1.Whatis a Bank?
A Bankis a financial organization which accepts deposits that can be withdrawnondemand and also lends money to individuals and business houses that need it.
Structureof banking sector in India:
2.Whatis RBI?
The RBIis India's central bank. The Reserve Bank of India was established on April 1,1935 in accordance with the provisions of the Reserve Bank of India Act,1934.RBI acts as a banker to the Government and Banks.The Central Bankmaintains record of Government revenue and expenditure under various heads. Itmaintains deposit accounts of all other banks and advances money to otherbanks, when needed.Another important function of the Central Bank is theissuance of currency notes, regulating their circulation in the country by differentmethods.
3.Whatis Scheduled Bank?
Allbanks which are included in the Second Schedule to the Reserve Bank of IndiaAct, 1934 are scheduled banks.These banks comprise Scheduled Commercial Banksand Scheduled Cooperative Banks. The type of banks comes under these ScheduledCommercial Banks and Scheduled Cooperative Banks can be seen in the abovefigure.All most all banks are Scheduled banks in India.
4.Whatare Commercial Banks?
Commercialbanks may be defined as, any banking organization that deals with the depositsand loans of business organizationsCommercial banks issue bank checks anddrafts, as well as accept money on term deposits. Commercial banks also act asmoneylenders, by way of installment loans and overdrafts.Commercial banks also allowfor a variety of deposit accounts, such as checking, savings, and time deposit.These institutions are run to make a profit and owned by a group ofindividuals.
5.Typesof Loans offered by Commercial banks:
1)Secured Loan: Asecured loan is one where the borrower provides a certain property or asset ascollateral against the loan. The main condition of these loans is that if theloan remains unpaid, the bank has the right to use the property in any way theylike to realize the outstanding amount.
2)Unsecured Loan:Unsecured loans have no collateral and therefore command higher interest rates.There are a variety of unsecured loans available today and these include creditcars, credit facilities such as a lines of credit, corporate bonds, and bankoverdrafts.
3)Mortgage Loans:Mortgage loans that are provided by commercial banks are similar to securedloans but are used specifically to buy real estate property for commercialpurposes. In most of these cases, the banks hold a lien on the title to the particularproperty purchased with the loan. If the borrower is unable to pay the loanback, the bank leverages this item against the loan to generate funds orrecover the principal.
6.Whatare Public Sector Banks?
Theseare banks where majority stake is held by the Government of India. i.e morethan 51% of sharesExamples of public sector banks are: SBI, Bank of India,Canara Bank, etc
7.Whatare Private Sector Banks?
Theseare banks majority of share capital of the bank is held by private individuals.These banks are registered as companies with limited liability.Examples ofprivate sector banks are: ICICI Bank, Axis bank, HDFC, etc.
8.Whatare Foreign Banks?
Thesebanks are registered and have their headquarters in a foreign country butoperate their branches in our country.Examples of foreign banks in India are:HSBC, Citibank, Standard Chartered Bank, etc.
9.Whatare Regional Rural Banks?
RegionalRural Banks were established under the provisions of an Ordinance promulgatedon the 26th September 1975 and the RRB Act, 1976 with an objective to ensuresufficient institutional credit for agriculture and other rural sectors. Thearea of operation of RRBs is limited to the area as notified by GoI coveringone or more districts in the State.RRBs are jointly owned by GoI, the concernedState Government and Sponsor Banks (27 scheduled commercial banks and one StateCooperative Bank); the issued capital of a RRB is shared by the owners in theproportion of 50%, 15% and 35% respectively.Prathama bank is the first RegionalRural Bank in India located in the city Moradabad in Uttar Pradesh.
10.Whatare Cooperative Banks?
Aco-operative bank is a financial entity which belongs to its members, who areat the same time the owners and the customers of their bank. Co-operative banksare often created by persons belonging to the same local or professionalcommunity or sharing a common interest. Co-operative banks generally providetheir members with a wide range of banking and financial services (loans,deposits, banking accounts, etc).They provide limited banking products and arespecialists in agriculture-related products.Cooperative banks are the primaryfinanciers of agricultural activities, some small-scale industries andself-employed workers.Co-operative banks function on the basis of"no-profit no-loss".Anyonya Co-operative Bank Limited (ACBL) is thefirst co-operative bank in India located in the city of Vadodara in Gujarat.
11.HowBank gets Money?
Banksmake money by lending your money out at interest and by charging you forservices provided. Banks keep on lending money.The other big revenue itemsgenerated by banks are the fees they charge. Bank charge for every service,whether it is for an electronic transaction, or permitting a transfer throughthe Internet banking system.When banks get profits they invest in othercompanies and in return they will get money
12.Whatis a Repo Rate?
Reporate is the rate at which our banks borrow rupees from RBI. Whenever the bankshave any shortage of funds they can borrow it from RBI. A reduction in the reporate will help banks to get money at a cheaper rate. When the repo rateincreases, borrowing from RBI becomes more expensive.
13.Whatis Reverse Repo Rate?
This isexact opposite of Repo rate. Reverse Repo rate is the rate at which ReserveBank of India (RBI) borrows money from banks. RBI uses this tool when it feelsthere is too much money floating in the banking system. Banks are always happyto 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 toRBI due to this attractive interest rates.
14.Whatis CRR Rate?
Cashreserve Ratio (CRR) is the amount of funds that the banks have to keep withRBI. If RBI decides to increase the percent of this, the available amount withthe banks comes down. RBI is using this method (increase of CRR rate), to drainout the excessive money from the banks.
15.Whatis SLR Rate?
SLR(Statutory Liquidity Ratio) is the amount a commercial bank needs to maintainin the form of cash, or gold or govt. approved securities (Bonds) beforeproviding credit to its customers.SLR rate is determined and maintained by theRBI (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 timeliabilities. Time Liabilities are the liabilities a commercial bank liable topay to the customers on their anytime demand. SLR is used to control inflationand propel growth. Through SLR rate tuning the money supply in the system canbe controlled efficiently.
16.Whatis Bank Rate?
Bankrate, also referred to as the discount rate, is the rate of interest which acentral bank charges on the loans and advances that it extends to commercialbanks and other financial intermediaries. Changes in the bank rate are oftenused by central banks to control the money supply.
17. Whatis Inflation?
Inflationis as an increase in the price of bunch of Goods and services that projects theIndian economy. An increase in inflation figures occurs when there is anincrease in the average level of prices in Goods and services. Inflationhappens when there are fewer Goods and more buyers; this will result inincrease in the price of Goods, since there is more demand and less supply ofthe goods.
18. Whatis Deflation?
Deflationis the continuous decrease in prices of goods and services. Deflation occurswhen the inflation rate becomes negative (below zero) and stays there for alonger period.
19.Whatis PLR?
ThePrime Lending Rate is the interest rate charged by banks to their mostcreditworthy customers (usually the most prominent and stable businesscustomers). The rate is almost always the same amongst major banks. Adjustmentsto the prime rate are made by banks at the same time; although, the prime ratedoes not adjust on any regular basis. The Prime Rate is usually adjusted at thesame time and in correlation to the adjustments of the Fed Funds Rate. Therates reported below are based upon the prime rates on the first day of eachrespective month. Some banks use the name "Reference Rate" or"Base Lending Rate" to refer to their Prime Lending Rate.
20.Whatis Deposit Rate?
InterestRates paid by a depository institution on the cash on deposit.
21.Whatis FII?
FII(Foreign Institutional Investor) used to denote an investor, mostly in the formof an institution. An institution established outside India, which proposes toinvest in Indian market, in other words buying Indian stocks. FII's generallybuy in large volumes which has an impact on the stock markets. InstitutionalInvestors includes pension funds, mutual funds, Insurance Companies, Banks,etc.
22.Whatis FDI?
FDI(Foreign Direct Investment) occurs with the purchase of the “physical assets ora significant amount of ownership (stock) of a company in another country inorder to gain a measure of management control” (Or) A foreign company having astake in a Indian Company.
23.Whatis IPO?
IPO isInitial Public Offering. This is the first offering of shares to the generalpublic from a company wishes to list on the stock exchanges
24.Whatis Disinvestment?
TheSelling of the government stake in public sector undertakings.
25.Whatis Fiscal Deficit?
It isthe difference between the government’s total receipts (excluding borrowings)and total expenditure.
26.Whatis Revenue deficit?
Itdefines that, where the net amount received (by taxes & other forms) failsto meet the predicted net amount to be received by the government.
27. Whatis GDP?
TheGross Domestic Product or GDP is a measure of all of the services and goods producedin a country over a specific period; classically a year.
28.Whatis GNP?
GrossNational Product is measured as GDP plus income of residents from investmentsmade abroad minus income earned by foreigners in domestic market.
29.Whatis National Income?
NationalIncome is the money value of all goods and services produced in a countryduring the year.
30.Whatis Per Capita Income?
Thenational income of a country, or region, divided by its population. Per capitaincome is often used to measure a country's standard of living.
31.Whatis Vote on Account?
Avote-on account is basically a statement ,where the government presents anestimate of a sum required to meet the expenditure that it incurs during thefirst three to four months of an election financial year until a new governmentis in place, to keep the machinery running.
32..Difference between Vote on Account and Interim Budget?
Vote-on-accountdeals only with the expenditure side of the government's budget, an interimBudget is a complete set of accounts, including both expenditure and receipts.
33.What is SDR?
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 intointernational currencies so they serve as a supplement to the official foreignreserves of member countries. Its value is based on a basket of keyinternational currencies (U.S. dollar, euro, yen and pound sterling).
34.What is SEZ?
SEZmeans Special Economic Zone is the one of the part of government’s policies inIndia. A special Economic zone is a geographical region that economic lawswhich are more liberal than the usual economic laws in the country. The basicmotto behind this is to increase foreign investment, development ofinfrastructure, job opportunities and increase the income level of the people
35.Whatis Open Market operations(OMO)?
Thebuying and selling of government securities in the open market in order toexpand or contract the amount of money in the banking system by RBI. Openmarket operations are the principal tools of monetary policy.
36.Whatis Micro Credit?
It is aterm used to extend small loans to very poor people for self-employmentprojects that generate income, allowing them to care for themselves and theirfamilies.
37.Whatis Liquidity Adjustment Facility(LAF)?
A toolused in monetary policy that allows banks to borrow money through repurchaseagreements. This arrangement allows banks to respond to liquidity pressures andis used by governments to assure basic stability in the financialmarkets.
38.Whatis RTGS System?
Theacronym 'RTGS' stands for Real Time Gross Settlement. RTGS system is a fundstransfer mechanism where transfer of money takes place from one bank to anotheron a 'real time' and on 'gross' basis. This is the fastest possible moneytransfer system through the banking channel. Settlement in 'real time' meanspayment transaction is not subjected to any waiting period. The transactionsare settled as soon as they are processed. 'Gross settlement' means thetransaction is settled on one to one basis without bunching with any othertransaction.
39.Whatis Bancassurance?
It isthe term used to describe the partnership or relationship between a bank and aninsurance company whereby the insurance company uses the bank sales channel inorder to sell insurance products.
40.Whatis Wholesale Price Index(WPI)?
TheWholesale Price Index (WPI) is the index used to measure the changes in theaverage price level of goods traded in wholesale market. A total of 435commodity prices make up the index. It is available on a weekly basis. It isgenerally taken as an indicator of the inflation rate in the Indian economy.The Indian Wholesale Price Index (WPI) was first published in 1902, and wasused by policy makers until it was replaced by the Producer Price Index (PPI)in 1978.
41.Whatis Consumer price Index(CPI)?
It is ameasure estimating the average price of consumer goods and services purchasedby households.
42.Whatis Venture Capital?
Venturecapital is money provided by an outside investor to finance a new, growing, ortroubled business. The venture capitalist provides the funding knowing thatthere’s a significant risk associated with the company’s future profits and cashflow. Capital is invested in exchange for an equity stake in the businessrather than given as a loan, and the investor hopes the investment will yield abetter-than-average return.
43.Whatis a Treasury Bills?
TreasuryBills (T-Bills) are short term, Rupee denominated obligations issued by theReserve Bank of India (RBI) on behalf of the Government of India. They are thususeful in managing short-term liquidity. At present, the Government of Indiaissues three types of treasury bills through auctions, namely, 91-day, 182-dayand 364-day. There are no treasury bills issued by State Governments.
44 .Whatis Banking Ombudsmen Scheme?
TheBanking Ombudsman Scheme enables an expeditious and inexpensive forum to bankcustomers for resolution of complaints relating to certain services rendered bybanks.The Banking Ombudsman is a senior official appointed by the Reserve Bankof India to redress customer complaints against deficiency in certain bankingservices.The Banking Ombudsman Scheme was first introduced in India in 1995,and was revised in 2002. The current scheme became operative from the 1 January2006, and replaced and superseded the banking Ombudsman Scheme 2002.
45.Whatis Subsidy?
Asubsidy is a form of financial assistance paid to a business or economicsector. Most subsidies are made by the government to producers or distributorsin an industry to prevent the decline of that industry or an increase in theprices of its products or to encourage it to hire more labor.
46.Whatis a Debenture? How many types of debentures are there? What are they?
Adebenture is basically an unsecured loan to a corporation. A type of debtinstrument that is not secured by physical asset.
Debenturesare backed only by the general creditworthiness and reputation of the issuer
.i)Convertible Debentures:Any type of debenture that can be converted into some other security or it canbe converted into stock..
ii)Non-Convertibility Debentures(NCB):Non Convertible Debentures are those that cannot be converted into equityshares of the issuing company, as opposed to Convertible debentures.Non-convertible debentures normally earn a higher interest rate thanconvertible debentures do.
47.Whatis a hedge fund?‘Hedge’ means to reduce financial risk.A hedge fund is an investmentfund open to a limited range of investors and requires a very large initialminimum investment. It is important to note that hedging is actually thepractice of attempting to reduce risk, but the goal of most hedge funds is tomaximize return on investment.
48.Whatis FCCB?
AForeign Currency Convertible Bond (FCCB) is a type of convertible bond issuedin a currency different than the issuer’s domestic currency. In other words,the money being raised by the issuing company is in the form of a foreigncurrency. A company may issue an FCCB if it intends to make a large investmentin a country using that foreign currency.
49.Whatis Capital Account Convertibility(CAC)?
It isthe freedom to convert local financial assets into foreign financial assets andvice versa at market determined rates of exchange. This means that capitalaccount convertibility allows anyone to freely move from local currency intoforeign currency and back.The Reserve Bank of India has appointed a committeeto set out the framework for fuller Capital Account Convertibility.Capitalaccount convertibility is considered to be one of the major features of adeveloped economy. It helps attract foreign investment. capital accountconvertibility makes it easier for domestic companies to tap foreignmarkets.
50.Whatis Current Account Convertibility?
Itdefines at one can import and export goods or receive or make payments forservices rendered. However, investments and borrowings are restricted.
51.Whatis Arbitrage?
The opportunityto buy an asset at a low price then immediately selling it on a differentmarket for a higher price.
52.Whatis Capitalism?
Capitalismas an economy is based on a democratic political ideology and produces a freemarket economy, where businesses are privately owned and operated for profit;in capitalism, all of the capital investments and decisions about production,distribution, and the prices of goods, services, and labor, are determined inthe free market and affected by the forces of supply and demand.
53.Whatis Socialism?Socialism as an economy is based on a collectivist type ofpolitical ideology and involves the running of businesses to benefit the commongood of a vast majority of people rather than of a small upper class segment ofsociety.
OTHERIMP DATA (some would be repetitive):
1.Whatis corporate governance?
The wayin which a company is governed and how it deals with the various interests ofits customers, shareholders, employees and society at large. Corporate governanceis the set of processes, customs, policies, laws, and institutions affectingthe way a corporation (or company) is directed, administered or controlled.Isdefined as the general set of customs, regulations, habits, and laws thatdetermine to what end a firm should be run.
Functionsof RBI?
TheReserve 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 YoungCommission. The commission submitted its report in the year 1926, though thebank was not set up for nine years.To regulate the issue of Bank Notes andkeeping of reserves with a view to securing monetary stability in India andgenerally to operate the currency and credit system of the country to itsadvantage." Banker to the Government: performs merchant banking functionfor the central and the state governments; also acts as their banker.Banker tobanks: maintains banking accounts of all scheduled banks.
What ismonetary policy?
AMonetary policy is the process by which the government, central bank, of acountry 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 objectivesoriented towards the growth and stability of the economy.
What is Fiscal Policy?
Fiscalpolicy is the use of government spending and revenue collection to influencethe economy. These policies affect tax rates, interest rates and governmentspending, in an effort to control the economy. Fiscal policy is an additionalmethod to determine public revenue and public expenditure.
What isCore Banking Solutions?
Corebanking is a general term used to describe the services provided by a group ofnetworked bank branches. Bank customers may access their funds and other simpletransactions from any of the member branch offices. It will cut down time,working simultaneously on different issues and increasing efficiency. The platformwhere communication technology and information technology are merged to suitcore needs of banking is known as Core Banking Solutions.
What is bank and its features and types?
A bankis a financial organization where people deposit their money to keep itsafe.Banks play an important role in the financial system and the economy. As akey component of the financial system, banks allocate funds from savers toborrowers in an efficient manner.
RegionalRural Banks were established with an objective to ensuresufficientinstitutional credit for agriculture and other rural sectors. TheRRBs mobilizefinancial resources from rural / semi-urban areas and grant loansand advancesmostly to small and marginal farmers, agricultural labourers andrural artisans.
Thearea of operation of RRBs is limited to the area as notified by GoI coveringoneor more districts in the State
.ii.Banking services for individual customers is known as retail banking
.iii. Abank that deals mostly in but international finance, long-term loans forcompanies and underwriting. Merchant banks do not provide regularbankingservices to the general public
iv.Online banking (or Internet banking) allows customers to conductfinancialtransactions on a secure website operated by their retail or virtualbank.
v.Mobile Banking is a service that allows you to do banking transactions onyourmobile phone without making a call , using the SMS facility. Is a term usedforperforming balance checks, account transactions, payments etc. via amobiledevice such as a mobile phone
.vi.Traditional banking is the normal bank accounts we have. Like, put your moneyin the bank and they act as a security and you will get only the normalinterests (decided by RBI in our case, FED bank in US)
.vii.Investment banking is entirely different. Here, people who are having somuchmoney (money in excess which will yield only less interest if in Banks)will investtheir money and get higher returns. For example, If i have moremoney instead oftaking the pain of investing in share market, buying propertiesetc. I will give toinvestment banks and they will do the money management andgive me higherreturns when compared to traditional banks.
What isE-Governance?
E-Governanceis the public sector’s use of information and communication technologies withthe aim of improving information and service delivery, encouraging citizenparticipation in the decision-making process and making government moreaccountable,transparent and effective.
What isRight to information Act?
TheRight to Information act is a law enacted by the Parliament of India givingcitizens of India access to records of the Central Government and Stateovernments.The Act applies to all States and Union Territories of India, exceptthe State of Jammu and Kashmir - which is covered under a State-level law. Thislaw was passed by Parliament on 15 June 2005 and came fully into force on 13October 2005.
Credit Rating Agencies in India?
Thecredit rating agencies in India mainly include ICRA and CRISIL. ICRAwasformerly referred to the Investment Information and Credit Rating Agency ofIndia Limited. Their main function is to grade the different sector andcompanies in terms of performance and offer solutions for up gradation. Thecredit rating agencies in India mainly include ICRA and CRISIL(Credit RatingInformation Services of India Limited)
What isCheque?
Chequeis a negotiable instrument instructing a Bank to pay a specific amount from aspecified account held in the maker/depositor's name with that Bank.A bill ofexchange drawn on a specified banker and payable on demand.“Written orderdirecting a bank to pay money”.valid for 3 months.
What isdemand Draft?
Ademand draft is an instrument used for effecting transfer of money. It is aNegotiable Instrument. Cheque and Demand-Draft both are used for Transfer ofmoney. You can 100% trust a DD. It is a banker's check. A check may bedishonored for lack of funds a DD can not. Cheque is written by an individualand Demand draft is issued by a bank. People believe banks more thanindividuals.valid for 3 months.
What isa NBFC?
Anon-banking financial company (NBFC) is a company registered under theCompaniesAct, 1956 and is engaged in the business of loans and advances, acquisition ofshares/stock/bonds/debentures/securities issued by government, but does notinclude any institution whose principal business is that of agricultureactivity, industrial activity, sale/purchase/construction of immovableproperty.
NBFCsare doing functions akin to that of banks; however there are a few differences:
(i)ANBFC cannot accept demand deposits (demand deposits are funds deposited at adepository institution that are payable on demand -- immediately or within avery short period -- like your current or savings accounts).
(ii) itis not a part of the payment and settlement system and as such cannot issuecheques to its customers; and
(iii)Deposit insurance facility of DICGC is not available for NBFC depositors unlikein case of banks.
Diffbetween banking & Finance?
Financeis generally related to all types of financial, this could be accounting,insurances and policies. Whereas banking is everything that happens in a bankonly.The term Banking and Finance are two very different terms but are oftenassociated together. These two terms are often used to denote services that abank and other financial institutions provide to its customers.
What is NASSCOM ?
TheNational Association of Software and Services Companies (NASSCOM), the Indianchamber of commerce is a consortium that serves as an interface to the Indiansoftware industry and Indian BPO industry. Maintaining close interaction withthe Government of India in formulating National IT policies with specific focuson IT software and services maintaining a state of the art information databaseof IT software and services related activities for use of both the softwaredevelopers as well as interested companies overseas.
What is ASSOCHAM?
TheAssociated Chambers of Commerce and Industry of India (ASSOCHAM), India'spremier apex chamber covers a membership of over 2 lakh companies andprofessionals across the country. It was established in 1920 by promoterchambers, representing all regions of India. As an apex industry body, ASSOCHAMrepresents the interests of industry and trade, interfaces with Government onpolicy issues and interacts with counterpart international organizations topromote bilateral economic issues. The current president of ASSOCHAM is Mr.Rajkumar Dhoot.
What isNABARD?
NABARDwas established by an act of Parliament on 12 July 1982 to implement theNational Bank for Agriculture and Rural Development Act 1981. It replaced theAgricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC)of Reserve Bank of India, and Agricultural Refinance and DevelopmentCorporation (ARDC). It is one of the premiere agency to provide credit in ruralareas. NABARD is set up as an apex Development Bank with a mandate forfacilitating credit flow for promotion and development of agriculture,small-scale industries, cottage and village industries, handicrafts and otherrural crafts.
What isSIDBI?
TheSmall Industries Development Bank of India is a state-run bank aimed to aid thegrowth 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 awholly owned subsidiary of Industrial Development Bank of India.
What isSENSEX and NIFTY?
SENSEXis the short term for the words "Sensitive Index" and is associatedwith the Bombay (Mumbai) Stock Exchange (BSE). The SENSEX was first formed on1-1-1986 and used the market capitalization of the 30 most traded stocks ofBSE. 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 andNifty both are an "index”. An index is basically an indicator it indicateswhether most of the stocks have gone up or most of the stocks have gonedown.
What isSEBI
?SEBIis the regulator for the Securities Market in India. Originally set up bytheGovernment of India in 1988, it acquired statutory form in 1992 with SEBIAct 1992 being passed by the Indian Parliament. Chaired by U.K.Sinha.
What isMutual funds?
Mutualfunds are investment companies that pool money from investors at large andoffer to sell and buy back its shares on a continuous basis and use the capitalthus raised to invest in securities of different companies. The mutual fundwill have a fund manager that trades the pooled money on a regular basis. Thenet proceeds or losses are then typically distributed to the investorsannually.
What isAsset Management Companies?
Acompany that invests its clients' pooled fund into securities that match itsdeclared financial objectives. Asset management companies provide investorswith more diversification and investing options than they would have bythemselves. Mutual funds, hedge funds and pension plans are all run by assetmanagement companies. These companies earn income by charging service fees totheir clients.
What are non-perfoming assets?
Non-performingassets, also called non-performing loans, are loans,made by a bank or financecompany, on which repayments or interest payments are not being made on time. Adebt obligation where the borrower has not paid any previously agreed uponinterest and principal repayments to the designated lender for an extendedperiod of time. The nonperforming asset is therefore not yielding any income tothe lender in the form of principal and interest payments.
What isRecession?A true economic recession can only be confirmed if GDP (GrossDomestic Product)growth is negative for a period of two or more consecutivequarters.
What isforeign exchange reservers?
Foreignexchange reserves (also called Forex reserves) in a strict sense are only theforeign currency deposits and bonds held by central banks and monetaryauthorities.However, the term in popular usage commonly includes foreignexchange and gold,SDRs and IMF reserve positions
A Bankis a financial organization which accepts deposits that can be withdrawnondemand and also lends money to individuals and business houses that need it.
Structureof banking sector in India:
2.Whatis RBI?
The RBIis India's central bank. The Reserve Bank of India was established on April 1,1935 in accordance with the provisions of the Reserve Bank of India Act,1934.RBI acts as a banker to the Government and Banks.The Central Bankmaintains record of Government revenue and expenditure under various heads. Itmaintains deposit accounts of all other banks and advances money to otherbanks, when needed.Another important function of the Central Bank is theissuance of currency notes, regulating their circulation in the country by differentmethods.
3.Whatis Scheduled Bank?
Allbanks which are included in the Second Schedule to the Reserve Bank of IndiaAct, 1934 are scheduled banks.These banks comprise Scheduled Commercial Banksand Scheduled Cooperative Banks. The type of banks comes under these ScheduledCommercial Banks and Scheduled Cooperative Banks can be seen in the abovefigure.All most all banks are Scheduled banks in India.
4.Whatare Commercial Banks?
Commercialbanks may be defined as, any banking organization that deals with the depositsand loans of business organizationsCommercial banks issue bank checks anddrafts, as well as accept money on term deposits. Commercial banks also act asmoneylenders, by way of installment loans and overdrafts.Commercial banks also allowfor a variety of deposit accounts, such as checking, savings, and time deposit.These institutions are run to make a profit and owned by a group ofindividuals.
5.Typesof Loans offered by Commercial banks:
1)Secured Loan: Asecured loan is one where the borrower provides a certain property or asset ascollateral against the loan. The main condition of these loans is that if theloan remains unpaid, the bank has the right to use the property in any way theylike to realize the outstanding amount.
2)Unsecured Loan:Unsecured loans have no collateral and therefore command higher interest rates.There are a variety of unsecured loans available today and these include creditcars, credit facilities such as a lines of credit, corporate bonds, and bankoverdrafts.
3)Mortgage Loans:Mortgage loans that are provided by commercial banks are similar to securedloans but are used specifically to buy real estate property for commercialpurposes. In most of these cases, the banks hold a lien on the title to the particularproperty purchased with the loan. If the borrower is unable to pay the loanback, the bank leverages this item against the loan to generate funds orrecover the principal.
6.Whatare Public Sector Banks?
Theseare banks where majority stake is held by the Government of India. i.e morethan 51% of sharesExamples of public sector banks are: SBI, Bank of India,Canara Bank, etc
7.Whatare Private Sector Banks?
Theseare banks majority of share capital of the bank is held by private individuals.These banks are registered as companies with limited liability.Examples ofprivate sector banks are: ICICI Bank, Axis bank, HDFC, etc.
8.Whatare Foreign Banks?
Thesebanks are registered and have their headquarters in a foreign country butoperate their branches in our country.Examples of foreign banks in India are:HSBC, Citibank, Standard Chartered Bank, etc.
9.Whatare Regional Rural Banks?
RegionalRural Banks were established under the provisions of an Ordinance promulgatedon the 26th September 1975 and the RRB Act, 1976 with an objective to ensuresufficient institutional credit for agriculture and other rural sectors. Thearea of operation of RRBs is limited to the area as notified by GoI coveringone or more districts in the State.RRBs are jointly owned by GoI, the concernedState Government and Sponsor Banks (27 scheduled commercial banks and one StateCooperative Bank); the issued capital of a RRB is shared by the owners in theproportion of 50%, 15% and 35% respectively.Prathama bank is the first RegionalRural Bank in India located in the city Moradabad in Uttar Pradesh.
10.Whatare Cooperative Banks?
Aco-operative bank is a financial entity which belongs to its members, who areat the same time the owners and the customers of their bank. Co-operative banksare often created by persons belonging to the same local or professionalcommunity or sharing a common interest. Co-operative banks generally providetheir members with a wide range of banking and financial services (loans,deposits, banking accounts, etc).They provide limited banking products and arespecialists in agriculture-related products.Cooperative banks are the primaryfinanciers of agricultural activities, some small-scale industries andself-employed workers.Co-operative banks function on the basis of"no-profit no-loss".Anyonya Co-operative Bank Limited (ACBL) is thefirst co-operative bank in India located in the city of Vadodara in Gujarat.
11.HowBank gets Money?
Banksmake money by lending your money out at interest and by charging you forservices provided. Banks keep on lending money.The other big revenue itemsgenerated by banks are the fees they charge. Bank charge for every service,whether it is for an electronic transaction, or permitting a transfer throughthe Internet banking system.When banks get profits they invest in othercompanies and in return they will get money
12.Whatis a Repo Rate?
Reporate is the rate at which our banks borrow rupees from RBI. Whenever the bankshave any shortage of funds they can borrow it from RBI. A reduction in the reporate will help banks to get money at a cheaper rate. When the repo rateincreases, borrowing from RBI becomes more expensive.
13.Whatis Reverse Repo Rate?
This isexact opposite of Repo rate. Reverse Repo rate is the rate at which ReserveBank of India (RBI) borrows money from banks. RBI uses this tool when it feelsthere is too much money floating in the banking system. Banks are always happyto 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 toRBI due to this attractive interest rates.
14.Whatis CRR Rate?
Cashreserve Ratio (CRR) is the amount of funds that the banks have to keep withRBI. If RBI decides to increase the percent of this, the available amount withthe banks comes down. RBI is using this method (increase of CRR rate), to drainout the excessive money from the banks.
15.Whatis SLR Rate?
SLR(Statutory Liquidity Ratio) is the amount a commercial bank needs to maintainin the form of cash, or gold or govt. approved securities (Bonds) beforeproviding credit to its customers.SLR rate is determined and maintained by theRBI (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 timeliabilities. Time Liabilities are the liabilities a commercial bank liable topay to the customers on their anytime demand. SLR is used to control inflationand propel growth. Through SLR rate tuning the money supply in the system canbe controlled efficiently.
16.Whatis Bank Rate?
Bankrate, also referred to as the discount rate, is the rate of interest which acentral bank charges on the loans and advances that it extends to commercialbanks and other financial intermediaries. Changes in the bank rate are oftenused by central banks to control the money supply.
17. Whatis Inflation?
Inflationis as an increase in the price of bunch of Goods and services that projects theIndian economy. An increase in inflation figures occurs when there is anincrease in the average level of prices in Goods and services. Inflationhappens when there are fewer Goods and more buyers; this will result inincrease in the price of Goods, since there is more demand and less supply ofthe goods.
18. Whatis Deflation?
Deflationis the continuous decrease in prices of goods and services. Deflation occurswhen the inflation rate becomes negative (below zero) and stays there for alonger period.
19.Whatis PLR?
ThePrime Lending Rate is the interest rate charged by banks to their mostcreditworthy customers (usually the most prominent and stable businesscustomers). The rate is almost always the same amongst major banks. Adjustmentsto the prime rate are made by banks at the same time; although, the prime ratedoes not adjust on any regular basis. The Prime Rate is usually adjusted at thesame time and in correlation to the adjustments of the Fed Funds Rate. Therates reported below are based upon the prime rates on the first day of eachrespective month. Some banks use the name "Reference Rate" or"Base Lending Rate" to refer to their Prime Lending Rate.
20.Whatis Deposit Rate?
InterestRates paid by a depository institution on the cash on deposit.
21.Whatis FII?
FII(Foreign Institutional Investor) used to denote an investor, mostly in the formof an institution. An institution established outside India, which proposes toinvest in Indian market, in other words buying Indian stocks. FII's generallybuy in large volumes which has an impact on the stock markets. InstitutionalInvestors includes pension funds, mutual funds, Insurance Companies, Banks,etc.
22.Whatis FDI?
FDI(Foreign Direct Investment) occurs with the purchase of the “physical assets ora significant amount of ownership (stock) of a company in another country inorder to gain a measure of management control” (Or) A foreign company having astake in a Indian Company.
23.Whatis IPO?
IPO isInitial Public Offering. This is the first offering of shares to the generalpublic from a company wishes to list on the stock exchanges
24.Whatis Disinvestment?
TheSelling of the government stake in public sector undertakings.
25.Whatis Fiscal Deficit?
It isthe difference between the government’s total receipts (excluding borrowings)and total expenditure.
26.Whatis Revenue deficit?
Itdefines that, where the net amount received (by taxes & other forms) failsto meet the predicted net amount to be received by the government.
27. Whatis GDP?
TheGross Domestic Product or GDP is a measure of all of the services and goods producedin a country over a specific period; classically a year.
28.Whatis GNP?
GrossNational Product is measured as GDP plus income of residents from investmentsmade abroad minus income earned by foreigners in domestic market.
29.Whatis National Income?
NationalIncome is the money value of all goods and services produced in a countryduring the year.
30.Whatis Per Capita Income?
Thenational income of a country, or region, divided by its population. Per capitaincome is often used to measure a country's standard of living.
31.Whatis Vote on Account?
Avote-on account is basically a statement ,where the government presents anestimate of a sum required to meet the expenditure that it incurs during thefirst three to four months of an election financial year until a new governmentis in place, to keep the machinery running.
32..Difference between Vote on Account and Interim Budget?
Vote-on-accountdeals only with the expenditure side of the government's budget, an interimBudget is a complete set of accounts, including both expenditure and receipts.
33.What is SDR?
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 intointernational currencies so they serve as a supplement to the official foreignreserves of member countries. Its value is based on a basket of keyinternational currencies (U.S. dollar, euro, yen and pound sterling).
34.What is SEZ?
SEZmeans Special Economic Zone is the one of the part of government’s policies inIndia. A special Economic zone is a geographical region that economic lawswhich are more liberal than the usual economic laws in the country. The basicmotto behind this is to increase foreign investment, development ofinfrastructure, job opportunities and increase the income level of the people
35.Whatis Open Market operations(OMO)?
Thebuying and selling of government securities in the open market in order toexpand or contract the amount of money in the banking system by RBI. Openmarket operations are the principal tools of monetary policy.
36.Whatis Micro Credit?
It is aterm used to extend small loans to very poor people for self-employmentprojects that generate income, allowing them to care for themselves and theirfamilies.
37.Whatis Liquidity Adjustment Facility(LAF)?
A toolused in monetary policy that allows banks to borrow money through repurchaseagreements. This arrangement allows banks to respond to liquidity pressures andis used by governments to assure basic stability in the financialmarkets.
38.Whatis RTGS System?
Theacronym 'RTGS' stands for Real Time Gross Settlement. RTGS system is a fundstransfer mechanism where transfer of money takes place from one bank to anotheron a 'real time' and on 'gross' basis. This is the fastest possible moneytransfer system through the banking channel. Settlement in 'real time' meanspayment transaction is not subjected to any waiting period. The transactionsare settled as soon as they are processed. 'Gross settlement' means thetransaction is settled on one to one basis without bunching with any othertransaction.
39.Whatis Bancassurance?
It isthe term used to describe the partnership or relationship between a bank and aninsurance company whereby the insurance company uses the bank sales channel inorder to sell insurance products.
40.Whatis Wholesale Price Index(WPI)?
TheWholesale Price Index (WPI) is the index used to measure the changes in theaverage price level of goods traded in wholesale market. A total of 435commodity prices make up the index. It is available on a weekly basis. It isgenerally taken as an indicator of the inflation rate in the Indian economy.The Indian Wholesale Price Index (WPI) was first published in 1902, and wasused by policy makers until it was replaced by the Producer Price Index (PPI)in 1978.
41.Whatis Consumer price Index(CPI)?
It is ameasure estimating the average price of consumer goods and services purchasedby households.
42.Whatis Venture Capital?
Venturecapital is money provided by an outside investor to finance a new, growing, ortroubled business. The venture capitalist provides the funding knowing thatthere’s a significant risk associated with the company’s future profits and cashflow. Capital is invested in exchange for an equity stake in the businessrather than given as a loan, and the investor hopes the investment will yield abetter-than-average return.
43.Whatis a Treasury Bills?
TreasuryBills (T-Bills) are short term, Rupee denominated obligations issued by theReserve Bank of India (RBI) on behalf of the Government of India. They are thususeful in managing short-term liquidity. At present, the Government of Indiaissues three types of treasury bills through auctions, namely, 91-day, 182-dayand 364-day. There are no treasury bills issued by State Governments.
44 .Whatis Banking Ombudsmen Scheme?
TheBanking Ombudsman Scheme enables an expeditious and inexpensive forum to bankcustomers for resolution of complaints relating to certain services rendered bybanks.The Banking Ombudsman is a senior official appointed by the Reserve Bankof India to redress customer complaints against deficiency in certain bankingservices.The Banking Ombudsman Scheme was first introduced in India in 1995,and was revised in 2002. The current scheme became operative from the 1 January2006, and replaced and superseded the banking Ombudsman Scheme 2002.
45.Whatis Subsidy?
Asubsidy is a form of financial assistance paid to a business or economicsector. Most subsidies are made by the government to producers or distributorsin an industry to prevent the decline of that industry or an increase in theprices of its products or to encourage it to hire more labor.
46.Whatis a Debenture? How many types of debentures are there? What are they?
Adebenture is basically an unsecured loan to a corporation. A type of debtinstrument that is not secured by physical asset.
Debenturesare backed only by the general creditworthiness and reputation of the issuer
.i)Convertible Debentures:Any type of debenture that can be converted into some other security or it canbe converted into stock..
ii)Non-Convertibility Debentures(NCB):Non Convertible Debentures are those that cannot be converted into equityshares of the issuing company, as opposed to Convertible debentures.Non-convertible debentures normally earn a higher interest rate thanconvertible debentures do.
47.Whatis a hedge fund?‘Hedge’ means to reduce financial risk.A hedge fund is an investmentfund open to a limited range of investors and requires a very large initialminimum investment. It is important to note that hedging is actually thepractice of attempting to reduce risk, but the goal of most hedge funds is tomaximize return on investment.
48.Whatis FCCB?
AForeign Currency Convertible Bond (FCCB) is a type of convertible bond issuedin a currency different than the issuer’s domestic currency. In other words,the money being raised by the issuing company is in the form of a foreigncurrency. A company may issue an FCCB if it intends to make a large investmentin a country using that foreign currency.
49.Whatis Capital Account Convertibility(CAC)?
It isthe freedom to convert local financial assets into foreign financial assets andvice versa at market determined rates of exchange. This means that capitalaccount convertibility allows anyone to freely move from local currency intoforeign currency and back.The Reserve Bank of India has appointed a committeeto set out the framework for fuller Capital Account Convertibility.Capitalaccount convertibility is considered to be one of the major features of adeveloped economy. It helps attract foreign investment. capital accountconvertibility makes it easier for domestic companies to tap foreignmarkets.
50.Whatis Current Account Convertibility?
Itdefines at one can import and export goods or receive or make payments forservices rendered. However, investments and borrowings are restricted.
51.Whatis Arbitrage?
The opportunityto buy an asset at a low price then immediately selling it on a differentmarket for a higher price.
52.Whatis Capitalism?
Capitalismas an economy is based on a democratic political ideology and produces a freemarket economy, where businesses are privately owned and operated for profit;in capitalism, all of the capital investments and decisions about production,distribution, and the prices of goods, services, and labor, are determined inthe free market and affected by the forces of supply and demand.
53.Whatis Socialism?Socialism as an economy is based on a collectivist type ofpolitical ideology and involves the running of businesses to benefit the commongood of a vast majority of people rather than of a small upper class segment ofsociety.
OTHERIMP DATA (some would be repetitive):
1.Whatis corporate governance?
The wayin which a company is governed and how it deals with the various interests ofits customers, shareholders, employees and society at large. Corporate governanceis the set of processes, customs, policies, laws, and institutions affectingthe way a corporation (or company) is directed, administered or controlled.Isdefined as the general set of customs, regulations, habits, and laws thatdetermine to what end a firm should be run.
Functionsof RBI?
TheReserve 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 YoungCommission. The commission submitted its report in the year 1926, though thebank was not set up for nine years.To regulate the issue of Bank Notes andkeeping of reserves with a view to securing monetary stability in India andgenerally to operate the currency and credit system of the country to itsadvantage." Banker to the Government: performs merchant banking functionfor the central and the state governments; also acts as their banker.Banker tobanks: maintains banking accounts of all scheduled banks.
What ismonetary policy?
AMonetary policy is the process by which the government, central bank, of acountry 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 objectivesoriented towards the growth and stability of the economy.
What is Fiscal Policy?
Fiscalpolicy is the use of government spending and revenue collection to influencethe economy. These policies affect tax rates, interest rates and governmentspending, in an effort to control the economy. Fiscal policy is an additionalmethod to determine public revenue and public expenditure.
What isCore Banking Solutions?
Corebanking is a general term used to describe the services provided by a group ofnetworked bank branches. Bank customers may access their funds and other simpletransactions from any of the member branch offices. It will cut down time,working simultaneously on different issues and increasing efficiency. The platformwhere communication technology and information technology are merged to suitcore needs of banking is known as Core Banking Solutions.
What is bank and its features and types?
A bankis a financial organization where people deposit their money to keep itsafe.Banks play an important role in the financial system and the economy. As akey component of the financial system, banks allocate funds from savers toborrowers in an efficient manner.
RegionalRural Banks were established with an objective to ensuresufficientinstitutional credit for agriculture and other rural sectors. TheRRBs mobilizefinancial resources from rural / semi-urban areas and grant loansand advancesmostly to small and marginal farmers, agricultural labourers andrural artisans.
Thearea of operation of RRBs is limited to the area as notified by GoI coveringoneor more districts in the State
.ii.Banking services for individual customers is known as retail banking
.iii. Abank that deals mostly in but international finance, long-term loans forcompanies and underwriting. Merchant banks do not provide regularbankingservices to the general public
iv.Online banking (or Internet banking) allows customers to conductfinancialtransactions on a secure website operated by their retail or virtualbank.
v.Mobile Banking is a service that allows you to do banking transactions onyourmobile phone without making a call , using the SMS facility. Is a term usedforperforming balance checks, account transactions, payments etc. via amobiledevice such as a mobile phone
.vi.Traditional banking is the normal bank accounts we have. Like, put your moneyin the bank and they act as a security and you will get only the normalinterests (decided by RBI in our case, FED bank in US)
.vii.Investment banking is entirely different. Here, people who are having somuchmoney (money in excess which will yield only less interest if in Banks)will investtheir money and get higher returns. For example, If i have moremoney instead oftaking the pain of investing in share market, buying propertiesetc. I will give toinvestment banks and they will do the money management andgive me higherreturns when compared to traditional banks.
What isE-Governance?
E-Governanceis the public sector’s use of information and communication technologies withthe aim of improving information and service delivery, encouraging citizenparticipation in the decision-making process and making government moreaccountable,transparent and effective.
What isRight to information Act?
TheRight to Information act is a law enacted by the Parliament of India givingcitizens of India access to records of the Central Government and Stateovernments.The Act applies to all States and Union Territories of India, exceptthe State of Jammu and Kashmir - which is covered under a State-level law. Thislaw was passed by Parliament on 15 June 2005 and came fully into force on 13October 2005.
Credit Rating Agencies in India?
Thecredit rating agencies in India mainly include ICRA and CRISIL. ICRAwasformerly referred to the Investment Information and Credit Rating Agency ofIndia Limited. Their main function is to grade the different sector andcompanies in terms of performance and offer solutions for up gradation. Thecredit rating agencies in India mainly include ICRA and CRISIL(Credit RatingInformation Services of India Limited)
What isCheque?
Chequeis a negotiable instrument instructing a Bank to pay a specific amount from aspecified account held in the maker/depositor's name with that Bank.A bill ofexchange drawn on a specified banker and payable on demand.“Written orderdirecting a bank to pay money”.valid for 3 months.
What isdemand Draft?
Ademand draft is an instrument used for effecting transfer of money. It is aNegotiable Instrument. Cheque and Demand-Draft both are used for Transfer ofmoney. You can 100% trust a DD. It is a banker's check. A check may bedishonored for lack of funds a DD can not. Cheque is written by an individualand Demand draft is issued by a bank. People believe banks more thanindividuals.valid for 3 months.
What isa NBFC?
Anon-banking financial company (NBFC) is a company registered under theCompaniesAct, 1956 and is engaged in the business of loans and advances, acquisition ofshares/stock/bonds/debentures/securities issued by government, but does notinclude any institution whose principal business is that of agricultureactivity, industrial activity, sale/purchase/construction of immovableproperty.
NBFCsare doing functions akin to that of banks; however there are a few differences:
(i)ANBFC cannot accept demand deposits (demand deposits are funds deposited at adepository institution that are payable on demand -- immediately or within avery short period -- like your current or savings accounts).
(ii) itis not a part of the payment and settlement system and as such cannot issuecheques to its customers; and
(iii)Deposit insurance facility of DICGC is not available for NBFC depositors unlikein case of banks.
Diffbetween banking & Finance?
Financeis generally related to all types of financial, this could be accounting,insurances and policies. Whereas banking is everything that happens in a bankonly.The term Banking and Finance are two very different terms but are oftenassociated together. These two terms are often used to denote services that abank and other financial institutions provide to its customers.
What is NASSCOM ?
TheNational Association of Software and Services Companies (NASSCOM), the Indianchamber of commerce is a consortium that serves as an interface to the Indiansoftware industry and Indian BPO industry. Maintaining close interaction withthe Government of India in formulating National IT policies with specific focuson IT software and services maintaining a state of the art information databaseof IT software and services related activities for use of both the softwaredevelopers as well as interested companies overseas.
What is ASSOCHAM?
TheAssociated Chambers of Commerce and Industry of India (ASSOCHAM), India'spremier apex chamber covers a membership of over 2 lakh companies andprofessionals across the country. It was established in 1920 by promoterchambers, representing all regions of India. As an apex industry body, ASSOCHAMrepresents the interests of industry and trade, interfaces with Government onpolicy issues and interacts with counterpart international organizations topromote bilateral economic issues. The current president of ASSOCHAM is Mr.Rajkumar Dhoot.
What isNABARD?
NABARDwas established by an act of Parliament on 12 July 1982 to implement theNational Bank for Agriculture and Rural Development Act 1981. It replaced theAgricultural Credit Department (ACD) and Rural Planning and Credit Cell (RPCC)of Reserve Bank of India, and Agricultural Refinance and DevelopmentCorporation (ARDC). It is one of the premiere agency to provide credit in ruralareas. NABARD is set up as an apex Development Bank with a mandate forfacilitating credit flow for promotion and development of agriculture,small-scale industries, cottage and village industries, handicrafts and otherrural crafts.
What isSIDBI?
TheSmall Industries Development Bank of India is a state-run bank aimed to aid thegrowth 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 awholly owned subsidiary of Industrial Development Bank of India.
What isSENSEX and NIFTY?
SENSEXis the short term for the words "Sensitive Index" and is associatedwith the Bombay (Mumbai) Stock Exchange (BSE). The SENSEX was first formed on1-1-1986 and used the market capitalization of the 30 most traded stocks ofBSE. 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 andNifty both are an "index”. An index is basically an indicator it indicateswhether most of the stocks have gone up or most of the stocks have gonedown.
What isSEBI
?SEBIis the regulator for the Securities Market in India. Originally set up bytheGovernment of India in 1988, it acquired statutory form in 1992 with SEBIAct 1992 being passed by the Indian Parliament. Chaired by U.K.Sinha.
What isMutual funds?
Mutualfunds are investment companies that pool money from investors at large andoffer to sell and buy back its shares on a continuous basis and use the capitalthus raised to invest in securities of different companies. The mutual fundwill have a fund manager that trades the pooled money on a regular basis. Thenet proceeds or losses are then typically distributed to the investorsannually.
What isAsset Management Companies?
Acompany that invests its clients' pooled fund into securities that match itsdeclared financial objectives. Asset management companies provide investorswith more diversification and investing options than they would have bythemselves. Mutual funds, hedge funds and pension plans are all run by assetmanagement companies. These companies earn income by charging service fees totheir clients.
What are non-perfoming assets?
Non-performingassets, also called non-performing loans, are loans,made by a bank or financecompany, on which repayments or interest payments are not being made on time. Adebt obligation where the borrower has not paid any previously agreed uponinterest and principal repayments to the designated lender for an extendedperiod of time. The nonperforming asset is therefore not yielding any income tothe lender in the form of principal and interest payments.
What isRecession?A true economic recession can only be confirmed if GDP (GrossDomestic Product)growth is negative for a period of two or more consecutivequarters.
What isforeign exchange reservers?
Foreignexchange reserves (also called Forex reserves) in a strict sense are only theforeign currency deposits and bonds held by central banks and monetaryauthorities.However, the term in popular usage commonly includes foreignexchange and gold,SDRs and IMF reserve positions