You are on page 1of 36

Module-III

Banking Regulation:
Course Outline:
• Regulation by RBI.
• Licensing.
• Capital Requirement.
• Capital Adequacy – BASLE- I and BASLE-II.
• Shareholding and Voting Rights.
• KYC.
• AML.
• Banking Ombudsman Scheme.
• Other Regulators like SEBI, IRDA and Government of India.

Introduction:

Bank regulations are a form of government regulation which


subject banks to certain requirements, restrictions and guidelines.

Objectives of Bank Regulation

The objectives of bank regulation, and the emphasis, vary between


jurisdictions. The most common objectives are:

1. Prudential -- to reduce the level of risk bank creditors are


exposed to (i.e. to protect depositors)
2. Systemic risk reduction -- to reduce the risk of disruption
resulting from adverse trading conditions for banks causing
multiple or major bank failures
3. Avoid misuse of banks -- to reduce the risk of banks being
used for criminal purposes, e.g. laundering the proceeds of
crime
4. To protect banking confidentiality
5. Credit allocation -- to direct credit to favored sectors

General principles of bank regulation

Banking regulations can vary widely across nations and


jurisdictions. This section of the article describes general principles
of bank regulation throughout the world.
Minimum requirements

Requirements are imposed on banks in order to promote the


objectives of the regulator. The most important minimum
requirement in banking regulation is maintaining minimum capital
ratios.

Supervisory review

Banks are required to be issued with a bank license by the


regulator in order to carry on business as a bank, and the regulator
supervises licenced banks for compliance with the requirements
and responds to breaches of the requirements through obtaining
undertakings, giving directions, imposing penalties or revoking the
bank's licence.

Market discipline

The regulator requires banks to publicly disclose financial and


other information, and depositors and other creditors are able to
use this information to assess the level of risk and to make
investment decisions. As a result of this, the bank is subject to
market discipline and the regulator can also use market pricing
information as an indicator of the bank's financial health.

Instruments and requirements of bank regulation

Capital requirement

The capital requirement sets a framework on how banks must


handle their capital in relation to their assets. Internationally, the
Bank for International Settlements' Basel Committee on Banking
Supervision influences each country's capital requirements. In
1988, the Committee decided to introduce a capital measurement
system commonly referred to as the Basel Capital Accords. The
latest capital adequacy framework is commonly known as Basel II.
This updated framework is intended to be more risk sensitive than
the original one, but is also a lot more complex.
Reserve requirement

The reserve requirement sets the minimum reserves each bank


must hold to demand deposits and banknotes. This type of
regulation has lost the role it once had, as the emphasis has moved
toward capital adequacy, and in many countries there is no
minimum reserve ratio. The purpose of minimum reserve ratios is
liquidity rather than safety. An example of a country with a
contemporary minimum reserve ratio is Hong Kong, where banks
are required to maintain 25% of their liabilities that are due on
demand or within 1 month as qualifying liquefiable assets.

Reserve requirements have also been used in the past to control the
stock of banknotes and/or bank deposits. Required reserves have at
times been gold coin, central bank banknotes or deposits, and
foreign currency.

Financial reporting and disclosure requirements

Banks may be required to:

1. Prepare annual financial statements according to a financial


reporting standard, have them audited, and to register or
publish them
2. Prepare more frequent financial disclosures, e.g. Quarterly
Disclosure Statements
3. Have directors of the bank attest to the accuracy of such
financial disclosures
4. Prepare and have registered prospectuses detailing the terms
of securities it issues (e.g. deposits), and the relevant facts
that will enable investors to better assess the level and type of
financial risks in investing in those securities.

Credit rating requirement

Banks may be required to obtain and maintain a current credit


rating from an approved credit rating agency, and to disclose it to
investors and prospective investors. Also, banks may be required
to maintain a minimum credit rating.

Regulations by RBI:
Prior to the enactment of Banking Regulation Act, 1949 which
aims to consolidate the law relating to banking and to provide for
the nature of transactions which can be carried on by banks in
India, the provisions of law relating to banking companies formed
a part of the general law applicable to companies and were
contained in Part XA of the Indian Companies Act, 1913. These
provisions were first introduced in 1936, and underwent two
subsequent modifications, which proved inadequate and difficult to
administer. Moreover, it was recognised that while the primary
objective of company law is to safeguard the interests of the share
holder, that of banking legislation should be the protection of the
interests of the depositor. It was therefore felt that a separate
legislation was necessary for regulation of banking in India. With
this objective in view, a Bill to amend the law relating to Banking
Companies was introduced in the Legislative Assembly in
November, 1944 and was passed on 10th March, 1949 as the
Banking Companies Act, 1949. By Section 11 of the Banking
Laws (Application to Cooperative Societies) Act, 1965, the
nomenclature was changed to the Banking Regulation Act, 1949.

The Reserve Bank of India has been entrusted with the


responsibility under the Banking Regulation Act, 1949 to regulate
and supervise banks' activities in India and their branches abroad.
While the regulatory provisions of this Act prescribe the policy
framework to be followed by banks, the supervisory framework
provides the mechanism to ensure banks' compliance with the
policy prescription.

General Framework of Regulation

The existing regulatory framework under the Banking Regulations


Act 1949 can be categorised as follows :

a) Business of Banking Companies

b) Licensing of banking companies


c) Control over Management

d) Acquisition of the Undertakings of banking companies in


certain cases

e) Restructuring and Resolution including winding up operation

f) Penal Provisions

Licensing:

Accordingly, an internal study in RBI covered the background on


banking regulation, licensing of banks under Banking Regulation
Act, 1949, extant policy relating to bank licensing, both Indian and
foreign banks international experience and practice on limited bank
licensing.

Indian Banking System:

The Indian financial system currently consists of commercial


banks, co-operative banks, financial institutions and non-banking
financial companies ( NBFCs). The commercial banks can be
divided into categories depending on the ownership pattern, viz.
public sector banks, private sector banks, foreign banks. While the
State bank of India and its associates, nationalised banks and
Regional Rural Banks are constituted under respective enactments
of the Parliament, the private sector banks are banking companies
as defined in the Banking Regulation Act. The cooperative credit
institutions are broadly classified into urban credit cooperatives
and rural credit cooperatives.

Licensing of banks

In terms of Sec 22 of the B.R.Act, no company shall carry on


banking business in India, unless it holds a licence issued in that
behalf by Reserve Bank and any such licence may be issued
subject to such conditions as the Reserve Bank may think fit to
impose.

Before granting any licence, RBI may require to be satisfied that


the following conditions are fulfilled:

• that the company is or will be in a position to pay its present


or future depositors in full as their claims accrue;
• that the affairs of the company are not being , or are not
likely to be, conducted in a manner detrimental to the
interests of its present or future depositors;
• that the general character of the proposed management of the
proposed bank will not be prejudicial to the public interest or
the interest of its depositors;
• that the company has adequate capital structure and earning
prospects;
• that having regard to the banking facilities available in the
proposed principal area of operations of the company, the
potential scope for expansion of banks already in existence
in the area and other relevant factors the grant of the licence
would not be prejudicial to the operation and consolidation

Business of banking

As per Section 5 (b) of Banking Regulation Act, 1949 ' banking '
means the accepting , for the purpose of lending or investment, of
deposits of money from the public, repayable on demand or
otherwise and withdrawable by cheque, draft, order or otherwise.

Permissible Activities of a Banking Company

Section 6 of B.R. Act, 1949 gives the details of forms of business


in which a banking company may engage. However, it is a long list
and banks may carry out one or more activities permitted in the
section.

Policy of issuing licence to banks in India

The policy framework for issuing licences to private sector and


foreign banks are discussed below:
Private sector banks

• The guidelines for licensing of new banks in the private


sector were issued by the Reserve Bank of India (RBI) on
January 22, 1993. The revised guidelines for entry of new
banks in private sector were issued on January 3, 2001. The
foreign investment limit from all the sources in private banks
was raised from a maximum of 49 per cent to 74 per cent in
March 2004. In consultation with the Government of India,
the Reserve Bank released a roadmap on February 28, 2005,
detailing the norms for the presence of foreign banks in India.
The Reserve Bank also issued comprehensive guidelines on
Ownership and Governance in private sector banks. The
broad principles underlying the policy framework were to
ensure that the ultimate ownership and control of private
sector banks is well diversified. Further, the fit and proper
criteria have to be the over-riding consideration in the path of
ensuring adequate investments, appropriate restructuring and
consolidation in the banking sector. No single entity or group
of related entities would have shareholding or control,
directly or indirectly, in any bank in excess of 10 per cent of
the paid up capital of the private sector bank. Any higher
level of acquisition will be with the prior approval of RBI
and in accordance with guidelines issued by RBI for grant of
acknowledgement for acquisition of shares. These measures
were intended to further enhance the efficiency of the
banking system by increasing competition.
• The initial minimum paid-up capital for a new bank was kept
at Rs. 200 crore. The initial capital was required to be to
Rs.300 crore within three years of commencement of
business. The aggregate foreign investment in private banks
from all sources ( FDI, FII, NRI) cannot exceed 74 per cent.
• Mergers and amalgamations are a common strategy adopted
for restructuring and strengthening banks internationally.
Although the consolidation process through mergers and
acquisitions of banks in India has been going for several
years it gained momentum in late 1990s. With increased
liberalisation, globalisation and technological advancement,
the consolidation process of Indian banking sector is likely to
intensify in the future, thereby imparting greater resilience to
the financial system. The Reserve Bank ensures that mergers
and amalgamation enhance the stability of the banking
system. Thus, the guidelines issued by RBI on May 11, 2005
laid down the process of merger and determination of swap
ratio.

Licensing of foreign banks

India issues a single class of banking licence to banks and hence


does not place any undue restrictions on their operations merely on
the ground that in some countries there are requirements of
multiple licences for dealing in local currency and foreign
currencies with different categories of clientele. Banks in India,
both Indian and foreign, enjoy full and equal access to the
payments and settlement systems and are full members of the
clearing houses and payments system.

Procedurely, foreign banks are required to apply to RBI for


opening their branches in India. Foreign banks’ application for
opening their maiden branch is considered under the provisions of
Sec 22 of the BR Act, 1949. Before granting any licence under this
section, RBI may require to be satisfied that the Government or the
law of the country in which it is incorporated does not discriminate
in any way against banks from India. Other conditions as
enumerated in para 2.5 above are required to be fulfilled.

Unlike the restrictive practices of certain foreign countries, India is


liberal in respect of the licensing and operation of the foreign bank
branches as illustrated by the following :

• India issues a single class of banking licence to foreign banks


and does not place any limitations on their operations. All
banks can carry on both retail and wholesale banking.
• Deposit insurance cover is uniformly available to all foreign
banks at a non-discriminatory rate of premium.
• The norms for capital adequacy, income recognition and
asset classification are by and large the same. Other
prudential norms such as exposure limits are the same as
those applicable to Indian banks.
Opening of branches in India by Foreign banks

The policy for approving foreign banks applications to open


maiden branch and further expand their branch presence has been
incorporated in the ‘Roadmap for presence of Foreign banks in
India’ indicated in the Press Release dated February 28, 2005 as
well as in the liberalized branch authorisation policy issued on
September 8, 2005. The branch authorisation policy for Indian
banks has been made applicable to foreign banks subject to the
following:

• Foreign banks are required to bring an assigned capital of US


$25 million up front at the time of opening the first branch in
India.
• Existing foreign banks having only one branch would have to
comply with the above requirement before their request for
opening of second branch is considered.
• Foreign banks may submit their branch expansion plan on an
annual basis.
• In addition to the parameters laid down for Indian banks, the
following parameters would also be considered for foreign
banks :
o Foreign bank’s and its group’s track record of
compliance and functioning in the global markets
would be considered. Reports from home country
supervisors will be sought, wherever necessary.
o Weightage would be given to even distribution of home
countries of foreign banks having presence in India.
o The treatment extended to Indian banks in the home
country of the applicant foreign bank would be
considered.
o Due consideration would be given to the bilateral and
diplomatic relations between India and the home
country.
o The branch expansion of foreign banks would be
considered keeping in view India’s commitments at
World Trade Organisation (WTO). Licences issued for
off-site ATMs installed by foreign banks are not
included in the ceiling of 12.

In terms of India’s commitment to WTO, as a part of market


access, India is committed to permit opening of 12 branches of
foreign banks every year. As against these commitments, Reserve
Bank of India has permitted upto 17- 18 branches in the past. The
Bank follows a liberal policy where the branches are sought to be
opened in unbanked/under-banked areas. Off-site ATMs are not
counted in the above limit. Including off-site ATMs, foreign banks
are having ( as on October 15, 2007) place of business at 933
locations ( 273 branches + 660 off site ATMs).

The procedure regarding approval of proposals for opening


branches of foreign banks in India has been simplified and
streamlined for the sake of expeditious disposal.

A licence under the provisions of B.R. Act, 1949 enables the


foreign banks to carry out any activity which is permissible to a
bank in India. This is in contrast with practices adopted in many
countries, where foreign banks can carry out only a limited menu
of activities.

As against the requirements of achieving 40 per cent of net bank


credit as target for lending to priority sector in case of domestic
banks, it has been made mandatory for the foreign banks to achieve
the minimum target of 32% of net bank credit for priority sector
lending. Within the target of 32%, two subtargets in respect of
advances (a) to small scale sector (minimum of 10%), and (b)
exports (minimum of 12%) have been fixed. The foreign banks are
not mandated for targeted credit in respect of agricultural
advances. There is no regulatory prescription in respect of foreign
banks to open branches in rural and semi-urban centers.

Differentiated Bank Licensing- Examining Pros and Cons

Arguments in Favour of Adopting a Differentiated bank Licensing

1. With the broadening and deepening of financial sector, it is


observed that banks are slowly migrating from a situation in the
past where the number of banking services offered by the banks
was limited and all banks provided all the services to a situation
where banks are finding their niche areas and mainly providing
services in their chosen areas. Many banks keep the plain vanilla
banking as a small necessary adjunct. It is widely recognized that
banks providing services to retail customers have different skill
sets and risk profiles as compared to banks which mainly deal with
large corporate clients.

The present situation where every bank can carry out every activity
permissible under Section 6 of Banking Regulation Act, 1949 has
the following implications, relevant to the subject under
consideration :

• For a wholesale bank dealing with corporate clients only, it


becomes a costly adjunct to maintain a skeleton retail
banking presence. Moreover it becomes difficult for such a
bank to meet priority sector obligations and obligations for
doing inclusive banking.
• Retail banks may have to create risk management and
regulatory compliance structures which are more appropriate
to wholesale banks, thus resulting in non-optimal use of
resources.
• Similar supervisory resources are devoted to banks with
different business profiles. This may also result in non-
optimal use of supervisory resources.
• The priority sector lending regime for foreign banks
indicated in paragarph 3.3 has been causing some discomfort
for some of the foreign banks. For example, some of the
foreign banks find it difficult to fulfil even the less rigorous
target of 32 per cent in respect of priority sector advances.
• Some banks find it difficult to provide ' no frills' facility to
economically disadvantaged. For them the more liberal
licensing regime causes a different set of problems.

It appears that given an opportunity, some of the banks may like to


follow a niche strategy rather than competing as full service all
purpose banks.

2. On the other hand, there are some factors which point towards
desirability of continuing with the existing system of universal
banking:
• In India, the penetration of banking services is very low. Less
than 59 % of adult population has access to a bank account
and less than 14 % of adult population has a loan account
with a with a bank. Under such circumstances, it would be
incorrect to create a regime where banks are allowed to
choose a path away from carrying banking to masses.
• Priority sector lending is important for banks. The revised
guidelines on priority sector lending have rationalized the
components of priority sector. For the first time, investments
by banks in securitised assets, representing loans to various
categories of priority sector, shall be eligible for
classification under respective categories of priority sector
(direct or indirect) depending on the underlying assets,
provided the securitised assets are originated by banks and
financial institutions and fulfil the Reserve Bank of India
guidelines on securitisation. This would mean that the banks'
investments in the above categories of securitised assets shall
be eligible for classification under the respective categories
of priority sector only if the securitised advances were
eligible to be classified as priority sector advances before
their securitisation. These measures would make it easier to
comply with the priority sector lending requirements by those
banks which had faced some difficulties in this regard.
• The business model adopted by such ‘niche’ banks depends
heavily on ample inter-bank liquidity. Any shock leading to
liquidity crunch can translate into a run on the bank. This
situation has been clearly illustrated recently in UK in the
case of Northern Rock Bank.

International experience and practice

International experience and practices of licensing procedure


followed in major jurisdictions by the respective regulators have
been studied and we have grouped them into two viz limited
banking licence - equally applicable both for domestic and foreign
banks and limited bank license-different for domestic and foreign
banks. In addition, there are countries where different licences are
issued for commercial banking, savings bank, rural banks or credit
unions . In certain counties no distinction is made between
domestic and foreign banks. Thus, there is no widely accepted
recommended model available internationally.

Capital requirement

The capital requirement is a bank regulation, which sets a


framework on how banks and depository institutions must handle
their capital. The categorization of assets and capital is highly
standardized so that it can be risk weighted (see Risk-weighted
asset). Internationally, the Basel Committee on Banking
Supervision housed at the Bank for International Settlements
influence each country's banking capital requirements. In 1988, the
Committee decided to introduce a capital measurement system
commonly referred to as the Basel Accord. This framework is now
being replaced by a new and significantly more complex capital
adequacy framework commonly known as Basel II. While Basel II
significantly alters the calculation of the risk weights, it leaves
alone the calculation of the capital. The capital ratio is the
percentage of a bank's capital to its risk-weighted assets. Weights
are defined by risk-sensitivity ratios whose calculation is dictated
under the relevant Accord.

Each national regulator normally has a very slightly different way


of calculating bank capital, designed to meet the common
requirements within their individual national legal framework.

Most developed countries implement Basel I and II, stipulate


lending limits as a multiple of a banks capital eroded by the yearly
inflation rate.

The 5 Cs of Credit, Character, Cash Flow, Collateral, Conditions


and Capital, have been replaced by one single criterion. While the
international standards of bank capital were laid down in the 1988
Basel I accord, Basel II makes significant alterations to the
interpretation, if not the calculation, of the capital requirement.

Regulatory capital
In the Basel I accord bank capital was divided into two "tiers",
each with some subdivisions.

Capital Adequacy: BASEL-I & BASEL-II

The Reserve Bank of India decided in April 1992 to introduce a


risk asset ratio system for banks (including foreign banks) in India
as a capital adequacy measure in line with the Capital Adequacy
Norms prescribed by Basel Committee.This circular prescribes the
risk weights for the balance sheet assets, non-funded items and
other off-balance sheet exposures and the minimum capital funds
to be maintained as ratio to the aggregate of the risk weighted
assets and other exposures, as also, capital requirements in the
trading book, on an ongoing basis.

Capital

The basic approach of capital adequacy framework is that a bank


should have sufficient capital to provide a stable resource to absorb
any losses arising from the risks in its business. Capital is divided
into tiers according to the characteristics/qualities of each
qualifying instrument. For supervisory purposes capital is split into
two categories: Tier I and Tier II. These categories represent
different instruments’ quality as capital. Tier I capital consists
mainly of share capital and disclosed reserves and it is a bank’s
highest quality capital because it is fully available to cover losses.
Tier II capital on the other hand consists of certain reserves and
certain types of subordinated debt. The loss absorption capacity of
Tier II capital is lower than that of Tier I capital.

Credit Risk

Credit risk is most simply defined as the potential that a bank’s


borrower or counterparty may fail to meet its obligations in
accordance with agreed terms. It is the possibility of losses
associated with diminution in the credit quality of borrowers or
counterparties. In a bank’s portfolio, losses stem from outright
default due to inability or unwillingness of a customer or a
counterparty to meet commitments in relation to lending, trading,
settlement and other financial transactions. Alternatively, losses
result from reduction in portfolio arising from actual or perceived
deterioration in credit quality.

For most banks, loans are the largest and the most obvious source
of credit risk; however, other sources of credit risk exist
throughout the activities of a bank, including in the banking book
and in the trading book, and both on and off balance sheet. Banks
increasingly face credit risk (or counterparty risk) in various
financial instruments other than loans, including acceptances,
inter-bank transactions, trade financing, foreign exchange
transactions, financial futures, swaps, bonds, equities, options and
in guarantees and settlement of transactions.

The goal of credit risk management is to maximize a bank’s risk-


adjusted rate of return by maintaining credit risk exposure within
acceptable parameters. Banks need to manage the credit risk
inherent in the entire portfolio, as well as, the risk in the individual
credits or transactions. Banks should have a keen awareness of the
need to identify measure, monitor and control credit risk, as well
as, to determine that they hold adequate capital against these risks
and they are adequately compensated for risks incurred.

Market Risk

Market risk refers to the risk to a bank resulting from movements


in market prices in particular changes in interest rates, foreign
exchange rates and equity and commodity prices. In simpler terms,
it may be defined as the possibility of loss to a bank caused by
changes in the market variables. The Bank for International
Settlements (BIS) defines market risk as “the risk that the value of
‘on’ or ‘off’ balance sheet positions will be adversely affected by
movements in equity and interest rate markets, currency exchange
rates and commodity prices”. Thus, Market Risk is the risk to the
bank’s earnings and capital due to changes in the market level of
interest rates or prices of securities, foreign exchange and equities,
as well as, the volatilities of those changes.

GUIDELINES

Components of Capital
Capital funds: The capital funds for the banks are being discussed
under two heads i.e. the capital funds of Indian banks and the
capital funds of foreign banks operating in India.

Capital funds of Indian banks : For Indian banks, 'capital funds'


would include the components Tier I capital and Tier II capital.

Elements of Tier I capital: The elements of Tier I capital include

i) Paid-up capital (ordinary shares), statutory reserves, and other


disclosed free reserves, if any;

ii) Perpetual Non-cumulative Preference Shares (PNCPS) eligible


for inclusion as Tier I capital - subject to laws in force from time to
time;

iii) Innovative Perpetual Debt Instruments (IPDI) eligible for


inclusion as Tier I capital; and

iv) Capital reserves representing surplus arising out of sale


proceeds of assets.

The guidelines covering Perpetual Non-Cumulative Preference


Shares (PNCPS) eligible for inclusion as Tier I capital indicating
the minimum regulatory requirements are furnished in Annex 1.
The guidelines governing the Innovative Perpetual Debt
Instruments (IPDI) eligible for inclusion as Tier I capital indicating
the minimum regulatory requirements are furnished in Annex 2.

Elements of Tier II capital: The elements of Tier II capital include


undisclosed reserves, revaluation reserves, general provisions and
loss reserves, hybrid capital instruments, subordinated debt and
investment reserve account.

a.Undisclosed reserves

They can be included in capital, if they represent accumulations of


post-tax profits and are not encumbered by any known liability and
should not be routinely used for absorbing normal loss or operating
losses. .

b.Revaluation reserves
It would be prudent to consider revaluation reserves at a discount
of 55 percent while determining their value for inclusion in Tier II
capital. Such reserves will have to be reflected on the face of the
Balance Sheet as revaluation reserves.

c.General provisions and loss reserves

Such reserves can be included in Tier II capital if they are not


attributable to the actual diminution in value or identifiable
potential loss in any specific asset and are available to meet
unexpected losses. Adequate care must be taken to see that
sufficient provisions have been made to meet all known losses and
foreseeable potential losses before considering general provisions
and loss reserves to be part of Tier II capital. General
provisions/loss reserves will be admitted up to a maximum of 1.25
percent of total risk weighted assets.

'Floating Provisions' held by the banks, which is general in nature


and not made against any identified assets, may be treated as a part
of Tier II capital within the overall ceiling of 1.25 percent of total
risk weighted assets.

Excess provisions which arise on sale of NPAs would be eligible


Tier II capital subject to the overall ceiling of 1.25% of total Risk
Weighted Assets

d.Hybrid debt capital instruments

Those instruments which have close similarities to equity, in


particular when they are able to support losses on an ongoing basis
without triggering liquidation, may be included in Tier II capital.
At present the following instruments have been recognized and
placed under this category:

i. Debt capital instruments eligible for inclusion as Upper Tier II


capital ; and

ii. Perpetual Cumulative Preference Shares (PCPS) / Redeemable


Non-Cumulative Preference Shares (RNCPS) / Redeemable
Cumulative Preference Shares (RCPS) as part of Upper Tier II
Capital
The guidelines governing the instruments at (i) and (ii) above,
indicating the minimum regulatory requirements are furnished in
Annex 3 and Annex 4 respectively.

e.Subordinated debt

Banks can raise, with the approval of their Boards, rupee-


subordinated debt as Tier II capital, subject to the terms and
conditions given in the Annex 5.

f.Investment Reserve Account

In the event of provisions created on account of depreciation in the


‘Available for Sale’ or ‘Held for Trading’ categories being found
to be in excess of the required amount in any year, the excess
should be credited to the Profit & Loss account and an equivalent
amount (net of taxes, if any and net of transfer to Statutory
Reserves as applicable to such excess provision) should be
appropriated to an Investment Reserve Account in Schedule 2
–“Reserves & Surplus” under the head “Revenue and other
Reserves” in the Balance Sheet and would be eligible for inclusion
under Tier II capital within the overall ceiling of 1.25 per cent of
total risk weighted assets prescribed for General Provisions/ Loss
Reserves.

g.Banks are allowed to include the ‘General Provisions on


Standard Assets’ and ‘provisions held for country exposures’ in
Tier II capital. However, the provisions on ‘standard assets’
together with other ‘general provisions/ loss reserves’ and
‘provisions held for country exposures’ will be admitted as Tier II
capital up to a maximum of 1.25 per cent of the total risk-weighted
assets.

Capital funds of foreign banks operating in India

For the foreign banks operating in India, 'capital funds' would


include the two components i.e. Tier I capital and Tier II capital.

Elements of Tier I capital: The elements of Tier I capital include


i) Interest-free funds from Head Office kept in a separate account
in Indian books specifically for the purpose of meeting the capital
adequacy norms.

ii) Innovative Instruments eligible for inclusion as Tier I capital.

iii) Statutory reserves kept in Indian books.

iv) Remittable surplus retained in Indian books which is not


repatriable so long as the bank functions in India.

Elements of Tier II capital: The elements of Tier II capital include


the following elements.

a) Elements of Tier II capital as applicable to Indian banks.

b) Head Office (HO) borrowings raised in foreign currency (for


inclusion in Upper Tier II Capital) subject to the terms and
conditions as mentioned at para 7 of Annex 3 to this circular.

Regarding the capital of foreign banks they are also required to


follow the following instructions:

a) The foreign banks are required to furnish to Reserve Bank, (if


not already done), an undertaking to the effect that the banks will
not remit abroad the remittable surplus retained in India and
included in Tier I capital as long as the banks function in India.

b) These funds may be retained in a separate account titled as


'Amount Retained in India for Meeting Capital to Risk-weighted
Asset Ratio (CRAR) Requirements' under 'Capital Funds'.

c) An auditor's certificate to the effect that these funds represent


surplus remittable to Head Office once tax assessments are
completed or tax appeals are decided and do not include funds in
the nature of provisions towards tax or for any other contingency
may also be furnished to Reserve Bank.

d) Foreign banks operating in India are permitted to hedge their


entire Tier I capital held by them in Indian books subject to the
following conditions:
(i) The forward contract should be for tenor of one year or more
and may be rolled over on maturity. Rebooking of cancelled hedge
will require prior approval of Reserve Bank.

(ii) The capital funds should be available in India to meet local


regulatory and CRAR requirements. Therefore, foreign currency
funds accruing out of hedging should not be parked in nostro
accounts but should remain swapped with banks in India at all
times.

e) Capital reserve representing surplus arising out of sale of assets


in India held in a separate account is not eligible for repatriation so
long as the bank functions in India.

f) Interest-free funds remitted from abroad for the purpose of


acquisition of property should be held in a separate account in
Indian books.

g) The net credit balance, if any, in the inter-office account with


Head Office/overseas branches will not be reckoned as capital
funds. However, any debit balance in Head Office account will
have to be set-off against the capital.

Other terms and conditions for issue of Tier I/Tier II capital

h) Foreign banks in India may raise Head Office (HO) borrowings


in foreign currency for inclusion as Tier I /Tier II capital subject to
the terms and conditions indicated at

i) Foreign banks operating in India are also required to comply


with the instructions on limits for Tier II elements and norms on
cross holdings as applicable to Indian banks. The elements of Tier
I and Tier II capital do not include foreign currency loans granted
to Indian parties.

Shareholdings and Voting Rights:

KYC and AML:

The objective of KYC/AML/CFT guidelines is to prevent


banks from being used, intentionally or unintentionally, by
criminal elements for money laundering or terrorist financing
activities. KYC procedures also enable banks to know/understand
their customers and their financial dealings better which in turn
help them manage their risks prudently.

Definition of Customer

For the purpose of KYC policy, a ‘Customer’ is defined as :

• a person or entity that maintains an account and/or has a


business relationship with the bank;
• one on whose behalf the account is maintained (i.e. the
beneficial owner);
• beneficiaries of transactions conducted by professional
intermediaries, such as Stock Brokers, Chartered
Accountants, Solicitors etc. as permitted under the law, and
• any person or entity connected with a financial transaction
which can pose significant reputational or other risks to the
bank, say, a wire transfer or issue of a high value demand
draft as a single transaction.

Guidelines

General

i) Banks should keep in mind that the information collected from


the customer for the purpose of opening of account is to be treated
as confidential and details thereof are not to be divulged for cross
selling or any other like purposes. Banks should, therefore, ensure
that information sought from the customer is relevant to the
perceived risk, is not intrusive, and is in conformity with the
guidelines issued in this regard. Any other information from the
customer should be sought separately with his/her consent and
after opening the account.

ii) Banks should ensure that any remittance of funds by way of


demand draft, mail/telegraphic transfer or any other mode and
issue of travellers’ cheques for value of Rupees fifty thousand and
above is effected by debit to the customer’s account or against
cheques and not against cash payment.
iii) Banks should ensure that the provisions of Foreign
Contribution (Regulation) Act, 1976 as amended from time to
time, wherever applicable are strictly adhered to.

KYC Policy

Banks should frame their KYC policies incorporating the


following four key elements:

a)Customer Acceptance Policy;

b) Customer Identification Procedures;

c) Monitoring of Transactions; and

d) Risk Management.

Customer Acceptance Policy (CAP)

a) Every bank should develop a clear Customer Acceptance Policy


laying down explicit criteria for acceptance of customers. The
Customer Acceptance Policy must ensure that explicit guidelines
are in place on the following aspects of customer relationship in
the bank.

i) No account is opened in anonymous or fictitious/benami


name(s);

ii) Parameters of risk perception are clearly defined in terms of the


nature of business activity , location of customer and his clients,
mode of payments, volume of turnover, social and financial status
etc. to enable categorisation of customers into low, medium and
high risk (banks may choose any suitable nomenclature viz. level I,
level II and level III). Customers requiring very high level of
monitoring, e.g. Politically Exposed Persons (PEPs) may, if
considered necessary, be categorised even higher;

iii) Documentation requirements and other information to be


collected in respect of different categories of customers depending
on perceived risk and keeping in mind the requirements of PML
Act, 2002 and instructions/guidelines issued by Reserve Bank from
time to time;

iv) Not to open an account or close an existing account where the


bank is unable to apply appropriate customer due diligence
measures i.e. bank is unable to verify the identity and /or obtain
documents required as per the risk categorisation due to non
cooperation of the customer or non reliability of the
data/information furnished to the bank. It is, however, necessary to
have suitable built in safeguards to avoid harassment of the
customer. For example, decision by a bank to close an account
should be taken at a reasonably high level after giving due notice
to the customer explaining the reasons for such a decision;

v) Circumstances, in which a customer is permitted to act on behalf


of another person/entity, should be clearly spelt out in conformity
with the established law and practice of banking as there could be
occasions when an account is operated by a mandate holder or
where an account is opened by an intermediary in fiduciary
capacity and

vi) Necessary checks before opening a new account so as to ensure


that the identity of the customer does not match with any person
with known criminal background or with banned entities such as
individual terrorists or terrorist organisations etc.

b) Banks should prepare a profile for each new customer based on


risk categorisation. The customer profile may contain information
relating to customer’s identity, social/financial status, nature of
business activity, information about his clients’ business and their
location etc. The nature and extent of due diligence will depend on
the risk perceived by the bank. However, while preparing customer
profile banks should take care to seek only such information from
the customer, which is relevant to the risk category and is not
intrusive. The customer profile is a confidential document and
details contained therein should not be divulged for cross selling or
any other purposes.
c) For the purpose of risk categorisation, individuals (other than
High Net Worth) and entities whose identities and sources of
wealth can be easily identified and transactions in whose accounts
by and large conform to the known profile, may be categorised as
low risk. Illustrative examples of low risk customers could be
salaried employees whose salary structures are well defined,
people belonging to lower economic strata of the society whose
accounts show small balances and low turnover, Government
Departments and Government owned companies, regulators and
statutory bodies etc. In such cases, the policy may require that only
the basic requirements of verifying the identity and location of the
customer are to be met. Customers that are likely to pose a higher
than average risk to the bank should be categorised as medium or
high risk depending on customer's background, nature and location
of activity, country of origin, sources of funds and his client profile
etc. Banks should apply enhanced due diligence measures based on
the risk assessment, thereby requiring intensive ‘due diligence’ for
higher risk customers, especially those for whom the sources of
funds are not clear. Examples of customers requiring higher due
diligence include (a) nonresident customers; (b) high net worth
individuals; (c) trusts, charities, NGOs and organizations receiving
donations; (d) companies having close family shareholding or
beneficial ownership; (e) firms with ' sleeping partners '; (f)
politically exposed persons (PEPs) of foreign origin; (g) non-face
to face customers and (h) those with dubious reputation as per
public information available etc. Howeveronly NPOs/NGOs
promoted by United Nations or its agencies may be classified as
low risk customer.

d) It is important to bear in mind that the adoption of customer


acceptance policy and its implementation should not become too
restrictive and must not result in denial of banking services to
general public, especially to those, who are financially or socially
disadvantaged.

Customer Identification Procedure ( CIP)

a) The policy approved by the Board of banks should clearly spell


out the Customer Identification Procedure to be carried out at
different stages i.e. while establishing a banking relationship;
carrying out a financial transaction or when the bank has a doubt
about the authenticity/veracity or the adequacy of the previously
obtained customer identification data. Customer identification
means identifying the customer and verifying his/her identity by
using reliable, independent source documents, data or information.
Banks need to obtain sufficient information necessary to establish,
to their satisfaction, the identity of each new customer, whether
regular or occasional, and the purpose of the intended nature of
banking relationship. Being satisfied means that the bank must be
able to satisfy the competent authorities that due diligence was
observed based on the risk profile of the customer in compliance
with the extant guidelines in place. Such risk based approach is
considered necessary to avoid disproportionate cost to banks and a
burdensome regime for the customers. Besides risk perception, the
nature of information/documents required would also depend on
the type of customer (individual, corporate etc.). For customers
that are natural persons, the banks should obtain sufficient
identification data to verify the identity of the customer, his
address/location, and also his recent photograph. For customers
that are legal persons or entities, the bank should (i) verify the
legal status of the legal person/entity through proper and relevant
documents; (ii) verify that any person purporting to act on behalf
of the legal person/entity is so authorised and identify and verify
the identity of that person; (iii) understand the ownership and
control structure of the customer and determine who are the natural
persons who ultimately control the legal person. Customer
identification requirements in respect of a few typical cases,
especially, legal persons requiring an extra element of caution are
given in paragraph 2.5 below for guidance of banks. Banks may,
however, frame their own internal guidelines based on their
experience of dealing with such persons/entities, normal bankers’
prudence and the legal requirements as per established practices. If
the bank decides to accept such accounts in terms of the Customer
Acceptance Policy, the bank should take reasonable measures to
identify the beneficial owner(s) and verify his/her/their identity in
a manner so that it is satisfied that it knows who the beneficial
owner(s) is/are.
b) It has been observed that some close relatives, e.g. wife, son,
daughter and daughter and parents etc. who live with their
husband, father/mother and son, as the case may be, are finding it
difficult to open account in some banks as the utility bills required
for address verification are not in their name. It is clarified, that in
such cases, banks can obtain an identity document and a utility bill
of the relative with whom the prospective customer is living along
with a declaration from the relative that the said person
(prospective customer) wanting to open an account is a relative and
is staying with him/her. Banks can use any supplementary
evidence such as a letter received through post for further
verification of the address. While issuing operational instructions
to the branches on the subject, banks should keep in mind the spirit
of instructions issued by the Reserve Bank and avoid undue
hardships to individuals who are, otherwise, classified as low risk
customers.

c) Banks should introduce a system of periodical updation of


customer identification data (including photograph/s) after the
account is opened. The periodicity of such updation should not be
less than once in five years in case of low risk category customers
and not less than once in two years in case of high and medium
risk categories.

d) An indicative list of the nature and type of


documents/information that may be may be relied upon for
customer identification is given in Annex-I to this Master Circular.
It is clarified that permanent correct address, as referred to in
Annex-I, means the address at which a person usually resides and
can be taken as the address as mentioned in a utility bill or any
other document accepted by the bank for verification of the address
of the customer.

e) It has been brought to our notice that the said indicative


list furnished in Annex -I, is being treated by some banks as an
exhaustive list as a result of which a section of public is being
denied access to banking services. Banks are, therefore, advised to
take a review of their extant internal instructions in this regard.
2.5 Customer Identification Requirements – Indicative Guidelines

i) Trust/Nominee or Fiduciary Accounts

There exists the possibility that trust/nominee or fiduciary accounts


can be used to circumvent the customer identification procedures.
Banks should determine whether the customer is acting on behalf
of another person as trustee/nominee or any other intermediary. If
so, banks should insist on receipt of satisfactory evidence of the
identity of the intermediaries and of the persons on whose behalf
they are acting, as also obtain details of the nature of the trust or
other arrangements in place. While opening an account for a trust,
banks should take reasonable precautions to verify the identity of
the trustees and the settlors of trust (including any person settling
assets into the trust), grantors, protectors, beneficiaries and
signatories. Beneficiaries should be identified when they are
defined. In the case of a 'foundation', steps should be taken to
verify the founder managers/ directors and the beneficiaries, if
defined.

ii) Accounts of companies and firms

Banks need to be vigilant against business entities being used by


individuals as a ‘front’ for maintaining accounts with banks. Banks
should examine the control structure of the entity, determine the
source of funds and identify the natural persons who have a
controlling interest and who comprise the management. These
requirements may be moderated according to the risk perception
e.g. in the case of a public company it will not be necessary to
identify all the shareholders.

iii) Client accounts opened by professional intermediaries

When the bank has knowledge or reason to believe that the client
account opened by a professional intermediary is on behalf of a
single client, that client must be identified. Banks may hold
'pooled' accounts managed by professional intermediaries on
behalf of entities like mutual funds, pension funds or other types of
funds. Banks also maintain 'pooled' accounts managed by
lawyers/chartered accountants or stockbrokers for funds held 'on
deposit' or 'in escrow' for a range of clients. Where funds held by
the intermediaries are not co-mingled at the bank and there are
'sub-accounts', each of them attributable to a beneficial owner, all
the beneficial owners must be identified. Where such funds are co-
mingled at the bank, the bank should still look through to the
beneficial owners. Where the banks rely on the 'customer due
diligence' (CDD) done by an intermediary, they should satisfy
themselves that the intermediary is regulated and supervised and
has adequate systems in place to comply with the KYC
requirements. It should be understood that the ultimate
responsibility for knowing the customer lies with the bank.

iv) Accounts of Politically Exposed Persons (PEPs) resident


outside India

Politically exposed persons are individuals who are or have been


entrusted with prominent public functions in a foreign country,
e.g., Heads of States or of Governments, senior politicians, senior
government/judicial/military officers, senior executives of state-
owned corporations, important political party officials, etc. Banks
should gather sufficient information on any person/customer of this
category intending to establish a relationship and check all the
information available on the person in the public domain. Banks
should verify the identity of the person and seek information about
the sources of funds before accepting the PEP as a customer. The
decision to open an account for a PEP should be taken at a senior
level which should be clearly spelt out in Customer Acceptance
Policy. Banks should also subject such accounts to enhanced
monitoring on an ongoing basis. The above norms may also be
applied to the accounts of the family members or close relatives of
PEPs.

v) Accounts of non-face-to-face customers

With the introduction of telephone and electronic banking,


increasingly accounts are being opened by banks for customers
without the need for the customer to visit the bank branch. In the
case of non-face-to-face customers, apart from applying the usual
customer identification procedures, there must be specific and
adequate procedures to mitigate the higher risk involved.
Certification of all the documents presented should be insisted
upon and, if necessary, additional documents may be called for. In
such cases, banks may also require the first payment to be effected
through the customer's account with another bank which, in turn,
adheres to similar KYC standards. In the case of cross-border
customers, there is the additional difficulty of matching the
customer with the documentation and the bank may have to rely on
third party certification/introduction. In such cases, it must be
ensured that the third party is a regulated and supervised entity and
has adequate KYC systems in place.

Small Deposit Accounts

(i) Although flexibility in the requirements of documents of


identity and proof of address has been provided in the above
mentioned KYC guidelines, it has been observed that a large
number of persons, especially, those belonging to low income
group both in urban and rural areas are not able to produce such
documents to satisfy the bank about their identity and address. This
would lead to their inability to access the banking services and
result in their financial exclusion. Accordingly, the KYC procedure
also provides for opening accounts for those persons who intend to
keep balances not exceeding Rupees Fifty Thousand (Rs. 50,000/-)
in all their accounts taken together and the total credit in all the
accounts taken together is not expected to exceed Rupees One
Lakh (Rs. 1,00,000/-) in a year. In such cases, if a person who
wants to open an account and is not able to produce documents
mentioned in Annex I of this master circular, banks should open an
account for him, subject to:

Introduction from another account holder who has been subjected


to full KYC procedure. The introducer’s account with the bank
should be at least six months old and should show satisfactory
transactions. Photograph of the customer who proposes to open the
account and also his address need to be certified by the introducer,

or
any other evidence as to the identity and address of the customer to
the satisfaction of the bank.

ii) While opening accounts as described above, the customer


should be made aware that if at any point of time, the balances in
all his/her accounts with the bank (taken together) exceeds Rupees
Fifty Thousand (Rs. 50,000/-) or total credit in the account exceeds
Rupees One Lakh (Rs. 1,00,000/-) in a year, no further transactions
will be permitted until the full KYC procedure is completed. In
order not to inconvenience the customer, the bank must notify the
customer when the balance reaches Rupees Forty Thousand (Rs.
40,000/-) or the total credit in a year reaches Rupees Eighty
thousand (Rs. 80,000/-) that appropriate documents for conducting
the KYC must be submitted otherwise operations in the account
will be stopped.

Banking Ombudsman Scheme:

Banking Ombudsman is a quasi judicial authority functioning


under India’s Banking Ombudsman Scheme 2006, and the
authority was created pursuant to the a decision by the Government
of India to enable resolution of complaints of customers of banks
relating to certain services rendered by the banks. The Banking
Ombudsman Scheme was first introduced in India in 1995, and
was revised in 2002. The current scheme became operative from
the 1 January 2006, and replaced and superseded the banking
Ombudsman Scheme 2002. From 2002 until 2006, around 36,000
complaints have been dealt by the Banking Ombudsmen.

Type of complaints

• The type and scope of the complaints which may be


considered by a Banking Ombudsman is very
comprehensive, and it has been empowered to receive and
consider complaints pertaining to the following:

• Non-payment or inordinate delay in the payment or


collection of cheques, drafts, bills, etc.;
• Non-acceptance, without sufficient cause, of small
denomination notes tendered for any purpose, and for
charging of commission for this service;

• Non-acceptance, without sufficient cause, of coins tendered


and for charging of commission for this service;

• Non-payment or delay in payment of inward remittances ;

• Failure to issue or delay in issue, of drafts, pay orders or


bankers’ cheques;

• Non-adherence to prescribed working hours;

• Failure to honour guarantee or letter of credit commitments;

• Failure to provide or delay in providing a banking facility


(other than loans and advances) promised in writing by a
bank or its direct selling agents;

• Delays, non-credit of proceeds to parties' accounts, non-


payment of deposit or non-observance of the Reserve Bank
directives, if any, applicable to rate of interest on deposits in
any savings, current or other account maintained with a
bank ;

• Delays in receipt of export proceeds, handling of export bills,


collection of bills etc., for exporters provided the said
complaints pertain to the bank's operations in India;

• Refusal to open deposit accounts without any valid reason for


refusal;

• Levying of charges without adequate prior notice to the


customer;

• Non-adherence by the bank or its subsidiaries to the


instructions of Reserve Bank on ATM/debit card operations
or credit card operations;
• Non-disbursement or delay in disbursement of pension to the
extent the grievance can be attributed to the action on the part
of the bank concerned, (but not with regard to its employees);

• Refusal to accept or delay in accepting payment towards


taxes, as required by Reserve Bank/Government;

• Refusal to issue or delay in issuing, or failure to service or


delay in servicing or redemption of Government securities;

• Forced closure of deposit accounts without due notice or


without sufficient reason;

• Refusal to close or delay in closing the accounts;

• Non-adherence to the fair practices code as adopted by the


bank; and

• Any other matter relating to the violation of the directives


issued by the Reserve Bank in relation to banking or other
services.

The Banking Ombudsman Scheme 2006 has been introduced by


Reserve Bank of India with the object of enabling resolution of
complaints relating to certain services rendered by banks and to
facilitate the satisfaction or settlement of such complaints. The
salient features of the Scheme are as follows.

GROUNDS ON WHICH COMPLAINT CAN BE MADE TO


BANKING OMBUDSMAN

 The Banking Ombudsman can receive and consider complaints


relating to the following deficiency in banking or other services

(a) non-payment or inordinate delay in the payment or collection of


cheques, drafts, bills etc.;

(b) non-acceptance, without sufficient cause, of small


denomination notes tendered for any purpose, and for charging of
commission in respect thereof;
(c) non-acceptance, without sufficient cause, of coins tendered and
for charging of commission in respect thereof;

(d) non-payment or delay in payment of inward remittances;

(e) failure to issue or delay in issue of drafts, pay orders or


bankers’ cheques;

(f) non-adherence to prescribed working hours ;

(g) failure to honour guarantee or letter of credit commitments ;

(h) failure to provide or delay in providing a banking facility (other


than loans and advances) promised in writing by a bank or its
direct selling agents;

(i) delays, non-credit of proceeds to parties' accounts, non-payment


of deposit or non-observance of the Reserve Bank directives, if
any, applicable to rate of interest on deposits in any savings,
current or other account maintained with a bank;

(j) delays in receipt of export proceeds, handling of export bills,


collection of bills etc., for exporters provided the said complaints
pertain to the bank's operations in India;

(k) complaints from Non-Resident Indians having accounts in


India in relation to their remittances from abroad, deposits and
other bank related matters;

(l) refusal to open deposit accounts without any valid reason for
refusal;

(m) levying of charges without adequate prior notice to the


customer;

(n) non-adherence by the bank or its subsidiaries to the instructions


of Reserve Bank on ATM/Debit card operations or credit card
operations;
(o) non-disbursement or delay in disbursement of pension (to the
extent the grievance can be attributed to the action on the part of
the bank concerned, but not with regard to its employees);

(p) refusal to accept or delay in accepting payment towards taxes,


as required by Reserve Bank/Government;

(q) refusal to issue or delay in issuing, or failure to service or delay


in servicing or redemption of Government securities;

(r) forced closure of deposit accounts without due notice or without


sufficient reason;

(s) refusal to close or delay in closing the accounts;

(t) non-adherence to the fair practices code as adopted by the bank;


and

(u) any other matter relating to the violation of the directives


issued by the Reserve Bank in relation to banking or other services.

 The Banking Ombudsman can receive and consider complaints


relating to the following deficiency in banking service in respect
of loans and advances

(a) non-observance of Reserve Bank Directives on interest rates;

(b) delays in sanction, disbursement or non-observance of


prescribed time schedule for disposal of loan applications;

(c) non-acceptance of application for loans without furnishing


valid reasons to the applicant; and

(d) non-observance of any other direction or instruction of the


Reserve Bank as may be specified by the Reserve Bank for this
purpose from time to time.
 The Banking Ombudsman may also deal with such other matter
as may be specified by the Reserve Bank of India from time to
time in this behalf.

SETTLEMENT OF COMPLAINT AND PASSING OF AWARD


BY THE BANKING OMBUDSMAN
 As per the Scheme the Banking Ombudsman shall endeavour to
promote settlement of the complaint by Agreement between the
complainant and Bank.
 If the complaint is not settled by agreement within a period of
one month from the date of receipt of the complaint or such
further period as the Banking Ombudsman may allow the
parties, the Banking Ombudsman may, after affording the
parties a reasonable opportunity to present their case, pass an
Award or reject the complaint.
 Banking Ombudsman shall not have the power to pass an award
directing payment of an amount which is more than the actual
loss suffered by the complainant as a direct consequence of the
act of omission or commission of the bank, or ten lakh rupees
whichever is lower.

APPEAL BEFORE THE APPELLATE AUTHORITY:

 Any person aggrieved by the Award of the Banking


Ombudsman or rejection of a complaint for the reasons referred
to in sub clauses (c) to (g) of clause 13 of the Scheme can
within 30 days of the date of receipt of communication of
Award or rejection of complaint, prefer an appeal before the
prescribed Appellate Authority.
 The Appellate Authority may, if he is satisfied that the applicant
had sufficient cause for not making the appeal within time,
allow a further period not exceeding 30 days;

You might also like