Banking Flashcards
RBI gets its powers from which acts
- RBI Act of 1934
- Banking Regulation Act of 1949
4 pillars of financial inclusion are
Part of formal fin system/ Bank A/C
Multiple fin products
Affordable choices available at desired time
Informed choice capacity/ fin literacy
Basel Norms 2 main pts
- Banks share the risk
- Banks become strong
Can Payments Bank Lend
No
Function of NABARD
Refinance
It lends to banks and then banks lend to rural HH
It doesn’t lend directly to rural HH.
Bankers bank means
RBI helps commercial banks in need of help, advices them, retains their deposits.
Committee ass with NABARD
B Sivaraman committee
Do NBFCs take deposits
No, only some exceptional cases are allowed to have time deposits
Can NBFCs avail LAF
No, some exceptions.
Syndicated loan
A syndicated loan is a form of financing that is offered
by a group of lenders. Syndicated loans arise when a
project requires too large a loan for a single lender or
when a project needs a specialized lender with
expertise in a specific asset class. Syndicating allows
lenders to spread risk and take part in financial
opportunities that may be too large for their individual
capital base
Lenders are referred to as a
syndicate, which works together to provide funds for a
single borrower
Market Sterilisation Scheme Bonds are a type of
OMOs
Eg: say Amazon is wanting to invest hundred billion dollars in India so it will approach SBI for rupees in exchange. SBI will pass on this money to RBI and RBI will give back to SBI, say Rs.800 billion in return for those $10 billion. Now RBI did not intend this increase in money supply in the economy. So to balance it out, it will issue market sterilisation bonds which will be bought by the people and in this way RBI will get the extra money out of the economy and it will keep it with itself.
Fiscal polity components
Government Receipts
Government Expenditure
Public Debt
Accounts from where receipts and expenditures of the government are credited and debited
Consolidated Fund of India
Contingency Fund of India
Public Account of India
The categorisation of the government receipts is given below:
Revenue Receipt
A. Tax Revenue
1.Direct Tax
2.Indirect Tax
B. Non Tax Revenue
1. Fees
2.License and Permits
3. Fines and Penalties, etc
Capital Receipt
1. Loans Recovery
2. Disinvestments
3. Borrowing and other liabilities
Two classifications of public expenditure:
Revenue Expenditure
– It is a recurring expenditure:
Interest Payments
Defence Expenses
Salaries to Central Government employees, etc are examples of revenue expenditure
Capital Expenditure
– It is a non-recurring expenditure
- Loans repayments
- Loans to public enterprises, etc.
Arrange rates at which banks lend from old to new
BPLR- -> Base rate- -> MCLR- -> External Benchmarking
Capital Adequacy Ratio CAR is calculated on the basis of
Risk Weighted Assets RWA
Credit Rating agencies in India are regulated by
SEBI
Which has more liquidity demand deposits with banks or savings deposits with banks
Demand deposits > Savings deposits.
Fungibility
No subdivision
Barter system features
Double coincidence of wants
Fungibility
Lack of information
Features of money
- Permanent and perpetual want
- scarcity
- Storability
- Fungibility
- No counterfeitable
- Medium of exchange
Gold problems
Limited supply and Fungibility
Gold std
Full reserve system
Proportional reserve system
A portion of gold kept as reseve
Proportional reserve system
A portion of gold kept as reserve
Proportional reserve system in India
1927-57
Nixon shock ? Year?
Unilateral cancellation of direct international convertibility of dollar to gold. 1971
Breton woods system and collapse
Velocity of money
No of times the money has exchanged hands
Yield and premium
Quantitative easing
External Benchmark Lending Rate EBLR v. MCLR
EBLR components, Formula
NPA Types
N
NPA not paid for 90 days
Std Asset
SMA 0- Upto 30 days
SMA 1- 30 to 60 days
SMA 2- 60- 90 days
Provisioning
Sub std
Doubtful
Loss Asset
OTS with Haircut
Gross NPA
NET NPA = Gross NPA- Provisioning
