| Indicator | Current Rate |
|---|---|
| CRR | 3% |
| SLR | 18.50% |
| Repo Rate | 4.00% |
| Reverse Repo Rate | 3.35% |
Bank Rate
Bank rate, also referred to as the discount rate, is the
rate of interest which a central bank charges
on the loans and advances that it extends to commercial
banks and other financial intermediaries.
Changes in the bank rate are often used by central banks
to control the money supply.
R epo Rate
Repo rate is the rate at which our banks borrow rupees
from RBI. Whenever the banks have any
shortage of funds they can borrow it from RBI. A
reduction in the repo rate will help banks to get
money at a cheaper rate. When the repo rate increases,
borrowing from RBI becomes more
expensive.
R everse Repo Rate
This is exact opposite of Repo rate. Reverse Repo rate is
the rate at which Reserve Bank of India
(RBI) borrows money from banks. RBI uses this tool when
it feels there is too much money
floating in the banking system. Banks are always happy to
lend money to RBI since their money
is in safe hands with a good interest. An increase in
Reverse repo rate can cause the banks to
transfer more funds to RBI due to this attractive
interest rates.
CRR Rate
Cash reserve Ratio (CRR) is the amount of funds that the
banks have to keep with RBI. If RBI
decides to increase the percent of this, the available
amount with the banks comes down. RBI is
using this method (increase of CRR rate), to drain out
the excessive money from the banks.
S L R Rate
SLR (Statutory Liquidity Ratio) is the amount a
commercial bank needs to maintain in the form
of cash, or gold or govt. approved securities (Bonds)
before providing credit to its customers.
SLR rate is determined and maintained by the RBI (Reserve
Bank of India) in order to control
the expansion of bank credit.
SLR is determined as the percentage of total demand and
percentage of time liabilities. Time Liabilities are the
liabilities a commercial bank liable to pay
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to the customers on their anytime demand. SLR is used to
control inflation and propel growth.
Through SLR rate tuning the money supply in the system
can be controlled efficiently.
Inflation
Inflation is as an increase in the price of bunch of
Goods and services that projects the Indian
economy. An increase in inflation figures occurs when there
is an increase in the average level of
prices in Goods and services. Inflation happens when
there are fewer Goods and more buyers;
this will result in increase in the price of Goods, since
there is more demand and less supply of
the goods.
Deflation
Deflation is the continuous decrease in prices of goods
and services. Deflation occurs when the
inflation rate becomes negative (below zero) and stays
there for a longer period.
P L R
The Prime Interest Rate is the interest
rate charged by banks to their most creditworthy
customers (usually the most prominent and stable business
customers). The rate is almost always
the same amongst major banks. Adjustments to the prime
rate are made by banks at the same
time; although, the prime rate does not adjust on any regular
basis. The Prime Rate is usually
adjusted at the same time and in correlation to the
adjustments of the Fed Funds Rate. Some
banks use the name "Reference Rate" or
"Base Lending Rate" to refer to their Prime Lending
Rate.
Deposit Rate
Interest Rates paid by a depository institution on the
cash on deposit.
FII
FII (Foreign Institutional Investor) used to denote an investor, mostly
in the form of an
institution. An institution established outside India,
which proposes to invest in Indian market, in
other words buying Indian stocks. FII's generally buy in
large volumes which has an impact on
the stock markets. Institutional Investors
includes pension funds,
mutual funds, Insurance
Companies, Banks, etc.
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F D I
FDI (Foreign Direct Investment) occurs with the purchase
of the “physical assets or a significant
amount of ownership (stock) of a company in another
country in order to gain a measure of
management control” (Or) A foreign company having a stake
in a Indian Company.
IP
O
IPO is Initial Public Offering. This is the first
offering of shares to the general public from a
company wishes to list on the stock exchanges.
Disinvestment
The Selling of the government stake in public sector
undertakings.
Fiscal
Deficit
It is the difference between the government’s total
receipts (excluding borrowings) and total
expenditure. Present Fiscal Deficit is 5.3%
Revenue
deficit
It defines that,
where the net amount
received (by taxes & other
forms) fails to meet the
predicted net amount to be received by the government
G
D P
The Gross Domestic Product or GDP is a measure of all of
the services and goods produced in a
country over a specific period; classically a year.
G N P
Gross National Product is measured as GDP plus income of
residents from investments made
abroad minus income earned by foreigners in domestic
market.
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National Income
National Income is the money value of all goods and
services produced in a country during the
year.
Per
Capita Income
The national income of a country, or region, divided by
its population. Per capita income is often
used to measure a country's standard of living.
Vote on Account
A vote-on account is basically a statement ,where the
government presents an estimate of a sum
required to meet the expenditure that it incurs during
the first three to four months of an election
financial year until a new government is in place, to
keep the machinery running.
Difference between Vote on AccountandInterim
Budget
Vote-on-account deals only with the expenditure side of
the government's budget, an interim
Budget is a complete set of accounts, including both
expenditure and receipts.
S D R
The SDR (Special Drawing Rights) is an artificial
currency created by the IMF in 1969. SDRs
are allocated to member countries and can be fully
converted into international currencies so they
serve as a supplement to the official foreign reserves of
member countries. Its value is based on a
basket of key international currencies (U.S. dollar,
euro, yen and pound sterling).
S E Z
SEZ means Special Economic Zone is the one of the part of
government’s policies in India. A
special Economic zone is a geographical region that
economic laws which are more liberal than
the usual economic laws in the country. The basic motto
behind this is to increase foreign
investment, development of infrastructure, job
opportunities and increase the income level of the
people.
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Corporate governance
The way in which a company is governed and how it deals
with the various interests of its
customers, shareholders, employees and society at large.
Corporate governance is the set of
processes, customs, policies, laws, and institutions
affecting the way a corporation (or company)
is directed, administered or controlled.Is defined as the
general set of customs, regulations,
habits, and laws that determine to what end a firm should
be run.
R B I Functions
The Reserve Bank of India is the central bank of India,
was established on April 1, 1935 in
accordance with the provisions of the Reserve Bank of India
Act, 1934. The Reserve Bank of
India was set up on the recommendations of the Hilton
Young Commission. The commission
submitted its report in the year 1926, though the bank
was not set up for nine years.To regulate
the issue of Bank Notes and keeping of reserves with a
view to securing monetary stability in
India and generally to operate the currency and credit
system of the country to its advantage."
Banker to the Government: performs merchant banking
function for the central and the state
governments;
also acts as
their banker.Banker to
banks: maintains banking
accounts of all
scheduled banks.
Monetary policy
A Monetary policy is the process by which the government,
central bank, of a country controls
(i) the supply of money,
(ii) (ii) availability of money,
and
(iii) (iii) cost of money or rate of interest,
In order to attain a set of objectives oriented
towards the growth and stability
of the
economy.
Fiscal Policy
Fiscal policy is the use of government spending and revenue
collection to influence
the
economy. These policies affect tax rates, interest rates
and government spending, in an effort to
control the economy. Fiscal policy is an additional
method to determine public revenue and
public expenditure.
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Core
Banking Solutions
Core banking is a general term used to describe the
services provided by a group of networked
bank branches. Bank customers may access their funds and
other simple transactions from any of
the member branch offices. It will cut down time, working
simultaneously on different issues and
increasing efficiency. The platform where
communication technology and information
technology are merged to suit core needs of banking is
known as Core Banking Solutions.
Bank,
its Features and Types
A bank is a financial organization where people deposit
their money to keep it safe.Banks play
an important role in the financial system and the
economy. As a key component of the financial
system, banks allocate funds from savers to borrowers in
an efficient manner. Regional Rural
Banks were established with an objective to ensure
sufficient institutional credit for agriculture
and other rural sectors. The RRBs mobilize financial
resources from rural / semi-urban areas and
grant loans and advances mostly to small and marginal
farmers, agricultural labourers and rural
artisans.
(i) The area of operation of RRBs is limited to the area as notified by GoI
covering one
or more districts in the State.
(ii) ii. Banking services for individual customers is known as retail
banking.
(iii) iii. A bank that deals mostly
in but international finance, long-term
loans for
companies and underwriting. Merchant banks do not provide
regular banking services
to the general public
(iv) iv. Online banking (or Internet banking)
allows customers to conduct financial
transactions on a secure website operated by their retail
or virtual bank.
(v) v. Mobile Banking is a service that allows you to do banking
transactions on your
mobile phone without making a call , using the SMS
facility. Is a term used for
performing balance checks, account transactions, payments
etc. via a mobile device
such as a mobile phone.
(vi) vi. Traditional banking is the normal bank accounts we have. Like, put
your money in
the bank and they act as a security and you will get only
the normal interests (decided
by RBI in our case, FED bank in US).
(vii) vii. Investment banking is entirely different. Here, people who are
having so much
money (money in excess which will yield only less
interest if in Banks) will invest
their money and get higher returns. For example, If i
have more money instead of
taking the pain of investing in share market, buying
properties etc. I will give to
investment banks and they will do the money management
and give me higher returns
when compared to traditional banks.
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E -Governance
E-Governance is the public sector’s use of information
and communication technologies with the
aim of
improving information and service
delivery, encouraging citizen participation
in the
decision-making process and making government more
accountable,transparent and effective.
Right to Information Act
The Right to Information act is a law enacted by the
Parliament of India giving citizens of India
access to records of the Central Government and State
overnments.The Act applies to all States
and Union Territories of India, except the State of Jammu
and Kashmir - which is covered under
a State-level law. This law was passed by Parliament on
15 June 2005 and came fully into force
on 13 October 2005.
Credit Rating Agencies in India
The credit rating agencies in India mainly
include ICRA and CRISIL. ICRA wasformerly
referred to the Investment Information and Credit Rating
Agency of India Limited. Their main
function is to grade the
different sector and
companies in
terms of performance
and offer
solutions for up gradation. The credit rating agencies in India mainly
include ICRA and
CRISIL(Credit Rating Information Services of India
Limited)
Cheque
Cheque is a negotiable instrument instructing a Bank to
pay a specific amount from a specified
account held in
the maker/depositor's name with that Bank.A bill of exchange drawn on a
specified banker and payable on demand.“Written order
directing a bank to pay money”.
Demand Draft
A demand draft is an instrument used for effecting
transfer of money.
It is a Negotiable
Instrument. Cheque and Demand-Draft both are used for
Transfer of money. You can 100% trust
a DD. It is a banker's check. A check may be dishonored
for lack of funds a DD can not. Cheque
is written by an individual and Demand draft is issued by
a bank. People believe banks more than
individuals.
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N B F C
A non-banking financial company (NBFC) is a company
registered under the Companies Act,
1956 and is engaged in the business
of loans and advances, acquisition of
shares/stock/bonds/debentures/securities issued by government, but does not include
any
institution whose principal
business is that of agriculture activity, industrial activity,
sale/purchase/construction of immovable property.
NBFCs are doing functions akin to that of banks; however
there are a few differences:
(i) (i)A NBFC cannot accept demand deposits (demand deposits are funds
deposited at a
depository institution that are payable on demand --
immediately or within a very
short period -- like your current or savings accounts.)
(ii) it is not a part of the payment and settlement system and as such cannot
issue cheques
to its customers; and
(iii) Deposit insurance facility of DICGC is not available for NBFC depositors
unlike in
case of banks.
Diff between banking & Finance
Finance is generally related to all types of financial,
this could be accounting, insurances and
policies. Whereas banking is everything that happens in a
bank only.The term Banking and
Finance are two very different terms but are often
associated together. These two terms are often
used to denote services that a bank and other financial
institutions provide to its customers.
N A S S C O M
The National Association of Software and Services Companies (NASSCOM), the Indian
chamber of commerce is a consortium that serves as an
interface to the Indian software industry
and Indian BPO industry. Maintaining close interaction with the Government of India in
formulating National IT policies with specific focus on
IT software and services maintaining a
state of the art information database of IT software and
services related activities for use of both
the software developers as well as interested companies
overseas.
Mr. Som Mittal – President
Chairman - Natarajan Chandrasekaran
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A
S S O C H A M
The Associated Chambers of Commerce and Industry of India
(ASSOCHAM), India's premier
apex chamber covers a
membership of over 2 lakh companies and professionals across the
country. It was established in 1920 by promoter chambers,
representing all regions of India. As
an apex industry body, ASSOCHAM represents the interests
of industry and trade, interfaces
with Government on policy issues and interacts with
counterpart international organizations to
promote bilateral economic issues. President-Rajkumar
Dhoot
N A B A R D
NABARD was established by an act of Parliament on 12 July
1982 to implement the National
Bank for
Agriculture and Rural Development Act
1981. It replaced the Agricultural
Credit
Department (ACD) and Rural Planning and Credit Cell
(RPCC) of Reserve Bank of India, and
Agricultural Refinance and Development Corporation
(ARDC). It is one of the premiere agency
to provide credit
in rural areas. NABARD is set up
as an apex Development Bank with a
mandate for facilitating credit flow for promotion and
development of agriculture, small-scale
industries, cottage and village industries, handicrafts
and other rural crafts.
S ID B I
The Small Industries Development Bank of India is a
state-run bank aimed to aid the growth and
development of micro, small and medium scale industries
in India. Set up in 1990 through an act
of parliament, it was incorporated initially as a wholly owned subsidiary of Industrial
Development Bank of India.
S E N S E X and NIF T Y
SENSEX is the short term for the words "Sensitive
Index" and is associated with the Bombay
(Mumbai) Stock Exchange (BSE). The SENSEX was first
formed on 1-1-1986 and used the
market capitalization of the 30 most traded stocks of
BSE. Where as NSE has 50 most traded
stocks of NSE. SENSEX IS THE INDEX OF BSE. AND NIFTY IS
THE INDEX OF NSE.
BOTH WILL SHOW DAILY TRADING MARKS. Sensex and Nifty both
are an "index”. An
index is basically an indicator it indicates whether most
of the stocks have gone up or most of the
stocks have gone down.
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S
E B I
SEBI is the regulator for the Securities Market in India.
Originally set up by the Government of
India in 1988, it acquired statutory form in 1992 with
SEBI Act 1992 being passed by the Indian
Parliament. Chaired by U.K. Sinha.
Mutual Funds
Mutual funds are investment companies that pool money
from investors at large and offer to sell
and buy back
its shares on a continuous
basis and use the capital thus raised to invest in
securities of different companies. The mutual fund will
have a fund manager that trades the
pooled money on a regular basis. The net proceeds or
losses are then typically distributed to the
investors annually.
Asset Management Companies
A company that invests its clients' pooled fund into
securities that match its declared financial
objectives. Asset management companies provide investors
with more diversification and
investing options than they would have by themselves.
Mutual funds, hedge funds and pension
plans are all run by asset management companies. These
companies earn income by charging
service fees to their clients.
Non-perfoming assets
Non-performing assets, also called non-performing loans,
are loans,made by a bank or finance
company, on which
repayments or interest
payments are not being made on time. A debt
obligation where the borrower has not paid any previously
agreed upon interest and principal
repayments to the designated lender for an extended
period of time. The nonperforming asset is
therefore not yielding any income to the lender in the
form of principal and interest payments.
Recession
A true economic recession can only be confirmed if GDP
(Gross Domestic Product)growth is
negative for a period of two or more consecutive
quarters.
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Foreign exchange reservers
Foreign exchange reserves (also called Forex reserves) in
a strict sense are only the foreign
currency deposits and bonds held by central banks and
monetary authorities.However, the term
in popular usage commonly includes
foreign exchange and gold,SDRs and IMF reserve
positions.
IMF
The International Monetary Fund (IMF) is an international organization that
oversees the global
financial system by following the macroeconomic policies
of its member countries, in particular
those with an impact on exchange rates and the balance of
payments. It is an organization formed
to stabilize international exchange rates and facilitate development.
Managing Director. Christine Lagarde
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