[Banking] Bharat Bill Payment System (BBPS), SBI Shariya Equity fund, KYC partial freezing, Minimum Balance guidelines

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Unacademy Plus Mrunal Economy for Prelims and Mains UPSC!
  1. Prologue
  2. [Block-1] Money transfer related
    1. Bharat Bill Payment System (BBPS)
    2. Pre-paid cards: Bhai increases Limit
    3. ATM transaction: Bhai says >5=Rs.20
    4. Kotak Facebook money transfer
    5. Corporation bank: E-Mandate
    6. ICICI: cashless withdrawls
  3. [Block-2] Banking-Finance operations
    1. KYC non-compliant accounts: Bhai’s orders Partial Freezing
    2. Minimum Balance requirements: Bhai gets strict
    3. Madras highcourt nudges Rajanbhai
  4. [Block-3] New Product launch
    1. P1: SBI Shariya Equity fund
    2. P2: SBI Styleup card
    3. P3: Syndicate Bank: 2 new schemes
    4. P4: isc. Developments in Banking sector
  5. Mock Questions for Bank exams


  • In the previous article, we saw some of the recent developments in banking sector at ‘organizational’ level e.g. RRB Amendment bill, Small banks-payment banks, Kotak-ING Vysya merger, new guidelines for NBFC etc.
  • In this article, we’ll checkout some current banking developments at “operation” level.
  • Utility: IBPS Bank interviews and MCQs.

[Block-1] Money transfer related

Bharat Bill Payment System (BBPS)

Bharat Bill Payment System BBPS

  • 2013: RBI’s G.Padmanabhan Committee estimated ~6000 billion rupees are transacted through >30,000 million bills every day.
  • At present we have multiple channels to pay electricity, telephone, gas, cable and other utility bills – through cash, cheque, netbanking, credit card etc. and many middle-men involved such as paytm, ccavenue, billdesk etc.
  • PAdmanabhan Committee recommend a integrated bill payment system for the whole country, to improve efficiency, cut down operation costs and protect customers.
  • 2014: RBI sets up Prof. Umesh Bellur Committee (IIT Bombay).
  • As per Bellur Committee suggestions, Rajanbhai released guidelines for BBPS in 2014, November.

Salient features

  • BBPS is an integrated bill payment system
  • To pay light bill, phone bill, piped-gas bill, DTH, school fees & other utility bills.
  • Will also hear consumer complaints in bill payment.
  • Nodal body: NPCI (National Payment Corporation of India). NPCI is also responsible for Rupay cards.
  • Other guideline points too technical and unnecessary for MCQs.


  • Customer will have ease of paying bills and protection from frauds and mischief.
  • RBI and Government can keep tabs on all payments made in India- to fine tune their monetary policy and tax policies respectively.

Pre-paid cards: Bhai increases Limit

  • Prepaid cards allow customers to spend money without comprising their privacy and security (unlike credit cards)
  • Examples: SBI  gift card, ICICI meal card etc.
Existing money in individual card Rajanbhai increased to
Rs.50,000 Rs.1 Lakh

Additional provisions:

  • If a person has KYC compliant bank account, the bank is allowed to issue pre-paid cards to his family members as well.
  • But one beneficiary can get 1 card only.
  • Bank must report suspicious transactions to FIU (financial intelligence unit)
  • Card must be used in India only.

ATM transaction: Bhai says >5=Rs.20

RBI has permitted bankers to impose following ATM transaction charges on customer.

6 Metro cities Non metro
Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore remaining areas
Only 5 free transactions a month in home bank unlimited
only 3 free transactions in other banks 5 times
Afterwards, Rs.20 charged per transaction, even for printing that stupid mini-statement. same charge
  • Obviously, Metro customers don’t like it. Not one bit. Especially hostel students because their lukkha-type roommates steal money, so they prefer to takeout required money from ATM only, instead of hiding under the pillow or wallet.
  • Although Rajanbhai’s original motive is to encourage people to use virtual money (netbanking, creditcard etc) instead of paper currency.
  • So in long term, it’ll help decreasing the menace of fake currency as well.
  • We’ll allow 10 free ATM transactions to certain high value customers
  • We’ll allow unlimited free transctions for customers with above Rs.1 lakh balance in savings account.
PNB We’ll continue giving free ATM service to our customers. No monthly five-transaction limit.

Kotak Facebook money transfer

  • You can send money to your facebook friends in real time.
  • But you’ve to first register to a separate site called “KayPay”.
  • Limits: Rs.2500 per transaction and monthly maximum Rs.25,000
  • ICICI too allows such thing but among its own account holders only.

Corporation bank: E-Mandate

  • It provides an online platform for ‘repetitive’ payments- as an alternative to post-dated cheques and ECS (electronic clearing service).
  • Applications: Lightbill, Phonebill, Utility bills, Loan installements, school fees etc.nstalment payments, school fee payments, premium payment and the line,
  • Corporation bank will run this E-Mandate using National Payments Corporation of India’s (NPCI) National Automated Clearing House (NACH) services.

ICICI: cashless withdrawls

  • ICICI Bank launched ‘Cardless Cash Withdrawal’ at ATMs.
  • ICICI account holder can transfer money to a mobile phone user in the country.
  • No need even to have an account with any bank to receive money.
  • Beneficiary will get a six-digit code in his mobile.
  • Can use that code to withdraw money from ICICI’s bank ATMS (Even if he has no account)
  • Code valid for 2 years.

[Block-2] Banking-Finance operations

KYC non-compliant: Bhai’s orders Partial Freezing

Rajanbhai’s new order on lukkha-type customers who don’t submit KYC documents despite repeated reminders

3 months Bank should send first reminder to client to submit documents for KYC (Know your customer norms).
Another 3 months Send another reminder. IF customer still doesn’t give documents then partially freeze his account i.e. he can deposit money but cannot take it out.
Another 6 months
  • If a customer’s account is partially frozen for 6 months and still he doesn’t give documents then completely freeze his account- can’t deposit money, can’t take out money.

Minimum Bank Balance: Bhai gets strict

From 1st April 2015, Banks will have to implement following RBI-guidelines about minimum balance for customers.

  • They’ll have to inform client in advance IF his minimum balance falls below the prescribed limit. e.g. for ICICI Salaried savings account, minimum monthly balance requirement is Rs.10,000 for metro areas. Otherwise penalty of Rs.250/- at present.
  • IF client doesn’t maintain minimum balance, then penalty must be only in the proportion of short-fall. So banks will have to shift from the absolute figure like Rs.250 penalty, to a percentage figure like 1% of the shortfall.
  • Client must be given 1 month’s grace period to fix the problem, only after that levy penalty.
  • Penalty charges should be reasonable. OR simply convert such accounts to “No-frills” account instead of levying penalty. (No frills=basic savings bank deposit accounts meant for Poors.)
  • Bank should not take undue advantage of client’s difficulty or inattention. e.g. Terminally ill person, person who lost everything in a natural or man-made disaster and therefore unable to maintain minimum balance.

Madras highcourt nudges Bhai


  • Gold loan companies such as Muthoot Finance and Manappuram, are accused of charging very high interest rate from borrowers. (~24-30%)
  • RBI said ‘we don’t regulate the interests charged by such NBFCs’. Consequently, PIL filled in Madras highcourt.

Madras high court order (Nov.2014)

  • Mostly uneducated people borrow from such Gold loan companies for personal needs.
  • They lack the acumen to read fineprints in loan agreement and its future consequences.
  • Since Colonial times, Money lenders have exploited poor masses.
  • Therefore, It is the responsibility for RBI to ensure Non-Banking financial companies don’t turn into exploitative moneylenders.
  • RBI cannot wash off its hands from this responsibility.
  • RBI must force NBFCs to adopt Fair practices code (FPC).

[Block-3] New Products launch

P1: SBI Shariya Equity fund

  • Long term investment. Each unit costs Rs.10
  • Then SBI mutual fund managers will invest that money on the shares (equities) of Islamic Shairya compliant companies i.e. companies not involved in alcohol, tobacco, gambling, moneylending etc.
  • Outside Islamic nations, only 2 countries offering Shariya compliant investment options: (1) UK  (2) India.
  • Benefit? Financial inclusion among Muslims. Because Shariya law forbids them from earning ‘interest’ on money, hence many of them averse to investing in share market.
  • Within India, 3 mutual fund managers already offering such schemes viz. Goldman Sachs, Taurus and Tata.
  • Challenges:
  • In Indian stock-markets, hardly 600-700 companies have Shariya-compliant shares.
  • Some critiques argue a public sector bank must not cater to a particular religion, because it goes against the principles of secularism.
2014, November SBI gets permission from SEBI to launch this scheme.
2014, December SBI delays the launch of this scheme, without citing any reasons.

P2: SBI Styleup card

  • SBI and “Fashion at Big Bazaar” (Kishore Biyani’s Future group company)
  • Type: Co-branded credit card.
  • Benefit: lifetime 10% discount on fashion, accessories and footwear, at all big bazaar stores.
  • Additional reward points for buying even non-fashion items from big bazaar malls.

P3: Syndicate Bank: 2 new schemes

Synd Mahila Shakthi
  • For women entrepreneurs
  • Loans upto 5 crore, Without collateral
  • Interest rate ~10.25%
Synd Kuteer
  • Home loan for poor people with Annual income below 2 lakh per year.
  • Upto 10 lakh rupees with easy EMIs for 30 years.
  • No processing fees, legal charges.


Misc. Developments in Banking sector
Vijaya 444
  • Vijaya bank’s special term deposit scheme
  • Interest rate 9.05%
Best Governor Rajanbhai got this award from Euromoney magazine.
  • Before: HDFC would sent PIN via post to the debit card holder.
  • After: via SMS
  • Benefit: paper cost down + environment saved.
  • Not available in J&K because bulk-sms restrictions.
  • “Easy NRI account scheme” for middle east Non-resident Indians. Minimum balance requirement just 2000 rupees.
  • ICICI Smart star account for minors of 10 years and above age. They can operate it independently. Can issue cheque, pay bills, recharge mobiles, open FD-RD, ATM, Mobile and net banking.
Yes bank
  • CMD Rana Kapoor got $300 million loan from ADB (Asian development bank)
  • For small farmers and women SHGs.
Andhra bank
  • “Gen Next” bank accounts for children in 10-14 age group.
  • Can operate account individually
  • Will get a special savings pass book.
  • Can get ATM-debit card, mobile banking, net banking facilities
SBI Adani
  • Adani group is setting up a coal mining project in Queensland, Australia.
  • SBI and Adani signed an MoU to get $1 billion loan.
  • AAP and opposition parties don’t like it, alleging crony-capitalism and Vijay Mallya  wilful defaulter type fiasco.
  • RBI permitted banks to give loans to people against the long term bonds issued by the same bank.
  • Condition: Maximum Rs.10 lakh per borrower.
Samurai Bonds
  • India’s EXIM bank issued these bonds in Japan.
  • Total value 20 billion yen, maturity 10 years.
  • The money thus collected, will be used to finance Indian projects in SriLanka.

Mock Questions for Bank exams

Q. The Nodal Agency for implementing Bharat Bill Payment System (BBPS) is ____.

  1. Finance ministry
  2. Post Office network
  3. RBI
  4. NPCI

Q. Bharat Bill Payment system is designed on the recommendations of ____ Committee?

  1. Urjit Patel
  2. Nachiket Mor
  3. Bimal Jalan
  4. Umesh Bellur

Q. Purpose of Bharat Bill Payment System (BBPS) is to ___?

  1. Facilitate government to issue treasury bills.
  2. Facilitate RBI to sell treasury bills.
  3. Facilitate customers to pay utility bills.
  4. None.

Q. What is the maximum limit for Pre-paid cards in India?

  1. Rs.10,000
  2. Rs.50,000
  3. Rs.1,00,000
  4. None of above

Q. Find correct statement()s)

  1. SBI is the first entity in India to launch Shariya compliant equity scheme.
  2. To launch Shariya compliant mutual fund products, SEBI permission is not required.
  3. Both A and B
  4. Neither A nor B

Q. Recently, SBI introduced “Styleup” credit card in association with ___.

  1. Chroma Retail stores
  2. Raymond garments
  3. Myntra Fashion
  4. Big Bazaar

Q. Consider following pairs of bank vs minor account product. Which of them are correctly matched?

  1. Kotak Mahindra: Smart star
  2. Andhra Bank: Gen Next
  3. SBI: Nayi Manzil

answer choices

  1. Only 1 and 2
  2. Only 2 and 3
  3. Only 1 and 3
  4. All of them

Q. In 2014-15, _____ bank introduced Samurai bonds in Japanese market.

  1. Axis Bank
  2. State Bank of India
  3. SIDBI
  4. Exim Bank

Bank Interview Questions

  1. What do you know about Bharat Bill Payment system? How will it help Indian economy?
  2. Recently, SBI announced Shariya compliant equity funds. What are its features? How is it different than regular mutual fund products? What is the need to introduce such products in India?
  3. What are your views about the ATM transaction limit imposed by Reserve bank of India?
  4. Tell us something about KYC-norms and Fair practices code in India.
  5. If a customer has not maintained minimum balance in his account, then what will you do?
  6. If a customer is not submitting the KYC documents, then what will you do?

Visit Mrunal.org/Banking for more articles related to Banking, Finance and Insurance.

Indian History Freedom Struggle Pratik Nayak

38 Comments on “[Banking] Bharat Bill Payment System (BBPS), SBI Shariya Equity fund, KYC partial freezing, Minimum Balance guidelines”

  1. Worthy information about financial sector.

  2. From point of view of UPSC, which section of article is important.

    1. @RajanBhai..ek baar wo flow chart dekh lo…answer writing mein incorporate krne ke kaam aa saktaa h.

  3. Thanks sir for this great work..

    Sir, aap mains k GS papers ka solution and analysis kab upload kroge? M waiting for that..

  4. whats fair practise code?


  6. Wonderful… Thnx Sir… :-)

  7. A billion thanks is nothing for this altruistic work…always inspire me

  8. Thank you mrunal sir khuda àap ki manokamna puri kare

  9. thank you sir from bottom of my heart ………..

  10. Sir, please tell how to get last 2 years Yozana

    1. Paras, studying last two years’ Yojana= cost : benefit is bad. Better just prepare that much Hindu and economic survey.

      1. Sir you mean to say that preparing 2 year Hindu will be beneficial….Please reply

        1. abe nhi aaj k baad se regular pdh …

      2. sir plz do make a arrangement to share the question and analysis on united india insurance ASSISTANT ….

  11. the whole section is important for those aspirants who are appearing in po interview ,,thanks mrunal sir

  12. sir, I hope it is cardless withdrawal and not cashless withdrawal .. the heading of ICICI cardless withdrawal.

  13. Nice artical… :)..
    I am working in bank of india..i woluld like to share some information…our bank has introduced 1st IMT system…Instant money transfer..even be4 icici bank..its kind gud product for the customer..u can withdraw money through ATM without atm carf..u can send money to others via code n he or she can withdraw money throgh our any ATM card via using the code number without using ATM card..its max limit is 25k per month..n charge would be 15 rs per transaction
    .if u cants withdraw money for 14 days it ill expire and money would be refunded to account..
    so its a kind good product of our bank..its will help someone in needy time…and its easy to operate and use.. :)

    1. Are u a p.o in BOI ??which yr u clear Ibps..pls tell

  14. Mrunal Sir!..I want to save ur articles for reference,so can u suggest what would be the easiest and fastest n reliable way to prepare notes from ur articles

  15. 2) Recently, SBI announced Shariya compliant equity funds. What are its features?
    How is it different than regular mutual fund products?
    What is the need to introduce such products in India?

    can anyone give some points to the above question which Mrunal Sir has stated above

    Thanks in Advance!..

  16. MCQ Answers

  17. Bharat Bill Payment System (BBPS), enable every citizen to pay their different bills under the same window. This is anybill anywhere anytime payment facility. Thus, from now on, all you need to do is collect your electricity bill, phone bill, water bill, insurance premium, EMI for cars etc, visit your nearest Bharat Bill Payment Operating Units (BBPOUs), which is part of the BBPS network, and make all the payments at one single location..

    The BBPS will consist of two types of entities carrying out distinct functions –
    (i) Bharat Bill Payment Central Unit (BBPCU) which will be the single authorized entity operating the BBPS. The BBPCU will set necessary operational, technical and business standards for the entire system and its participants, and also undertake clearing and settlement activities. National Payment Corporation of India (NPCI) has been designated as BBPCU by RBI.
    (ii) Bharat Bill Payment Operating Units (BBPOUs), which will be the authorised operational units, working in adherence to the standards set by the BBPCU. The tiered structure could be further strengthened through an effective agent network/s of the BBPOUs. While there will be a single BBPCU, there could be multiple BBPOUs operating under the BBPS. The eligibility criteria for non-bank entities seeking to operate as BBPOUs would be as follows:
    a. The entity should be a company incorporated in India and registered under the Companies Act 1956 / Companies Act 2013
    b. The applicant entity should have a net worth of at least Rs.100 crore as per the last audited balance sheet and the same has to be maintained at all times.
    c. The company must have domain experience in the field of bill collection/services to the billers, and relevant experience in transaction processing for a minimum period of one year.
    d. The entity must seek authorization under the Payment and Settlement Systems Act, 2007 from the Reserve Bank of India for its operations.
    e. Banks which are desirous of operating as BBPOUs would need to obtain approval from the Reserve Bank of India under the Payment and Settlement Systems Act, 2007.

  18. Sir In this question I think you have given wrong options.
    As only Andhra Bank : Gen Next is true rest all are false. But there’s no option of 2 only or None of these.

    SBI has launched Pehla Kadam and Pehli Udaan.

    Q. Consider following pairs of bank vs minor account product. Which of them are correctly matched?

    Kotak Mahindra: Smart star
    Andhra Bank: Gen Next
    SBI: Nayi Manzil

    answer choices

    Only 1 and 2
    Only 2 and 3
    Only 1 and 3
    All of them

    1. Same doubt. Only Andhra Gen Next is correct

  19. Sir I am not able to download these articles as pdf even in chrome.Please can u explain me how to download it?

  20. Attempted 116 not good enough and written didnt save 1 answer .
    This year full of disappointments RBI g B lost in 3 marks , RRB in 1 mark, IBPS PO in 4 , SBI po in 3 and the hell didn’t qualify prelims ,loosing confidence .

  21. Thanks a lot for this consolidated information

  22. ICICI Cardless Cash Withdrawal: Code expires on the next midnight, so max validity is TWO days.

    ICICI Salary account has no Min Balance requirement.

    Please make these corrections.

  23. Sir, from where does the profit of these payment gateways cone from? Like Mobikwik gives 15% cashback on every transaction done through them and similarly other gateways give discounts and cashbacks. Where does all this come from and how do they make profits?

  24. a good compilation!!!easy to understand…..

  25. thank you sir

  26. Respected Sir, Your lectures are so simplified and lucid, it helps in better understanding. Why dont you establish your organisation in Delhi?

  27. Sir from where can get your geography and economics complete notes along with information of chapters to be read from ncerts and recommended books of the respective subjects.

  28. Sir the 1 u mentioned above is only for banking and that for the year 2013-14. I request you to please apprise me of the information I mentioned in the previous querry text of mine. Thanking you

  29. Sir the 1 u mentioned above is only for banking and that for the year 2013-14. I request you to please apprise me of the information I mentioned in the previous querry text of mine. Thanking you

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