgagee doing business in the commonwealth, when making a mortgage loan, shall not require, as a condition of a mortgage or as a term of a mortgage deed, that the mortgagor purchase casualty insurance on property which is the subject of the mortgage in an amount in excess of the replacement cost of the buildings or appurtenances on the mortgaged premises.MichiganMORTGAGE LENDING PRACTICES (EXCERPT)Act 135 of 1977445.1602a Property/casualty Insurance as condition to loan; limitation on amount required; amount as condition of sale, transfer, or assignment. [M.S.A. 23.1125(2a)]Sec. 2a. (1) Except as provided in subsection (2), a credit granting institution that requires a mortgagor to maintain property/casualty insurance as a condition to receiving a mortgage loan shall not require the amount of the property/casualty insurance to be greater than the replacement cost of the mortgaged building or buildings.(2) A credit granting institution may require an amount of property/casualty insurance that is required of the credit granting institution as a condition of a sale, transfer, or assignment of all or part of the mortgage to a third party. This subsection does not require that the credit granting institution anticipate a sale, transfer, or assignment at the time the mortgage loan is made.History: Add. 1995, Act 214, Imd. Eff. Nov. 29, 1995MontanaIn 2009, SB 375 amended MCA 32-1-430, 32-3-604, and 32-10-401 to provide that a “lender may not require insurance on improvements to real property in an amount that exceeds the reasonable replacement value of the improvements..”New HampshireRSA 417:4 printed 01-12-2006 from NH Insurance Dept websiteXVI. COERCION IN REQUIRING INSURANCE.(a) No creditor or lender engaged in the business of financing the purchase of real or personal property or of lending money on the security of real or personal property may require, as a condition to such financing or lending, or as a condition to the renewal or extension of any such loan or to the performance of any other act in connection with such financing or lending, that the purchaser or borrower, or the purchaser's or borrower's successors shall negotiate through a particular insurance company or companies, insurance agent or agents, broker or brokers, type of company or types of companies, any policy of insurance or renewal of a policy insuring such property. This provision does not prevent the exercise by any mortgagee of the right to approve on a reasonable nondiscriminatory basis only insurance companies authorized to do business in this state, selected by the borrower.(b) There shall be no interference either directly or indirectly with such borrower's, debtor's or purchaser's free choice of an agent and of an insurer which complies with the foregoing requirements, and the creditor or lender may not refuse the policy so tendered by the borrower, debtor or purchaser. Upon notice of any refusal of such tendered policy, the insurance commissioner shall order the creditor or lender to accept the tendered policy, if the commissioner determines that the refusal is not in accordance with the foregoing requirements of this subparagraph. Failure to comply with such an order of the insurance commissioner is a violation of this section.(c) Whenever the instrument requires that the purchaser, mortgagor, or borrower furnish insurance of any kind on real or personal property which is being conveyed or which is collateral security to a loan, the mortgagee or lender shall refrain from disclosing or using any and all such insurance information to its own advantage and to the detriment of either the borrower, purchaser, mortgagor, insurer, or company or agency complying with the requirements relating to insurance.(d) Notwithstanding any other law to the contrary, a creditor or lender of a loan secured by an interest in real property shall not require the borrower to keep the mortgaged property insured under a property insurance policy in a sum in excess of the value of the buildings on the real property.(e) Notwithstanding any other law to the contrary, no creditor or lender shall require as a condition to closing a loan that the borrower provide an original insurance policy at said closing; provided, however, that the creditor or lender may require the borrower to produce at closing a binder showing the borrower as a named insured and creditor or lender as mortgagee, and confirming that insurance has been issued, is in force, and will remain in full force until a copy of the final policy is delivered to the creditor or lender or until the creditor or lender has received notice of cancellation in accordance with the policy conditions.(f) No insurer may automatically write insurance on a debtor who has contracted credit based on the principle that the insurance is applicable unless specifically rejected by the debtor, unless the premium or such other identifiable charge as may be applicable is paid in full by the creditor.New JerseyNJAC 3:1-13.1Insurance tie-in prohibition(c) No lender shall, in connection with any application for a loan secured by a mortgage on real property located in New Jersey, require any mortgagor to obtain by purchase or otherwise a fire insurance policy in excess of the replacement value of the covered premises as permitted under N.J.S.A. 17:36-5.19 as a condition for granting such mortgage loan.New York3 NYCRR 38.9 Limitation on excess insurance and required disclosures(a) Limitation on excess insurance.No mortgage banker or exempt organization shall require any mortgagor, in connection with the granting of a mortgage loan, to obtain a hazard insurance policy in excess of the replacement cost of the improvements on the property as a condition for the granting of such mortgage loan.North Carolina58-63-25 "Unfair methods of competition" or "unfair and deceptive acts or practices"The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:(13) Overinsurance in Credit or Loan Transactions. In connection with a loan or extension of credit secured by real or personal property or both, requiring the applicant to procure property and casualty insurance against any one risk which results in coverage which exceeds the replacement value of the secured property at the time of the loan or extension of credit. In connection with a secured or unsecured loan or extension of credit, requiring the applicant to procure life or health insurance against any one risk which exceeds the amount of the loan. In connection with a loan secured by both real and personal property, requiring credit property insurance, as defined in G.S. 58-57-90, on the personal property. For the purposes of this subsection, "amount of loan" shall be deemed to be the amount of the principal and accrued interest to be paid by the debtor including other allowable charges.PennsylvaniaHere is a paper written by our Pennsylvania association on this issue relative to PA laws.Rhode IslandCHAPTER 27-5 - Fire Insurance Policies and Reserves - SECTION 27-5-3.2§ 27-5-3.2 Property insurance. No person, bank, or lending institution doing business in this state, whether acting under state or federal authority, which includes but is not limited to (1) a bank, savings bank, or trust company, as defined in this title, its affiliates or subsidiaries, (2) a bank holding company, as defined in 12 U.S.C. § 1841, its affiliates or subsidiaries, (3) mortgage companies, and (4) any other individual, corporation, partnership, or association authorized to take deposits and/or to make loans of money under the provisions of chapters 20, 21, 22, 23, 24, 25, 25.2, and 25.3 of title 19, making a mortgage loan, shall, as a condition of the mortgage or as a term of the mortgage deed, require that the mortgagor carry property insurance on the property which is the subject of the mortgage in excess of the replacement cost of any buildings or appurtenances subject to the mortgage; provided, that if a mortgage is sold, transferred, conveyed, or assigned, it shall be the responsibility of the holder of the mortgage to notify the insurance producer issuing the property insurance policy in writing of that sale, transfer, conveyance, or assignment. This notice shall be made in writing and shall be sent to the insurance producer within thirty (30) days of the sale, transfer, conveyance, or assignment by registered mail. In the event that the holder of a mortgage shall fail to notify the insurance producer who issued the property insurance policy that is in force, in writing, of that sale, transfer, conveyance, or assignment within thirty (30) days, the holder shall indemnify and hold the insurance producer harmless.VirginiaThe question posed was if a bank could force the consumer to have an insurance policy with the insured amount being the loan value even if this exceeds the value of the building. Under Virginia Banking code banks are not allowed to do this. The statutes does not reference personal or business loan so we would assume it applies to both.VA Code- 6.1-2.6:1. Fire insurance coverage under certain loans not to exceed replacement value of improvements.A. No lender shall require a borrower, as a condition to receiving or maintaining a loan secured by any mortgage or deed of trust, to provide or purchase property insurance coverage against risks to any improvements on any real property in an amount exceeding the replacement value of the improvements on the real property.In this section, 'property insurance coverage' means insurance against losses or damages caused by perils that commonly are covered in insurance policies described with terms similar to 'standard fire' or 'standard fire with extended coverage.'In determining the replacement value of the improvements on any real property, the lender may:1. Accept the value placed on the improvements by the insurer; or2. Use the value placed on the improvements that is determined by the lender's appraisal of the real property.B. A violation of this section shall not affect the validity of the mortgage or deed of trust securing the loan."Wisconsin632.07  Prohibiting requiring property insurance in excess of replacement value. A lender may not require a borrower, as a condition of receiving or maintaining a loan secured by real property, to insure the property against risks to improvements on the real property in an amount that exceeds the replacement value or market value of the improvements, whichever is greater.For an example of a related article regarding flood insurance prohibitions on this practice, "Flood Insurance Mandatory Purchase Guidelines".Last Updated: May 17, 2014Source:https://www.independentagent.com/Education/VU/Education/VU/Insurance/Personal-Lines/Homeowners/Conditions/WilsonMortgageAmount.aspx

IBPS/SBI/RRB examinations– Banking and financial awarenessChecklist for study preparation01Indian financial system – Financial intermediaries; Money market; Capital market; Financial assets;02Reserve Bank of India – History, Role and functions of Reserve Bank of India; Traditional functions; Development functions; Regulatory functions;03Banking history – Origin of banks - Nationalised banks first stage; Nationalised banks second stage; Old private sector banks; New private sector banks; SBI group banks; Foreign banks; Bank headquarters; Regional Rural Banks;04Types of banks – Savings bank; Commercial bank; Industrial bank; Development bank; Land development bank; Central bank;05Functions of commercial banks – Primary functions; Secondary functions; Agency functions; General utility functions; Social development functions;06Bank – Functional hierarchy; Positional hierarchy; Universal bank; Narrow bank; Islamic bank; Small bank; Payment bank; Banks-taglines; Banks-ranking;07Cooperative banks – Categories;08Types of customers – Individuals; Joint accounts; Minors; Illiterate; Blind; Pardanashin women; Hindu Undivided family; Clubs; Trusts; Charitable Institutions; Associations; Proprietorship firm; Partnership firm; Private and Public Limited companies09Types of deposits – Demand deposits; Savings and Current; Term deposits; Fixed, Recurring and Reinvestment deposits;10Non resident Indians – Persons of Indian origin; Resident Indians; Non resident accounts; Non resident external; Non resident ordinary; FCNR and RFC accounts; EEFC account; Escrow account;11KYC guidelines- Foreign Inward remittances; KYC- Categories of customers; Low risk; Medium risk and High risk;12Negotiable Instruments act 1881 – Negotiable instruments; Non negotiable instruments; Semi negotiable instruments;13Cheques – Parties to a cheque; Types of cheques; Reasons for cheque return; Crossing of cheques; MICR code; IFSC code; Cheque truncation system; Clearing house; RTGS remittance; NEFT remittance14Demand draft – Parties to a demand draft; Issue of duplicate demand draft; Difference between cheque and draft;15Negotiable Instruments - Bill of exchange; Promissory Note; Hundies;16Banker-customer relationships – Mortgage; Hypothecation; Pledge; Assignment; Bailment; Agency;17Currency note issue – Management of currency; Notes in circulation; Coins in circulation;18Electronic banking- Services; Benefits; Types of automated teller machines; Debit card; Credit card; Smart card; Core banking solution; Cheque truncation system;19Rights of customers – Various rights; Risks faced by commercial banks;20Important terms – Cash reserve ratio; Statutory liquidity ratio; Bank rate; Base rate; Marginal standing facility; Repo rate; Reverse repo rate;21Non Banking Finance Companies – Categories;22Insurance – Types of insurance; Life insurance products; Specific principles of insurance; Mutual fund products;23Agriculture – Functions of NABARD; Direct agriculture; Indirect agriculture; Culture and revolution; Types of farmers; Agriculture labourers;2425Categories of loans – Types of securities; Priority sector advances; Weaker section advances; Non Performing assets; Consortium Lending; Syndication credit;26Types of various accounts – Nostro account; Vostro account; Loro account; Suspense account; Call deposit; Margin account; No frill accounts; Senior citizen deposit account; Checking account; Bank trust custodial account; Official settlement account;27Foreign exchange – FERA; FEMA; Authorised persons; Notional rates; Foreign exchange selling and buying rates;28Forex terms – Import and export code; DGFT; Packing credit; Opinion letter; Packing credit; Payment under reserve; Delinking;29Capital market – Primary market; Secondary market; Shares; Debentures; Demat account; Depository; Stock exchanges; IPO; ASBA account; Stock exchanges; SENSEX; NIFTY; Market capitalization; Book value; Above par; Below par; Green shoe option; Red herring prospectus; Float; Outstanding capital; Earnings per share30Financial statements – Balance sheet; Profit and loss account; Categories of capital; Categories of reserves; Gross block; Net block; Intangible assets; Non current assets; Current assets; Current liabilities; Sources and uses of funds; Ratios – Current ratio; Gross profit ratio; Quick ratio; Debt equity ratio; PBDIT; Net worth; Tangible net worth; Sundry debtors; Sundry creditors;31Retail banking- Retail deposits; Retail loans; Retail services;32Wholesale banking – Fund based services; Non fund based services; Value added services; Retail Banking services; Needs of exporters; Needs of importers; Remittance services;3334Reserve Bank of India – The past and present Governors;35Various committees36Money market instruments – Call money; Notice money; Term money; Held till maturity; Yield to maturity; Coupon rate; Treasury operations; Gilt edged securities; Types of treasury bills; Commercial paper; Certificate of deposit; Inter corporate deposits; Ready forward contracts;37Indian Economy – Developing economy; Gross national product; Net national product; National wealth; National income; Gross domestic product; Personal income; Personal disposable income; History of planning; Planning commission; Five year plans; National development council; Planning strategies; Rural poverty; Types of unemployment; Foreign direct investments;38Development programmes – Employment; Rural development; Women empowerment; Education oriented; Public distribution system; Maharatnas; Navaratnas; Types of large scale industries; Foreign direct investment;39Mutual funds: Income funds; Growth funds; Balanced funds; Diversified funds; Infrastructure funds; Index funds; Open ended fund; Closed ended fund; Fixed maturity fund40Tax- Direct tax; Indirect tax; Income tax; Service tax; Sales tax; Value added tax; Customs duty; Central excise duty;Important topics:Account payee crossing;Electronic clearing system;Death claims;Nomination;PIN Number;PAN Number;Natural guardian;Mother of deposits;EEFC account;DRA-Debt recovery agent;DMA – Direct marketing agent;DSA – Direct selling agent;CASA account;Deposit Insurance and Credit Guarantee Corporation;Export Credit Guarantee Corporation;Collateral security & prime security;Guarantee; Financial guarantee;Deferred payment guarantee;Performance guarantee;Bills for collection;Pay in slip; Withdrawal slip;Arbitration; Arbitrate; Arbitrator;Gold loans; Appraisal; Appraiser;Bouncing/Dishonour of the cheque;Book building;Kerb trading; Insider trading;Document of title to goods;Credit rating agencies; SWIFT;Merchant Banking;Mergers and acquisitions;Encryption and decryption;Plastic money; Venture capital;Micro credit;Factoring; Forfeiting; Lease finance;Asset Reconstruction Company;Asset Management Company;Hedging; Underwriting; Subcontracting;Enterprise risk management;Asset Liability management;Relationship management;Breakeven point;Principle of utmost good faith;Principle of indemnity;Principle of subrogation;Principle of insurable interest;Principle of mitigation of loss;Mergers and consolidations;Business correspondent;Money laundering;Garnishee order;Income tax attachment order;Debt recovery tribunal;Balance of trade; Balanced budget;Balance of payments;Inflation and deflation;Special drawing rightsGlobal depository receipts;Indian depository receipts;American depository receipts;External commercial borrowings;Fiscal cliff;On balance sheet items;Off balance sheet items;Basel committee on banking supervision;Basel I and Basel II accord;Tier I and Tier II capital;CAMELS;Sarfaesi act 2002Securitisation;Derivatives; Options; Futures;Special purpose vehicle;Value at risk;Business process outsourcing;Capital account convertibilityMinimum support price;Net asset value;Capital adequacy ratio;LIBOR and MIBOR;One time settlement;Wholesale price index;Consumer price index;Bank working and business hours;LPG and PURA strategies;International development association;Corporate social responsibility;Monopoly and oligopoly;Per capita income;Business facilitator;Corporate governance in banks;Sub prime lending;Financial inclusion;Ways and means advances;Liquidity adjustment policy; Forwards;Negotiated dealing system; Conversion; Material alteration;Liquidators; Receivers;Banking ombudsman scheme;Participatory notes;Book building;Willful defaulters;Lok adalats;Debt recovery tribunals;Rule in clayton’s case;Current account transactions;Capital account transactions;Convertibility;Capital account convertibility;Liberalised remittance scheme;Exchange rate system;Mirror account; Forward contracts;Swaps; Arbitrage;Duty draw back system;External commercial borrowing;Suppliers’ credit;Buyers’ credit;Break even point;Schemes:1-Pradhan mantri Jan Dhan Yojana (World’s largest Financial Inclusion programme)2-Pandit Deen Dayal Upadhyaya Shramev Jayate Karyakram3-Deen Dayal Upadhyaya Antyodaya Yojana4-Mission Housing for all5-Micro Units Development and Refinance Agency Bank (MUDRA Bank)1-My Gov Online Platform2-Digital India3-Make In India4-Deen Dayal Upadhyaya Grameen Kaushal Yojana5-National Policy for Skill Development and Entrepreneurship6-National Sports Talent Search Scheme7-Swachh Vidyalaya Abhiyan8-Padhe Bharat Badhe Bharat9-Pandit Madan Mohan Malviya National Mission on Teachers and Teacher Training10-Rashtriya Avishkar Abhiyan1-Pradhan Mantri Suraksha Bima Yojana2-Pradhan Mantri Jeevan Jyoti Bima Yojana3-Atal Pension YojanaRBI and RBI Related Important Topics for IBPS Po / clerkBanking and Important topics from Banking1Origin of RBI. Who is the current governor. How many members are there in RBI BoardWhat is bank? What are its functions? how is it different from an NBFC/NBFC-factor, Post-office savings, Chit Fund, Nidhi etc?2RBI comparison with SEBI, IRDA : Name of their main bosses, Who controls what? NBFCs, MFI, Gold Loans, ULIP, Mutual funds etc.Types of banks: commercial banks, regional rural banks, cooperative banks, investment banks, development banks etc.3Powers and functions of RBIWhat is a Scheduled commercial bank?4How does RBI control the money supply?IDBI, ICICI, IFCI, SIDBI, EXIM, NHB etc.5Open market operations, MSF, liquidity adjustment facilityBank nationalization, mergers and consolidations.6SLR, CRR, Repo, Reverse repo, bank rateNames of chairman/CMD of big banks.7Priority sector lending: and its subsectors. How do they apply to Domestic bank vs foreign bank?Basic GK related to banks: first commercial bank in India, first bank setup by Indians, origin of SBI/ICICI, subsidiaries of SBI, etc.8Banking regulation act and its recent amendmentImportant Mobile APPS Launched By Various banks9Banking reform, Banking License, Narshiman, BASEL.Types of Bank customers and provisions related to them:Minor-Guardian, partnership firmsHUF and kartaNRI, PIOjoint account holdersMarried Womenpartnership firm accountspublic/private companiestrusts and cooperatives10Nachiket Mor CommitteeTypes of bank accounts and their features:1-current account, savings account2-term deposit account, fixed deposit,3-PPF, senior citizen’s account4-NRE-rupee account, FCNR account, RFC, EEFC, escrow account5-Allied topic: post office savings account and National savings certificate11Foreign exchange management, components of forex reserves, approx. forex under RBI. Powers under FERA/FEMA, Tarapore Committee on capital account convertibilityCheque:1-order/bearer/travel/bankers cheque2-endorsement, cheque-crossing,3-post-dated cheque, what if cheque-date is invalid4-when Bank should not pay, cheque-dishonor (cheque-bouncing)5-MICR, Cheque truncation6- new CTS-system7-Note refund rule, clan note-policy12Measures of money supplyOnline banking:1-NEFT, RGTS, EFTS, Bankwire, E-commerce2-networking among banks: INDONET, BankNET, RBINET, SWIFT, Point of Sale (POS) terminal3-core-banking solutions4-Electronic signature and Information Technology Act13Currency chest, Mint and press. Who signs coins and currency?Loans1-different type of loan products,2-Subprime lending3-mortgage, reverse mortgage, collaterals, stamp duty on loan documentslien, set-off4-Priority sector lending: and its sub sectors. How do they apply to Domestic bank vs Foreign bank?SLR, CRR, Repo, Reverse repo, bank rateBanking Ombudsman: powers functions, appeal structure and Consumer courtsWho appoint RBI Governor And tenure of RBI governor.Bancassurance, cross-selling, universal / narrow / retail bankingMobile Banking, personal banking, tele-banking, corporate bankingATM: PIN, HWAK, White Label ATM, third party ATMRural Banking And important Topics related to Rural Banking For IBPS PORural Banking And Important Topics for IBPS POWhat is Role Of RBI and NABARD in Rural BankingRural infrastructure development fund (RIDF) And Budget 2015 Fund allocationFinancial Inclusion And Schemes launched for financial inclusionregional rural banks, their amalgamationcooperative banks And Functions Of Co operative Banksmicro-finance institutions (MFI)primary agricultural credit SocietyBanking correspondent agentsKisan credit card, interest subvention on crop-loanslead bank scheme, local area banks, service area approachNon Performing Assets , Bad Loans and Other Important Topics for IBPS Preparation.NPA and Bad Loans = Problem for BanksInternational BankingWhat is NPA?Bretton WoodsGross NPA versus net NPAWorld BankAsset classification under NPA (substandard/doubtful/loss)ADR, GDR, IDRCurrent figure of NPA? Which bank has highest NPA?Islamic BankingCapital adequacy norms, hypothecationAsian clearing unionCIBIL and credit ratingbank for International settlementSARFAESI Act and its recent amendmentBASELasset reconstruction companiesWho are the Main boss of IMF, World Bank, ADB?Debt recovery tribunals.IMF: SDR, voting rightsLok Adalats , functions of Lok AdalatsBRICS Bank and Its Member Countries , HQ, President of Brics BankIndustrial sicknessAIIB Bank, HQ , President, Founding Members, IMF and AIIB ComparisionBoard for industrial and financial ReconstructionEuropean Banking AuthorityDisinvestmentTopics to Prepare for IBPS From current Affairs mainly Banking Related.Banking Awareness (Current Affairs)RBI’s monetary policy and key ratesAny committee made by RBI/government for Banking sector. Who is its chairman and what is the purpose?Any new directives to banks by RBI/Finance MinistryPerson in News: Any new appointments in RBI/Big Banks, Any Indian being appointed in foreign banksBanking license, entry of foreign banks.New Product and Mobile apps Launched by various BanksGovernment schemes associated with financial inclusion/pension/insurance: swabhiman, swavalamban etc.AwardsEconomy Theory , Financial Market, Budget And Other important topics from Traditional Syllabus. These topics are important for IBPS PO Exam.Economy Theory -Important topics to PrepareFinance1-Money market vs capital market: functions, who supervises them?2-Commercial bills, Treasury bills, certificate of deposit, commercial paper3-Derivatives, options-futures, currency swaps,4-underwriting, factoring5-debt vs equity: IPO-shares, stocks, debentures, bonds, mutual funds, G-sec6- venture capital, angel investor7- SEBI: functions, who is their main boss?8- Stock Exchange: BSE, NSE, SENSEX, Dollex etc. , Functions, Chairman and Power9- Credit rating: CRISIL, Moody, S&P etc., Different Types of Ratings10- participatory notes , Cheques, Promissory Notes, Negotiable Instruments, Bill of Exchange11 - QFI, FII12 - FDI and its limits in various sectors, FIPB13 - PAN card and DEMAT account14 -External commercial borrowing (ECB), ADR, GDR, IDR15 - RBI Act, Companies Act,Insurance1-Types of insurance2-Nationalization, LIC, GIC etc.3-IRDA: chairman, power-functions4-NPS, EPFO, ESIC, social security5-pension-insurance reforms, FDI6-Bancassurance7- Atal pension yojanaIndian Economy1-NITI AAYog2- five-year plans, main targets of 12 five-year plan.3-14th Finance commission and who is its chairman?4- Inflation: types, impact, various terms associated with inflation WPI, CPI, their new series, who calculates what?5- IIP, industrial licensing, definition of MSME6- Indian Economy growth Forecast , Forex Reserve And Balance of trade7- Economy Survey 2014-15 Highlights8- Industrial PolicyBudget1-Taxation:2- direct vs indirect. taxation powers of union and state3- tax deduction at source4 - tax slabs according to Budget 20155- negative list in service tax6 - PAN Card, E-filling of tax returns7- Types of budgets: surplus, deficit, balanced9- votable vs non-votable items10 -Finance Bill and appropriation Bill11 -cut motions: policy cut, economy cut, token cut12- general budget versus railway budget13- revenue versus capital expenditure14- standing committees of Parliament15- types of deficits, FRBM targets16- fiscal deficit and its impact on economy17- Consolidated fund, contingency fund, public account18 - Budget 2015 and Allocation of Funds for various Schemes and departmentsList of Important schemes And Programmes Launched PM Modi In Last One YearCategory of schemeScheme NamePro Poor1-Pradhan mantri Jan Dhan Yojana (World’s largest Financial Inclusion programme)2-Pandit Deen Dayal Upadhyaya Shramev Jayate Karyakram3-Deen Dayal Upadhyaya Antyodaya Yojana4-Mission Housing for all5-Micro Units Development and Refinance Agency Bank (MUDRA Bank)Pro Youth1-My Gov Online Platform2-Digital India3-Make In India4-Deen Dayal Upadhyaya Grameen Kaushal Yojana5-National Policy for Skill Development and Entrepreneurship6-National Sports Talent Search Scheme7-Swachh Vidyalaya Abhiyan8-Padhe Bharat Badhe Bharat9-Pandit Madan Mohan Malviya National Mission on Teachers and Teacher Training10-Rashtriya Avishkar AbhiyanPro Farmer1-Enhanced Compensation for distressed Farmers due to crop damage2-Deen Dayal Upadhyaya Gram Jyoti Yojana3-Soil Health Card Scheme4-Pradhan Mantri Krishi Sinchai Yojana5-Jan Suraksha Schemes (PMJJBY, PMBSY, APY)6-Rashtriya Gokul MissionPro Women1-Beti Bachao, Beti Padhao Abhiyaan2-Sukanya Samriddhi Account3-Himmat App4-PAHAL-Direct Benefits Transfer for LPG (DBTL) Consumers Scheme5-Swachh Bharat Mission6-Gold Monetisation Scheme7-Pro Senior Citizen1-Pradhan Mantri Suraksha Bima Yojana2-Pradhan Mantri Jeevan Jyoti Bima Yojana3-Atal Pension Yojana4-Pro Development1-The National Institution for Transforming India (NITI AAYOG)2-Make In India3-Digital India4-Smart City Programme5-The National Urban Development Mission6-Deen Dayal Upadhyaya Gram Jyoti Yojana7-Pragati Platform8-Mission Housing for all