BTL 918 - Pacs, Pain, and Camt

 

The Banking Tutor’s Lessons

BTL 918                                                                                12-07-2026

Pacs, Pain, and Camt

These are key message types under the ISO 20022 standard, a global framework transforming how financial data is exchanged between financial institutions.

Pain Message

Think of Pain messages as instructions from the customer to their bank to make a payment. It’s like giving instruction to bank, "Hey bank, please send money to this person"

Full form: Payment Initiation

Example: Pain.001 is used for credit transfer instructions, and Pain.002 is for status updates on those instructions.

Pacs Message

Once the payment instruction is sent, it’s time for banks to get involved. Pacs messages handle the clearing and settlement of payments between banks.

Full form: Payments Clearing and Settlement

Example: Pacs.008 is a credit transfer between financial institutions(MT103 is equivalent), while Pacs.004 deals with payment returns.

Camt Messages

Camt messages are the report cards of the payment world. They provide detailed information about account activities and payments.

Full form: Cash Management

Example: Camt.053 gives a bank statement, and Camt.056 is used for payment cancellations.

Real Life Example

Let’s say you, an individual in India, need to send $1,000 to a friend in the US:

1. Pain: You initiate the payment via your bank (Pain.001).

2. Pacs: Your bank coordinates with the intermediary and recipient banks to settle the funds (Pacs.008).

3. Camt: Once the transaction is complete, you and your bank receive reports about the payment (Camt.054 for notifications).

Advantages:-

These messages create a structured, traceable, and efficient payment flow across countries and financial systems. With ISO 20022 migration in full swing, understanding these is crucial for anyone in fintech or payments.

Sekhar Pariti

+91 9440641014

 

DBC 2493 - Long Position vs. Short Position

 

The Banking Tutor 

                       Daily Banking Concept 

No. 2493                                             12-07-2026  

Long Position vs. Short Position 

A long position means an investor has bought and owns shares of stock. An investor with a short position has sold shares but doesn't possess them yet.

DBC 2492 - Normalized Earnings

 

The Banking Tutor 

                       Daily Banking Concept 

No. 2492                                             11-07-2026  

   Normalized Earnings 

Normalized earnings or normalized income refers to a company’s income that has been adjusted to remove revenue, expenses, or effects of seasonality.

DBC 2491 - Adjudication

 

The Banking Tutor

Daily Banking Concept 

No. 2491                                                     10-07-2026      

                              Adjudication 

An adjudication is a legal ruling or judgment but the term can also refer to the process of settling a legal case or claim through the court or justice system.                      

BTL 917 - Shadow Credit

 

The Banking Tutor’s Lessons

BTL 917                                                                                09-07-2026

Shadow Credit

The term "Shadow Credit" holds different meanings depending on whether you are dealing with personal consumer banking, corporate finance, or macroeconomics.

In Personal Banking: Fraud & Dispute Resolution (Shadow Reversal)

In Retail banking, shadow credit refers to a temporary, provisional amount  deposited into your account while the bank investigates a disputed or fraudulent transaction.

If you report an unauthorized electronic transaction (UPI, debit/credit card fraud), regulations like the Reserve Bank of India (RBI) Limited Liability Clause require the bank to credit the disputed amount back to your account within 10 working days.

The "Shadow" Aspect: It acts as a temporary placeholder so you aren't left out of pocket. The bank has up to 90 days to investigate. If the probe finds you were not at fault, the credit becomes permanent. If negligence or fraud on your part is proven, the bank will revoke this credit.

Utilising Shadow Credit - Some banks freeze this specific portion of the balance until the investigation concludes, while others let you use it but hold you liable if the dispute is rejected.

In Credit Cards: The "Shadow Limit"

A shadow limit is an undisclosed, flexible buffer above your official credit card limit.

Hidden Cushion: It is invisible on your mobile app, statements, or bank dashboards.

Emergency Approval: It allows transactions to pass through seamlessly even if you slightly exceed your limit, preventing embarrassing card declines at a checkout counter.

Dynamic Calculation: This limit is determined algorithmically in real-time based on your repayment track record, internal credit score ("shadow scores"), and spending history. It is primarily offered on premium or high-end cards.

In Corporate Finance: Unreported Debt

For businesses, shadow credit refers to debt liabilities that do not explicitly appear on a company's primary balance sheet as formal bank debt.

Examples: It includes trade payables (money owed to vendors), inter-corporate loans, post-dated cheques used as collateral, and overdue legal or statutory dues.

The Risk: Commercial bankers look closely for hidden shadow credit because it secretly strains a company’s cash flow and artificially inflates their apparent repayment capability.

Sekhar Pariti

+91 9440641014

 

DBC 2490 - Equity Financing

 

The Banking Tutor 

                       Daily Banking Concept

 No. 2490                                              09-07-2026

Equity Financing 

Equity financing is the method of raising capital by selling shares of ownership in a company, allowing businesses to obtain funds from various investors without incurring debt.

DBC 2489 - Acquisitions

 

The Banking Tutor

 Daily Banking Concept

 

No. 2489                                               08-07-2026

 Acquisitions 

An acquisition occurs when one company purchases another entity, providing the acquiring company ownership and control over the acquired company's assets and operations.