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FM > FM A1,2 > Flashcards

FM A1,2 Flashcards

1
Q

RBI Act

A

1934

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2
Q

FERA ; Replaced by FEMA IN

A

1947 (Replaced by FEMA 1999)

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3
Q

Banking regulation Act

A

1949

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4
Q

DICGC full form and year of launch

A

Deposit Insurance and Credit Guarantee Corporation - 1961

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5
Q

Banking Ombudsman Scheme

A

1995

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6
Q

Prevention of Money Laundering Act

A

1992

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7
Q

Credit Information company Act

A

2005

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8
Q

Government securities act

A

2006

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9
Q

Payment Settlement Sys Act

A

2007

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10
Q

MONETARY POLICY features

A

Effects interest rates, inflation, credit availability via changes in supply of money

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11
Q

The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF).

A

REPO RATE

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12
Q

The (fixed) interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF

A

REV REPO

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13
Q

A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system

A

MSF

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14
Q

The MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.

A

CORRIDOR

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15
Q

It is the rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers. The Bank Rate is published under Section 49 of the Reserve Bank of India 1934. This rate has been aligned to the MSF rate and, therefore, changes automatically as and when the MSF rate changes alongside policy repo rate changes

A

BANK RATE

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16
Q

The average daily balance that a bank is required to maintain with the Reserve Bank as a share of such per cent of its Net demand and time liabilities (NDTL) that the Reserve Bank may notify from time to time in the Gazette of India

A

CRR

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17
Q

The share of NDTL that a bank is required to maintain in safe and liquid assets, such as, unencumbered government securities, cash and gold. Changes in SLR often influence the availability of resources in the banking system for lending to the private sector.

A

SLR

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18
Q

The rate below which bank cannot lend. It was not effective hence RBI has launched MCLR (Marginal cost of fund based lending rate)

A

BASE RATE

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19
Q

It allows RBI to absorb liquidity from commercial bank without giving government security in return. Here reverse repo is applicable as interest rate. Voluntary facility with bank and allows to handle emergency situations.

A

STANDING DEPOSIT FACILITY

20
Q

These include both, outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively.

A

OMO

21
Q

These include both, outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively.

A

OMO

22
Q

This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through sale of short-dated government securities and treasury bills. The cash so mobilised is held in a separate government account with the Reserve Bank. Money obtained by MSS cannot be used by government and it has to be kept with RBI only.

A

MSS

23
Q

PROS OF INFLATION TARGETTING - TIPS

A

Transparent, Independent, Price stability, Simple & Clear

24
Q

CONS OF INFLATION TARGETING - ZNTR

A

Possibility of interest rate touching zero lower bound; Narrow focus on cost stabilization, Lad in policy transmission, Room for inflation rate movement is less

25
Q

Reasons for low tax to GDP : BCDTULIP

A

EPS, Cash transactions, Disproportionate tax collection, Tax relaxation, Unaccounted income and expenditure, Pending litigations, Informal sector tax evasion, Poverty/Low per capita

26
Q

Measures to control the inflation - QQF

A

Q:- COML
Q: CAML
F: TSDREW

27
Q

FISCAL MEASURE TO CONTROL INFLATION - TSDREW

A

Tax changes, Small saving scheme interest rate, Controlling expenditure, Debt management, Rationing, Wage polic

28
Q

PSL CATEGORIES - HIERMAX

A

Housing, Infrastrcture, Education, Renewable, MSME, Agri, Export

29
Q

Inflation has become a major problem in India - DPPSFIT

A

Depreciation of value of rupees, Direct effect to nutritional intake of Poor, Increase in production cost; Supply side and demand side structural bottleneck; High food prices; Low share of industries; Inefficient transmission of monetary impulses

30
Q

Benefits of MCLR - TCFC

A

Transmission, Computation, Fairness of interest rate, Competitiveness & stability in long run

31
Q

Qualitative Monetary Policy Tool - CAML

A

Credit Rationing, Direct Action (PSL), Loan to Value Ratio, Moral Suasion

32
Q

Quantitative Monetary Policy Tool - COML

A

CRR/SLR, OMO, MSF, LAF

33
Q

Monetary Policy engendering economic growth by - RMCP

A

Confidence in rupee; Regulate market & institutions; Efficient management of currency; Promote integrity, efficiency, inclusiveness and competitiveness;

34
Q

Initiatives taken by RBI for the Development of Banking Sector - CFINOPG

A

Corporate governance, Fit & Proper criteria, Incubation center and innovative measures such as Regulatory sandbox and other measure, Introduction of new banks SFB & PB, Ombudsman scheme for increasing confidence, PCA framework, Forward Guidance

35
Q

functions of RBI - SNDBFMP

A

i. Supervisory Role and Functions
ii. Issue of Notes
iii. Banker to the Government
iv. Banker’s Bank
v. Custodian of Foreign Reserves
vi. Monetary Authority
vii. Collection and Publication of Data on banking and financial operations, prices, FDIs, FPIs, BOP, Exchange Rate and industries etc., of the economy.
viii. Promotional and developmental Functions

36
Q

Financial stability achieved by - GIMP

A

Governance structure, Established and sound institution, Monitoring & Measuring Systemic risk, Policies to mitigate identified systemic risks.

37
Q

BANKING STABILITY INDEX TAKES INTO ACCOUNT- LEPSA

A
  • Efficiency of the Banks
  • Profitability
  • Soundness
  • Liquidity
  • Asset Quality.
38
Q

Index of RBI to find- the expected number of banks that could become distressed given that at least one bank has become distressed

A

Banking Stability Index (BSI)

39
Q

A loan is categorized as NPA if it is due for a period of more than 90 days. Depending upon the due period

A

NPA

40
Q

These are the accounts
that have not-yet turned NPAs (default on the loan for more than 90 days), but rather these accounts can potentially become NPAs in future if no suitable action taken place.

A

Special Mention Accounts (SMA)

41
Q

the banks are required to set aside certain percentage of their profits in order to cover risk arising from NPA

A

Provisioning Coverage Ratio (PCR)

42
Q

Gross NPA - Provisioning Amount.

A

NET NPA

43
Q

total NPAs of the banks

A

GROSS NPA

44
Q

designed to ensure that banks hold a sufficient reserve of high-quality liquid assets (HQLA) to allow them to survive a period of significant liquidity stress lasting 30 calendar days

A

LCR

45
Q

Tier 1 Capital/ Total Consolidated Assets ×100 where Tier 1 capital represents a bank’s equity.

A

Leverage Ratio

46
Q

UNCONVENTIONAL MONETARY POLICY TOOL - FANT

A

Forward Guidance, Asset Purchase Programs, Negative Interest rates, Term-funding operations

47
Q

limitations of monetary policy in India - SSTSIGMA

A

Higher level of savings & deposits and less dependency of banks on RBI, Structural Issues in Economy, Transmission of monetary regulation citing issues of NPA & loss, Supply side issues, Presence of Informal moneylenders, Government side issues, Poor management & number of scams, , Access to banking system

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