1. What is a Repo Rate?
A: Repo rate is the rate at which commercial banks borrow short term loans 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. Present repo rate is 8.5 % as of February 24, 2012.
2. What is Reverse Repo Rate?
A: Reverse repo rate is the rate at which commercial banks park their excess fund with RBI. The present Reverse repo rate is 4.75 per cent.
6. What is Inflation?
A: Inflation is the increase in the prices of goods and services. An increase in inflation figures occurs when there is an increase in the average level of prices of 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. Inflation can also be defined as decrease in the value of money.
7. What is Deflation?
A: 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.
8. What is PLR?
A: The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers ( prime customers). The rate is almost always the same among 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 bank Rate.PLR is also referred as BPLR (Benchmark Prime Lending Rate). Recently government replaced PLR with Base Rate.So PLR is no more applicable to new loans.
9. What is Deposit Rate?
A: Interest Rates paid by a depository institution on the cash on deposit.
10. What is FII?
A: FII means Foreign Institutional Investor.They are investors, mostly in the form of institutions established outside India, who invest in Indian stock market. FII's generally buy in large volumes which has an impact on the stock markets. They invest and withdraw money at their will.So their investment is always considers short term investment. Institutional Investors includes pension funds, mutual funds, Insurance Companies, Banks, etc.
11. What is FDI?
A: FDI means Foreign Direct Investment.It is generly a long term investment a foreign company makes in India in the primary market. It also involves the purchase of the “physical assets or a significant amount of ownership (stock) of a company by a foreign firm in order to gain a measure of management control” Adequate FDI flow ensures healthy growth of the economy.Since the launch of New Ecomicomic Liberlisation Policy in 1991,India succeeded in attracting significant volume of FDI.
12. What is IPO?
A: 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.
13. What is Disinvestment?
A: Disinvestment is the process by which the government sells its share or stake partly or fully in a public sector undertaking to a private organization.
Privatisation is the most common name for disinvestment
14. What is Fiscal Deficit?
A: It is the difference between the government’s total receipts (excluding borrowings) and total expenditure. Fiscal deficit in 2011-12 is expected to reach at 5.9% of GDP. In the budget 2012- 13 govt aims to target fiscal deficit at 5.1% of GDP.
15. What is Revenue deficit?
A: 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. Revenue deficit in 2009-10 is proposed at 4.8% of GDP.
16. What is GDP?
A: 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. GDP of India during 20011-12 is around 8. %.
17. What is GNP?
A: Gross National Product is measured as GDP plus income of residents from investments made abroad minus income earned by foreigners in domestic market.
18. What is National Income?
A: National Income is the money value of all goods and services produced in a country during a year.
19. What is Per Capita Income?
A: 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.
20. What is Vote on Account?
A: 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.
21. Difference between Vote on Account and Interim Budget?
A: 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.
22. What is SDR?
A: 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).
23. What is SEZ?
A: SEZ means Special Economic Zone. 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.
24.What is 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.
25. Functions of RBI?
The Reserve Bank of India is the central bank of India as such it is the custodian of foreign reserve. It also formulate s and implements the monetory policy for the country. It also represents India in the international financial institutions. It also prints currency for the country. As bankers bank , it regulates and monitor all the banks in the country. Another important function of RBI is to control the credit flow in the country to check inflation.
26.What is monetary policy?
A Monetary policy is the process by which the government, central bank, of a country controls (i) the supply of money, (ii) availability of money, and (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.
27.What is 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.
28.What is 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.
29.What is a bank ?
A bank is a financial which accept deposit from the public and lend money to the customers and the busness community.They also provide a lot of financial services and promote a lot of financial products. As a key component of the financial system, banks allocate funds from savers to borrowers in an efficient manner.
30.What is RRB?
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. The area of operation of RRBs is limited to the area as notified by Govt of India covering one or more districts in the State.
31.What is Retail Banking
Banking services for individual customers is known as retail banking. Banks provide various types of advances and loans to individual customers. It constitutes the major part of banking transactions.
32.What is Merchant Banking
A bank that deals mostly in international finance, long-term loans for companies and underwriting. Merchant banks do not provide regular banking services to the general public.
33.What is Online Banking
Online banking (or Internet banking) is fecility to access one’s bank account through internet. It also allows customers to conduct various financial Transactions.
34. What is Mobile Banking
Mobile Banking is a service that allows you to do banking transactions through your mobile phone with the help of a login id and password.
35.What is 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.
36.What is 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 governments.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.
37.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)
39. What is 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 but a DD can not. Cheque is written by an individual and Demand draft is issued by a bank.
40.What is a NBFC?
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)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.
41.Differance 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.
42.What is NASSCOM ?
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.
43.What is ASSOCHAM?
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.
45.What is SIDBI?
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.
46.What is SENSEX and NIFTY?
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.
47.What is SEBI?
Securities and Exchange Board of India (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
48.What is 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.
49.What is 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.
50.What are 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 non -performing asset is therefore not yielding any income to the lender in the form of principal and interest payments.
51.What is Recession?
Deep economic problem is generally termed as 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.
52.What is 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.
53.What isMICR: ?
Magnetic ink character recognition MICR code is a nine-digit number printed on banking instruments such as a cheque or a demand draft using a special type of ink made of magnetic material. The first three digits denote the city. The fourth to sixth digits denote the bank, while the last three digits denote the branch number. The code is read by a machine, minimizing the chances of error in clearing of cheques, thereby making funds transfer faster. For example, in the MICR code 400240019, 400 denotes Mumbai, 240 denotes HDFC Bank Ltd and 019 denotes the Colaba branch of the bank.You will find the number on the right of the cheque number at the bottom of the cheque leaf.
54.What is RTGS:?
Real time gross settlement.It’s a fund transfer mechanism that enables money to move from one bank to another on a real time and gross basis. Simply put, real time means the transaction is settled instantly without any waiting period and gross means that it is not bunched with any other transaction.
: This facility would be handy during an emergency, when you need to transfer funds quickly.
55.NEFT: National electronic funds transfer
NEFT enables funds transfer from one bank to another but works a bit differently than RTGS.Since the settlement takes place in batches rather than individually, making NEFT slower than RTGS.
The transfer is not direct and RBI acts as the service provider to transfer the money from one account to another. You can transfer any amount through NEFT, even a rupee.
56.IFSC: India financial system code
An 11-digit alphanumeric (letters and numbers) code that helps identify bank branches. The first four numbers represent the bank’s code (alphabetic), the fifth number is a control character (0), and the next six numbers denote a bank branch. For example, the IFSC for HDFC Bank Ltd’s Colaba branch in Mumbai reads as HDFC0000085. This code is mentioned on your cheque. Different banks mention it at different places on the cheque.
57.CVV: Card verification value
CVV is an anti-fraud security feature that helps verify that you are in possession of your credit card and making the transaction. CVV is usually a three-digit number printed on the signature panel at the back of your credit card.
You need this number when shopping online or over the phone. You need to be careful with this number as it can make you a victim of fraud. It’s best to remember this number and blacken it off from your card.
58.PAP: Payable at par or MCC: Multi-city cheques
PAP or MCC cheques can be encashed anywhere in India, irrespective of the city they were issued in. They are treated as local clearing cheques across the country. The amount is credited in the account the same day and there are no inter-city collection charges associated with a normal cheques being encashed in another city.
A cheque issued at a branch in Chennai, can be encashed at a branch in Dibrugarh as if it were a local cheque.
There would be a notation on the top or the bottom of a cheque indicating its status as as PAP or MCC cheque.
By issuing a PAP or MCC cheque, you can save demand draft or cheque clearing costs.
Usually, these cheques are issued by companies to disburse dividends or redemption amounts.