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Rbi subsidiaries Flashcards

1
Q

subsidiaries of rbi

A

DICGC
BRBNMPL
ReBIT
IFTAS

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2
Q

DICGC

A

deposit insurance credit guarantee corporation

combining 2 entities

 deposit insurance corporation 1968
 credit guarantee corporation of india 1971

1978

both merged in DICGC

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3
Q

banks covered under DICGC

A

all commercial banks
including branches of foreign banks functioning in india
local area banks
regional rural banks

cooperative banks -
defined in section 2(gg)

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4
Q

deposits not approved by DICGC

A

deposit of foreign govt
deposit of central or state govt
inter bank deposit
deposit of state land development banks with the state cooperative bank
deposit received outside india
specifically exempted by the corporation with the previous approval by the rbi

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5
Q

Insurance coverage

A

upto 5 lakh for both principal and interest
one for different branches with the same bank
separate for accountts in different accounts
if they have different types of ownership then it will be insured separately

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6
Q

insurance coverage

meaning of same right and same capacity

A 
partner of a firm
guardian of a minor
director of a company 
trustee of a trust
joint account

all will have insurance of 5 lakhs

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7
Q

insurance premium

A

borne entirely by the insured bank

it is compulsory

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8
Q

BRBNMPL

A

bharat reserve bank note mudran private limited

before 1928, indian currency gott printed from Thomas De La Rye Giori of UK
STARTED in 1928 with the establishment of indian security press at nashik by GOI
THE SECOND note printing press was established in dewas (mp) in 1975 by GOI
RBI established BRBNMPL on 3 rd feb 1995 as a wholly owned subsidiary
registered as a private limited company under the companies act, 1956

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9
Q

BRBNMPL 2 press

A

mysore in karnataka
salboni in west bengal
16 billion note pieces per year on a 2 shift basis

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10
Q

ReBIT

A

reserve bank information technology
established in 2016 by RBI
to serve its IT and cybersecurity needs and to improve the cyber resilience of the indian banking industry
deliver and manage IT projects of RBI
assit RBI in risk based supervision of regulated entities through security audits
safeguard RBI assets by detecting and responding to cyber threats

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11
Q

Functions of RBI

A

factors determining success of monetary policy:

inflation targeting
usage of monetary policy instruments
monetary policy transmission

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12
Q

Inflation

A

Rbi
decreases the money supply in the economy through monetary policy

govt
increase supply of goods in the economy through fiscal policy

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13
Q

Quantitative tools Reserve Ratio

CRR SLR

A

as a % of NDTL (net demand and time liabilities)
CRR is kept with RBI
SLR is money kept in terms of liquid assets like cash ,gold,RBI approved securities.
SLR is maintained so as banks have liquid reserves
inflationary situation-
CRR and SLR are increased to reduce money supply in the economy
SLR also contributes to fiscal deficit financing

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14
Q

why SLR is reduced even in inflationary times

A

govt uses the SLR money for subsidies and work like this
as RBI does not want that to happen
even in inflationary times RBI reduces SLR

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15
Q

open market operations

A

purchase and sale of govt securities to banks
banks invest in OMOs using idle money
inflation- RBI will sell govt securities to reduce money supply in the economy

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16
Q

Bank rate

A

loan term loan
no collateral
inflation- higher bank rate

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17
Q

LAF

A 
liquidity adjustment facility 
consists of repo and reverse repo
Repo - repurchase agreement between RBI and banks.
govt securities kept as collateral 
Reverse Repo - 
borrowing by RBI from banks
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18
Q

MSF

A

marginal standing facility
banks can borrow from RBI by using SLR quota securities (1% of NDTL)
subject to higher interest rate ( repo + 1%)
minimum borrowing can be 1 crore
only scheduled commercial banks can use this facility

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19
Q

term repo rates

A

allows RBI to supply funds from time to time, with banks bidding for the rates at which they will borrow this money

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20
Q

MSS

A

market stabilisation scheme
also called sterilisation
reducing the supply from the economy
GOI borrows from RBI and issues T bills /
dated securities that are utilised for absorbing excess liquidity from the market

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21
Q

Qualitative tools
loan to value ratio /
margin requirements

A

inflation

LTV ratio is reduced money supply in the economy

22
Q

Qualitative tools
consumer credit control/
down payment

A

RBI can reduce down payment requirements to counter deflation
RBI can also decrease or increase the minimum instalments for loans

23
Q

Qualitative tools

Moral Suasion

A

moral suasion is done through seminars, conferences etc.,

24
Q

Direct Action

A

selective direct action on banks not complying with requirements is referred to as direct action

25
Qualitative tools | credit rationing
PSL , so there is balance in the growth and areas / sectors having high inflation / deflation can be targeted
26
unconventional quantitative easing
used by USA after the crisis 1. central banks creates money( printing) 2. buy bonds from financial institutions 3. which reduces interest rates 4. leading businesses and people to borrow more 5. so they spend more and create jobs 6. to boost the economy
27
tapering
opposite of quantitative easing increase the interest rates does not impact the economy as the economy is on the stable side
28
banker and debt manager of govt
Ad hoc T bills was of less than 91 days not marketable
29
ways and means advances
April 1 1997 to meet temporary mismatches in the receipts and payments of the government it can be availed to meet immediate cash from the RBI the WMA is to be vacated after 90 days currently interest rate is same as repo rate limits are mutually decided by the government and the RBI Special and normal WMA for SG (state government)
30
banker to banks
facilitating inter bank transactions | lender of last resort
31
financial regulation
licensing of commercial banks monitoring statutory pre emptions provisioning norms secured. insecured sub stand. 15% outstanding 25% of outs doubtful 25% (1 yr). 100% 40% (1-3 yrs) loss assets. 100%. 100%
32
financial regulation
para banking KYC norms currency management and issuance
33
monetary policy committee
objective deciding benchmark policy rates inflation under control
34
MPC history of recommendations
``` 2002 - Y v reddy 2006 - tarapore committee 2007- percy mitry committee 2009- rajan committee 2013- FSLRC,Urjit patel committee ```
35
members of MPC
``` 6 members Rbi governor Rbi deputy governor in charge of monetary policy one official nominated by the RBI board remaining 3 members would represe GOI ```
36
GOI members are selected by a committee
search cum selection committee cabinet secretary ( chair person) the RBI governor secretary of the department of economic affairs, ministry of finance 3 experts in the field of economics or banking as nominated by the central government
37
functions of MPC
inflation targeting 4+-2 % the central government determines the inflation target in terms of the CPI, once in every 5 yrs in consultation with RBI Give an explanation to the central government, if it failed to reach the specified inflation targets to publish a monetary policy report every 2 months, explaining the sources of inflation and the forecasts of the inflation for the coming period of 6 to 18 months
38
why was SEBI formed
controller of capital issues not effective in regulationn | demutualisation and dematerialisation of stock market
39
when was SEBI formed
in 1988 formed as a non statutory body to regulate the securities market in 1992 converted into a statutory body
40
regulation scope of SEBI
``` capital market capital market intermediaries bond market mutual funds UTI Venture capital FIIs - foreign institutional investors ```
41
responsibilities of SEBI
issuer of securities investors market intermediaries
42
power of SEBI
quasi judicial - grievance redressal mechanism quasi legislative - creation of rules and regulations quasi executive
43
Meaning of T+2 rolling cycle
money will be debited on monday account will be settled ob thursday reduces the amount of speculation and increases the confidence of the investors
44
intermediaries registered with Sebi
``` stock exchanges brokers merchant bankers underwriters depositories credit rating agencies FIIs mutual funds venture capital funds ```
45
SEBI amendment act 2014
any CIS taking more than 100 crores automatically comes under SEBI EVEN NIDHI, chit funds and cooperatives will come under SEBI if they finance more than 100 crores Now SEBI can arrest people for non compliance they carry out raids to generate back the funds fast track courts are to be established to settle cases at the earliest a mechanism for information exchange with similar agencies of other countries is to be created
46
types of brokers
circuit breaker - comes into play when the rise or fall in a stock exchange is beyond the range specified by the SEBI Merchant banker - helps retail and institutional investors to invest in financial markets
47
categories of investors in the market
retail individual investors qualified institutional investors non institutional investors
48
retail individual investor
investor who applies or bid for securities for a value of not more than rs 2,00,000
49
qualified institutional investor | part 1
mutual fund,venture capital fund and foreign venture registered with the board a foreign institutional investor and sub account, registered with the board a public financial institution as defined in section 4A of the companies act, 1956 a scheduled commercial bank a multilateral and bilateral development financial institution a state industrial development corporation
50
qualified institutional investor | part 2
an insurance company registered with the insurance regulatory and development authority a provident fund with minimum corpus of 25 crores a pension fund with minimum corpus of 25 crore national investment fund insurance funds set up and managed by army navy or air force of union of india insurance funds set up and managed by the department of posts, india

finance (8 decks)

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