CAIIB MADE SIMPLE BANK FINANCIAL MANAGEMENT (CAIIB PAPER - 2) Version 2.0 (FOR JUNE 2016 EXAMINATION) (A Very useful book for Day to Day Banking and all Knowledge Based Examinations) COMPILED BY Sanjay Kumar Trivedy (Divisional Manager ) Canara Bank, Government Link Cell, Nagpur, PGNS Complex, Modi No. 3, First Floor, Sitabuldi, Nagpur-440012,: 0712 – 2522271,2522272 / 07774069639 E-mail: [email protected]; [email protected] Preface Dear Friends, Banking/Financial sector in our country is witnessing a sea change & banker’s business has become more complex & difficult in this driven era of knowledge & technology. There are mass retirements happening due to super annuation & many new recruits are joining the Bank. More than 50% staff strength is newly recruited in last three to four years. An official working in the Banking sector has to keep pace with Updated knowledge, skills & attitude, as the same is required everywhere. There is need to issue a comprehensive book covering all the aspects so that new recruits get updated very fast without referring many voluminous books. This book titled “ CAIIB MADE SIMPLE ” has many unique features to its credit & consists of all topics/syllabus required for CAIIB examination with clear concept & simple language with latest changes during 2015-16 (upto 31.12.2015 as per IIBF/ CAIIB exams. requirements) also included. This Book is divided into four Modules namely A,B,C & D & Practice Teat Papers / Teat Yourself based on latest IIBF syllabus for CAIIB examination. The Book also covers the full syllabus (latest) of CAIIB examination and also recalled questions & MCQ based on IIBF examination Pattern will be helpful to all aspirants who are taking up CAIIB examination During preparation of this book, I have received tremendous support from Team RSTC, Mumbai, many friends & colleagues especially Sri V Manoj from RSTC, Guwahati, my wife Mrs Renu, who is also a banker, my son Master Ritwiz Aryan & Special thanks to Sri B P Desai Sir (Our Ex. AGM & now Faculty on Contract at RSTC, Mumbai) for vetting & compilation of this book. As any work will have always scope for further improvement, I shall be grateful if any feedback is provided for improvement in contents of the book. I wish you all the best for the written test & hope the study material will help in achieving the goal. Place : Nagpur SANJAY KUMAR TRIVEDY Date : 03.06.2016 Divisional Manager, GovernmentLinkCell,Nagpur CompiledbySanjayKumarTrivedy,DivisionalManager,Govt.Linkcell,Nagpur 1|P age BANK FINANCIAL MANAGEMENT - INDEX SI. Page No. No CONTENTS 1 ABOUT CAIIB EXAMINATION 03-05 2 MODULE : A ( INTERNATIONAL BANKING ) 06-63 3 MODULE : B ( RISK MANAGEMENT ) 64-137 4 MODULE : C ( TREASURY MANAGEMENT ) 138-186 5 MODULE : D (BALANCE SHEET MANAGEMENT) 187-251 6 PRACTICE TEST PAPERS 252-296 CompiledbySanjayKumarTrivedy,DivisionalManager,Govt.Linkcell,Nagpur 2|P age 1. ABOUT CAIIB EXAMINATION CAIIB EXAMINATION–June2016 OBJECTIVE CAIIBaims at providing advancedknowledge necessaryforbetterdecision makingcovering risk, financial andgeneralbank management. MEDIUMOF EXAMINATION:EitherinHindiorEnglish ELIGIBILITY:CandidatesmusthavecompletedJAIIBorPART-1oftheAssociateExamination,andtheir membershipsubscriptionshouldnotbeinarrears. SUBJECTOFEXAMINATION I.CompulsoryPaper AdvancedBankManagement 1. BankFinancialManagement 2. II.ElectivePapers(CandidatestochooseanyoneoftheirChoice) 1. CorporateBanking 7. HumanResourcesManagement 2. RuralBanking 8. InformationTechnology 3. InternationalBanking 9. RiskManagement 4. RetailBanking 10. CentralBanking 5. Co-operativeBanking 11. TreasuryManagement 6. Financialadvising Thereisnoexemptioninanyoftheabovesubject/sforpriorqualification/s. TheInstitutehasintroducedelectivestogiveopportunitiesforcandidatestospecializeintheverticaloftheir choice.Candidatesmaychoosetheelectiveintheareatheyarecurrentlyworkingorintheareatheywould liketoworkinfuture.Itissuggestedthatthecandidatesmaychoos electiveintheareatheyarecurrently ethe working and later move to other elective as this will enable appropriate skills / build up for handling differentbankingverticals. Cut-offDateofGuidelines/ImportantDevelopmentsforExaminations InrespectoftheexamstobeconductedbytheInstituteduringMay/Juneofacalendaryear,instructions/ guidelinesissuedbytheregulator(s)andimportantdevelopmentsinbankingandfinanceupto31st Decemberofthepreviousyearwillonlybeconsideredforthepurposeofinclusioninthequestionpapers.In respectoftheexamstobeconductedbytheInstituteduringNovember/Decemberofacalendaryear, instructions/guidelinesissuedbytheregulator(s)andimportantdevelopmentsinbankingandfinanceup to30Juneofthatyearwillonlybetheconsideredforthepurposeofinclusioninthequestionpapers. Reference:IIBFMonthlyMagazine:VISION. Further, questions based on current developments in banking and finance may be asked. Candidates are advised to refer to financial news papers / periodicals more particularly "IIBF VISION" and "BANK QUEST" published bytheInstitute. MODEOFEXAMINATION Examination will be conducted in Online Mode at majority of centres and under offline mode (paper and pencil) at selected centres as per the notification given on the web site in this regard. Examination will be held on threeconsecutive Sundays (one paper on each Sunday). PROCEDUREFOR APPLYINGFOREXAMINATION Application for examination should be made online from the Institute's website www.iibf.org.in. No physical formwillbeacceptedbytheInstitutewitheffectfrom1January,2013. PATTERN OF EXAMINATION : EachQuestionPaperwillcontainapproximately100objectivetypemultiple choice questions, carrying 100 marks including questions based on case study / case lets. The Institute may, however, vary the number of questions to be asked for a subject. There will NOT be negative markingfor wrong answers. Further, questions based on current developments in banking and finance may be asked. Candidates are advised to refer to financial news papers / periodicals more particularly "IIBF VISION" and "BANK QUEST" published bytheInstitute. CompiledbySanjayKumarTrivedy,DivisionalManager,Govt.Linkcell,Nagpur 3|P age QuestionsfortheCAIIBExaminationwillbeasked for: (a) Knowledge testing, (b) Conceptual grasp, (c) Analytical / logical exposition, (d) Problem solving,(e)Caseanalysis TYPES OF QUESTIONS 100ObjectiveTypeMultipleChoiceQuestions- carrying100marks–120minutesandquestionwillbe basedonKnowledgeTesting,ConceptualGrasp,Analytical/LogicalExposition,ProblemSolving&Case Analysis. TypeofQuestions–Basicallyfour types of MultipleChoiceQuestions askedinExamof WhichType–A:ConceptbasedStraightQuestions(40-50QUES-0.5MARKS EACH); Type–B:Problems&Solutions (15-20QUES- 1.0MARKS EACH);Type–C: Applied theorybasedQuestions (15-20QUES-2.0MARKS EACH); Type–D:CaseStudy&Case- letsbasedQuestions(10-15QUES -2.0MARKS EACH) QUESTIONSMODELS : TYPES OF QUESTIONS Type–A: MULTIPLECHOICE– QUESTIONS &ANSWERS TheBestMethodforassessingworkingcapitallimitusedbythebankforseasonalIndustriesis: 1. OperatingCycleMethod,2.ProjectedNetworkingMethod,3.ProjectedTurnoverMethod&4.Cash BudgetMethod Type–B: MULTIPLECHOICE– PROBLEMS&SOLUTIONS Mr.RamKumarishavingoverdraftaccountwithCanarabankuptoRs.100,000.ThepresentDebitBalance intheaccountwasRs.80550.00.ThebankhasreceivedattachmentorderfromIncometaxdeptt.ForRs. 16,200.00.Whatcanthebankdointhissituation? - Unlessthebankisadebtor,therecanbenoattachment andan unutilizedoverdraftaccountdoes notrenderthebankadebtor(butcreditor)&hencecannotattach. Type–C: MULTIPLECHOICE – APPLIEDTHEORY–QUES.&ANS FinancialInstitutionwishtohavethemoneylentbythemrepaidintime.Securedadvancessanctionedby bankspossesswhatkindofsecurity? - SecuredAdvanceshaveimpersonalsecurityi.e.TangibleSecurity Type–D: MULTIPLECHOICE– CASESTUDIES&CASELETS(PROBLEMS&SOLUTIONS) EconomicdevelopmentofacountrytoalargeextentdependsuponAgril.&Industrialsectors. Developmentofagril.Dependsuponirrigationfacilitieswhileindustrialdevelopmentonavailabilityof power,goodtransportandfastcommunicationfacilities.Allthesearecalledinfrastructure.Readthecaselet &explainwhichindustriesconstituteinfrastructure? a. Energy,Transport&Communication b. Irrigation,constructionofbridges&damsoverRivers&stablegovt.atCentre. c. AvailabilityofFundsforPMEGP,SJSRY&IndiraAwasYojana DURATIONOFEXAMINATION:Thedurationoftheexaminationwillbeof2hours. PERIODICITYANDEXAMINATIONCENTRES TheexaminationwillbeconductednormallytwiceayearinMay/JuneandNovember/Decemberon Sundays. Pass:Minimummarksforpassineverysubject-50outof100marks. Candidate securing at least 45 marks in each subject with an aggregate of 50% marks in all subjects of CAIIB examination in a single attempt will also be declared as having passed JAIIB Examination. Candidateswillbeallowedtoretaincreditsforthesubject/stheyhavepassedinoneattempttilltheexpiryof thetimelimitforpassingtheexaminationasmentionedbellow, TIMELIMITFORPASSINGTHEEXAMINATION CompiledbySanjayKumarTrivedy,DivisionalManager,Govt.Linkcell,Nagpur 4|P age Candidates will be required to pass CAIIB examination within a time limit of 2 years (i.e. 4 consecutive attempts).Initiallyacandidatewillhavetopayexaminationfeeforablockofoneyeari.e.fortwoattempts. IncaseacandidateisnotabletopassCAIIBexaminationwithin1stblockof2attempts,he/shecanappear fora furtherperiodof1year(2ndblock)i.e. 2attemptsonpaymentofrequisitefee. Candidateswhohave exhaustedthefirstblockof2attempts,shouldnecessarilysubmittheexaminationapplicationformforthe nextattempt,withoutanygap.Iftheydonotsubmittheexaminationformimmediatelyafterexhaustingthe first block, the examination conducted will be counted as attempts of the second block for the purpose of timelimitforpassing. CandidatesnotabletopassCAIIBexaminationwithinthestipulatedtimeperiodoftwoyearsarerequiredto re-enroll themselvesafreshbysubmittingfreshExamination Application Form. Such candidateswillnot be grantedcredit/sforsubject/spassed,ifany,earlier. Attempts will be counted from the date of application irrespective of whether a candidate appears at anyexaminationorotherwise. “CLASSOFPASS”CRITERIA TheInstitutewillconsidertheFIRSTPHYSICALATTEMPTofthecandidateattheexaminationasfirstattempt forawardingclass.Inotherwords,thecandidateshouldnothaveattemptedanyofthesubject/spertainingto theconcernedexaminationanytimeinthepastandhastopassallthesubjectsasperthepassingcriteriaand secure prescribed marks for awarding class. Candidate re-enrolling for the examination after exhaustingall permissibleattemptsasperthetimelimitrulewillnotbeconsideredforawardingclass. First Class: 60% or more marks in aggregate and pass in all the subjects in the FIRST PHYSICAL ATTEMPT. First Class with Distinction: 70% or more marks in aggregate and 60 or more marks in eachsubjectintheFIRSTPHYSICALATTEMPT. CAIIB EXAMINATION –June 2016 (Lastdateforapplyingforexamination:05/04/2016) ONLINEMODE ExaminationDATE TIME SUBJECTS 05/06/2016Sunday ONLINE-WillbegivenintheadmitLetter Advanced BankManagement 12/06/2016Sunday ONLINE-WillbegivenintheadmitLetter Bank Financial Management Corporate Banking Rural Banking International Banking Retail Banking Co-operative Banking 19/06/2016Sunday ONLINE-WillbegivenintheadmitLetter Financial Advising HumanResources Management InformationTechnology Risk Management Central Banking TreasuryManagement Last Date for receipt of Change of Centre Requests at the respective Zonal Offices for the CAIIB/Electives ExaminationsscheduledforJune2016:21stApril2016 ([email protected]%wef15.11.2015-EligibleforMembersOnly) (ExaminationEligibleforMembersOnly) Sr.No. NameoftheExam Attempts ForMembers(Rs) 1 CAIIB FirstBlockof2attempts 3092 SecondBlockof2attempts 3092 CompiledbySanjayKumarTrivedy,DivisionalManager,Govt.Linkcell,Nagpur 5|P age Module: A International Banking Forex Business; factors determining exchange rates, Direct and indirect quotations, spot / forward rates, premium and discount, cross rates. Basics of forex derivatives; forward exchange rate contracts, Options, Swaps. Correspondent banking, NRI accounts Documentary letters of Credit - UCPDC 600, various facilities to exporters and importers. Risks in foreign trade, role of ECGC, types of insurance and guarantee covers or ECGC. Role of Exim Bank - Role of RBI and exchange control - Regulations in India, Role and rules of FEDAI - Role of FEMA and its rules CompiledbySanjayKumarTrivedy,DivisionalManager,Govt.Linkcell,Nagpur 6|P age PART – A FOREIGN EXCHANGE MANAGEMENT ACT, 1999 The Foreign Exchange Management Act 1999 (FEMA) was enacted on December 02, 1999 to replace Foreign Exchange Regulation Act (FERA) 1973. The Act came into on June 01, 2000 and extends to the entire country, all branches, offices, agencies outside India - those owned or controlled by a person residing inIndia. Objective of FEMA: (i)Facilitating external trade and payments and(ii)for promoting theorderly development andmaintenance of foreign exchangemarket inIndiaTheForeignExchange Management Act, 1999, extendstothewhole of India. It shall also applies toall branches, officesand agencies outside India owned or controlled bya personresident inIndia. It cameintoforcewef June01, 2000. Important terms and definitions Authorised person means an authorised dealer, money changer, off-shore banking unit or any other person being authorised to deal in foreign exchange or foreign securities, by RBI, Currency includes all currencynotes,postalnotes,postalorders,moneyorders,cheques,drafts,travellers'cheques,lettersof credit, bills of exchange and promissory notes, credit cards or such other similar instruments, as may be notified by theReserveBank. Currency notes means and includes cash in the form of coins and bank notes;Current account transaction meansatransactionotherthanacapitalaccounttransactionandincludes,- (i) payments due in connection with foreign trade, other current business, services, and short-term banking andcredit facilities in theordinarycourseof business, (ii) payments dueas interest onloans andas net incomefrom investments, (iii) remittancesfor living expenses of parents, spouse and childrenresiding abroad, and (iv) expenses in connection with foreign travel, education and medical care of parents, spouse and children; Foreign exchange from whom : As per Section 5, any person maysell or drawforeign exchange to or from an authorised person if such sale or drawal is a current account transaction. Central Government may, in consultationwiththeReserveBank,imposesuchreasonablerestrictionsforcurrentaccounttransactions. Export, with its grammatical variations and cognate expressions means, the taking out of India to a place outside India any goods and provision of services from India to any person outside India; Foreign currency means anycurrencyother thanIndian currency; Foreignexchangemeansforeigncurrencyandincludes,- (i) deposits, credits andbalances payable in anyforeign currency, (ii) drafts, travellers' cheques, letters of credit or bills of exchange, expressed or drawn in Indian currency but payableinanyforeigncurrency, (iii) drafts,travellerscheques,lettersofcreditorbillsofexchangedrawnbybanks,institutionsorpersons outside India, but payable in Indian currency; Foreign security means any security, in the form of shares, stocks, bonds, debentures, or any other instrument denominated or expressed in foreign currency and includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividends is payable in Indian currency; Import, with its grammatical variations and cognate expressions, means bringing into India any goods, or services; PersonresidentinIndiameans- (I) a personresiding inIndiafor morethan182 daysduring the courseof theprecedingfinancial year butdoesnotinclude- (A) a person who has gone out of India or who stays outside India, in either case- (a) for or on taking up employmentoutsideIndia,or(b)forcarryingonabusinessorvocationoutsideIndia,or(c)foranyotherpurpose, insuchcircumstancesaswouldindicatehisintentiontostayoutsideIndiaforanuncertainperiod; (B) a person who has come to stay in India, in either case, otherwise than- (a) for or on taking up employment in India, or (b) for carrying on a businessor vocation in -India, or (c) for anyother purpose, insuch circumstancesaswouldindicatehisintentiontostayinIndiaforanuncertainperiod; (ii) anyperson or bodycorporateregistered or incorporatedin India, (iii) an office, branchor agencyin India owned or controlled bya personresident outsideIndia, (iv) anoffice,branchoragencyoutsideIndiaownedorcontrolledbyapersonresidentinIndia; Personresident outsideIndia meansa person who is not resident inIndia. RegulationAndManagementOfForeignExchangeDealinginforeignexchange(Sec3):Nopersonshall- (a) dealinortransferanyforeignexchangeorforeignsecuritytoanypersonnotbeinganauthorizedperson; (b) make anypaymentto or for theCredit of anyperson resident outside Indiain anymanner; (c) receive otherwise through an authorised person, any payment by order or on behalf of any person resident outsideIndia inanymanner; (d) enter into anyfinancialtransaction inIndia asconsiderationfor or in association with acquisitionor creation or transfer of aright toacquire, anyasset outsideIndia byanyperson. CompiledbySanjayKumarTrivedy,DivisionalManager,Govt.Linkcell,Nagpur 7|P age Holdingofforeignexchange:NopersonresidentinIndiashallacquire,hold,own,possessortransferanyforeign exchange,foreignsecurityoranyimmovablepropertysituatedoutsideIndia,unlesspermittedbyRBI. HoldingofforeigncurrencybyResidents:ApersonresidentinIndiamayhold,own,transferorinvestinforeign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a personwhowasresidentoutsideIndia. Holding of foreigncurrencybynon-residents Apersonresident outsideIndia mayhold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was resident in India or inherited from a person who wasresidentinIndia. Capital account transactions Atransactionwhichalterstheassetsorliabilities,includingcontingent liabilities,outsideIndiaofpersonsresidentinIndiaorassetsorliabilitiesinIndiaofpersonsresidentoutside India,iscalledcapitalaccounttransaction. AsperSection 6 anypersonmaysell or drawforeignexchange to or from anauthorisedpersonfor a capital account transaction. ReserveBank may, inconsultation with the CentralGovernment, specify: (a) anyclass or classes of capital account transactions which are permissible; (b) the limit upto whichforeignexchangeshall be admissiblefor suchtransactions: Reserve Bank shall not impose anyrestriction onthedrawal of foreign exchangefor payments due on account of amortisationof loans or for depreciation of direct investments in theordinarycourse of business. transaction. As per Section 6 anypersonmaysell or drawforeignexchange toorfrom an authorised personfor a capital account transaction. ReserveBank may, inconsultation with the CentralGovernment, specify: (c) anyclass or classes of capital account transactions which are permissible; (d) the limit upto whichforeignexchangeshall be admissiblefor suchtransactions: Reserve Bank shall not impose any restriction on the drawal of foreign exchange for payments due on account of amortisation of loans or for depreciation of direct investments in the ordinary course of business Restrictionon capital account transactions Reserve Bankmay, byregulations, prohibit, restrict or regulatethefollowing- (a) transfer or issue of anyforeignsecuritybya person resident inIndia; (b) transfer or issue of anysecuritybya personresident outsideIndia; (c) transfer or issue of anysecurityorforeign securitybyanybranch, office or agencyin India of a personresident outside India; (d) anyborrowing or lending inforeignexchangein whatever form or bywhatever namecalled; (e) anyborrowing or lending in rupeesin whatever form or bywhatever namecalled between a personresident in Indiaand a personresident outside India; (f ) deposits between personsresident in India and personsresident outside India; (9) export, import or holdingof currencyor currencynotes; (h) transfer of immovable propertyoutsideIndia, other thana leasenot exceeding five years, byapersonresident in India; (i) acquisition or transfer of immovable propertyin India, other thana leasenot exceedingfive years, bya personresident outside India; (j) giving of aguarantee or suretyinrespect of any debt, obligationor other liabilityincurred- (i) bya personresident inIndia and owed to aperson resident outside India; or (ii) bya personresident outside India. Reserve Bank's powers to issue directions to authorised person (Section 11) : Reserve Bank, may give to the authorised persons, any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security, direct any authorised person to furnish such information, insuchmanner, as it deemsfit. Penalty on authorized person : Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to Rs.10000 and in the case of continuing contravention with for every day during which such contravention continues. Power of Reserve Bank toinspect authorisedperson (Sec12) Reserve Bank may undertake an inspection of the business of any authorised person for the purpose of verifying the correctness of any statement, information or particulars furnished to the Reserve Bank, obtaining any information or particulars which such authorised person has failed to furnish on being called upon todo so. CONTRAVENTION AND PENALTIES : Penalties (Sec 13) : If any person contravenes any provisions of this Act, or contravenes anyrule, regulation, notification, direction or order issued in exercise of the CompiledbySanjayKumarTrivedy,DivisionalManager,Govt.Linkcell,Nagpur 8|P age powers under this Act, or contravenes anycondition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to Rs.2 lac where the amount is not quantifiable. Such contravention is a continuing one, further penalty which mayextend to Rs.5000 for every day after the first day during which the contravention continues. If anypersonfailstomakefull payment of thepenaltyimposed on him under section 13within a period of 90 days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment u/s 14. Power to compound contravention: U/s 15, anycontravention under section 13may, onan application made bytheperson committing suchcontravention, becompounded within 180 daysfrom the dateof receipt of applicationbythe Director of Enforcement or suchother officersof the Directorate of Enforcement and officersof theReserve Bank asmaybe authorised inthis behalf bythe CentralGovernment. ADJUDICATION AND APPEAL U/s 16 Central Government may appoint officers of the Central Government, as the Adjudicating Authorities for holding an inquiry. Adjudicating Authority may direct the said person to furnish a bond or guarantee,  No Adjudicating Authority shall hold an enquiry except upon a complaint in writing made by any officer authorised by a general or special order by the Central Government. Adjudicating Authorityshall have the powers of a civil court.  All proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of theIndian Penal Code.  Adjudicating Authority shall deal with the complaint to dispose of the complaint finally within one year from the date of receipt of the complaint: Appellate Tribunal (Sec 18): The Central Government shall, establish an Appellate Tribunal to be known as the Appellate Tribunal for Foreign Exchange to hear appeals against the orders of the Adjudicating Authorities and the Special Director (Appeals). Appellate Tribunal shall consist of aChairpersonand such number of MembersastheCentralGovernment maydeemfit. Restrictionon capital account transactions Reserve Bankmay, byregulations, prohibit, restrict or regulatethefollowing- (a)transfer or issue of anyforeignsecuritybya person resident inIndia; (b) transfer or issue of anysecuritybya personresident outsideIndia; (f) transfer or issue of anysecurityorforeign securitybyanybranch, office or agencyin India of a personresident outside India; (g) anyborrowing or lending inforeignexchangein whatever form or bywhatever namecalled; (h) anyborrowing or lending in rupeesin whatever form or bywhatever namecalled between a personresident in Indiaand a personresident outside India; deposits between persons resident inIndia andpersonsresident outsideIndia; (9) export, import or holdingof currencyor currencynotes; (k) transfer of immovable propertyoutsideIndia, other thana leasenot exceeding five years, byapersonresident in India; (l) acquisition or transfer of immovable propertyin India, other thana leasenot exceedingfive years, bya personresident outside India; (m) giving of aguarantee or suretyinrespect of any debt, obligationor other liabilityincurred- (iii)bya personresident inIndia and owed to aperson resident outside India; or (iv)bya personresident outside India. Reserve Bank's powers to issue directions to authorised person (Section 11) : Reserve Bank, may give to the authorised persons, any direction in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security, direct any authorised person to furnish such information, insuchmanner, as it deemsfit. Penalty on authorized person : Where any authorised person contravenes any direction given by the Reserve Bank under this Act or fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving reasonable opportunity of being heard, impose on the authorised person a penalty which may extend to Rs.10000 and in the case of continuing contravention with an additional penalty which may extend to Rs.2000.Appeal to High Court (Sec 35) : No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an Adjudicating Authority or the Appellate Tribunal or the Special Director (Appeals) isempowered. Anypersonaggrievedbyanydecision or order of theAppellateTribunalmay file an appeal to the High Court within 60 days from the date of communication of the decision or order of the AppellateTribunaltohimonanyquestionoflawarisingoutofsuchorder: DIRECTORATE OF ENFORCEMENT : U/S 36, Central Government shall establish a Directorate of Enforcement with a Director and other officers. U/s 37, the Director of Enforcement and other officers of Enforcement, not below the rank of an Assistant Director, shall take up for investigation, the contravention CompiledbySanjayKumarTrivedy,DivisionalManager,Govt.Linkcell,Nagpur 9|P age