RBI The Reserve Bank of India is the apex bank of the country, which was constituted under the

e RBI Act, 1934 to regulate the other banks, issue of bank notes and maintenance of reserves with a view to securing the monetary stability in India. Demand Deposit A Demand deposit is the one which can be withdrawn at any time, without any notice or penalty; e.g. money deposited in a checking account or savings account in a bank. Time Deposit Time deposit is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time. When the term is over it can be withdrawn or it can be held for another term. Fixed Deposits FDs are the deposits that are repayable on fixed maturity date along with the principal and agreed interest rate for the period. Banks pay higher interest rates on FDs than the savings bank account. Recurring Deposits These are also called cumulative deposits and in recurring deposit accounts, a certain amounts of savings are required to be compulsorily deposited at specific intervals for a specified period. Savings Account Savings account is an account generally maintained by retail customers that deposit money (i.e. their savings) and can withdraw them whenever they need. Funds in these accounts are subjected to low rates of interest. Current Accounts These accounts are maintained by the corporate clients that may be operated any number of times in a day. There is a maintenance charge for the current accounts for which the holders enjoy facilities of easy handling, overdraft facility etc. FCNR Accounts Foreign Currency Non-Resident accounts are the ones that are maintained by the NRIs in foreign currencies like USD, DM, and GBP etc. The account is a term deposit with interest rates linked to the international rates of interest of the respective currencies. NRE Accounts Non-Resident External accounts are the ones in which NRIs remit money in any permitted foreign currency and the remittance is converted to Indian rupees for credit to NRE accounts. The accounts can be in the form of current, saving, FDs, recurring deposits. The interest rates and other terms of these accounts are as per the RBI directives. Cheque Book - A small, bound booklet of cheques. A cheque is a piece of paper produced by your bank with your account number, sort-code and cheque number printed on it. The account number distinguishes your account from other accounts; the sort-code is your bank's special code which distinguishes it from any other bank. Cheque Clearing - This is the process of getting the money from the cheque-writer's account into the cheque receiver's account. Clearing Bank - This is a bank that can clear funds between banks. For general purposes, this is any institution which we know of as a bank or as a provider of banking services.

Bounced Cheque - when the bank has not enough funds in the relevant account or the account holder requests that the cheque is bounced (under exceptional circumstances) then the bank will return the cheque to the account holder. Credit Rating - This is the rating which an individual (or company) gets from the credit industry. This is obtained by the individual's credit history, the details of which are available from specialist organisations like CRISIL in India. Credit-Worthiness - This is the judgement of an organization which is assessing whether or not to take a particular individual on as a customer. An individual might be considered credit-worthy by one organisation but not by another. Much depends on whether an organization is involved with high risk customers or not. Interest - The amount paid or charged on money over time. If you borrow money interest will be charged on the loan. If you invest money, interest will be paid (where appropriate to the investment). Overdraft - This is when a person has a minus figure in their account. It can be authorized (agreed to in advance or retrospect) or unauthorized (where the bank has not agreed to the overdraft either because the account holder represents too great a risk to lend to in this way or because the account holder has not asked for an overdraft facility). Payee - The person who receives a payment. This often applies to cheques. If you receive a cheque you are the payee and the person or company who wrote the cheque is the payer. Payer - The person who makes a payment. This often applies to cheques. If you write a cheque you are the payer and the recipient of the cheque is the payee. Security for Loans - Where large loans are required the lending institution often needs to have a guarantee that the loan will be paid back. This takes the form of a large item of capital outlay (typically a house) which is owned or partly owned and the amount owned is at least equivalent to the loan required. Internet Banking - Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by the bank. Credit Card - A credit card is one of the systems of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services. Debit Card Debit card allows for direct withdrawal of funds from customers bank accounts. The spending limit is determined by the available balance in the account. Loan - A loan is a type of debt. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. There are different kinds of loan such as the house loan, auto loan etc.

Bank Rate - This is the rate at which central bank (RBI) lends money to other banks or financial institutions. If the bank rate goes up, long-term interest rates also tend to move up, and vice-versa. CRR - Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks. SLR - SLR stands for Statutory Liquidity Ratio. This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved to liabilities (deposits). It regulates the credit growth in India. ATM - An automated teller machine (ATM) is a computerised telecommunications device that provides the clients with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that contains a unique card number and some security information such as an expiration date or CVV. Authentication is provided by the customer entering a personal identification number (PIN) REPO RATE: - Under repo transaction the borrower places with the lender certain acceptable securities against funds received and agree to reverse this transaction on a predetermined future date at agreed interest cost. Repo rate is also called (repurchase agreement or repurchase option). REVERSE REPO RATE: - is the interest rate earned by the bank for lending money tothe RBI in exchange of govt. securities or "lender buys securities with agreement to sell them back at a predetermined rate". CASH RESERVE RATIO: - specifies the percentage of their total deposits the commercial bank must keep with central bank or RBI. Higher the CRR lower will be the capacity of bank to create credit. SLR: - known as Statutorily Liquidity Ratio. Each bank is required statutorily maintain a prescribed minimum proportion of its demand and time liabilities in the form of designated liquid asset.
OR

"Every bank has to maintain a percentage of its demand and time liabilities by way of cash, gold etc". BANK RATE: - is the rate of interest which is charged by RBI on its advances to commercial banks. When reserve bank desires to restrict expansion of credit it raises the bank rate there by making the credit costlier to commercial bank.
OVERDRAFT:- It is the loan facility on customer current account at a bank permitting

him to overdraw up to a certain agreed limit for a agreed period ,interest is payable only on the amount of loan taken up. PRIME LENDING RATE: It is the rate at which commercial banks give loan to its prime customers.

Monetary Policy Review CRR and Interest Rates

(Source: RBI) (% per annum) Oct Dec 30th 18th 4.25 4.25 8.00 8.00 7.00 7.00 Jan 29th 4.00 7.75 7.00
Highlights

.........................................

Key rates CRR Repo Rate Reverse Repo

From the PM's Advisor

The RBI could make more cuts to the repo rate if
..........................................................................................

inflation remains on projected lines, the PM's economic advisor C Rangarajan said
..........................................................................................

>>More

Policy measures: Cuts repo rate by 25 basis points to 7.75 percent. Reverse repo adjusted to 6.75 percent. Cash reserve ratio cut 25 basis points to 4.00 percent effective fortnight beginning February 9. Marginal Standing Facility rate adjusted to 8.75 percent. Bank rate adjusted to 8.75 percent.
..........................................................................................

Brokerage view
The RBI is definitely less hawkish in its statement, and we think it will remain in the easing mode in 2013. We think they will cut the repo rate by another 50 basis points in the next five months - Sujan Hajra, Anand Rathi Securities

Planning Commission
The decision to cut rates will help revive investment in the economy, Montek Singh Ahluwalia, deputy Chairman of the Planning Commission

Bank Rate

8.75% (w.e.f. close of business of 29/01/2013)

Decreased from 9.00% to 8.75% which was continuing since 17/04/2012

Third Quarter Review 2012-13 : RBI cuts Repo Rate by 25 bps (i.e. reduced from 8.00% to 7.75%; Similarly, Bank Rate, Reverse Repo Rate, Marginal Standing Facility Rates also adjusted i.e. cut by 25 bps. All these to be from immediate effect. RBI has also cut 25 bps on CRR and thus it has been reduced from 4.25% to 4.00%, and this will be wef 9/2/2013. (updated on 29/01/2013)
Cash Reserve Ratio (CRR) 4.00% (wef 09/02/2013) -announced on
29/01/2013

Decreased from 4.25%which was continuing since 30/10/2012

Statutory Liquidity Ratio (SLR)

23%(w.e.f. 11/08/2012) (announced on 31/07/2012)

Decreased from 24% which was continuing since 18/12/2010

Repo Rate under LAF

7.75% (w.e.f. 29/01/2013)

Decreased from 8.00% which was continuing since 17/04/2012

Reverse Repo Rate under LAF *

6.75% (w.e.f. 29/01/2013)

Decreased from 7.00% which was continuing since 17/04/2012

Saving Deposits - For residents RBI has amended the rate of interest on SF It remained regulated by RBI till 24th October, 2011.

Deregulated by RBI (a) It was 4% between 3/5/2011 accounts in exercise of wef 25/10/2011 to 24/10/2011; the powers conferred by (b) It was 3.50% between Section 35A of the 1/3/2003 to 2/5/2011) Banking Regulation Act, 1949

What is the meaning of FDI ?

The Foreign Direct Investment means cross border investment made by a resident in one economy in an enterprise in another economy, with the objective of establishing a lasting interest in the investee economy. FDI is also described as investment into the business of a country by a company in another country. country. Mostly the investment is into production by either buying a company in the target country or by expanding operations of an existing business in that Such investments can take place for many reasons, including to take advantage of cheaper wages, special investment privileges (e.g. tax exemptions) offered by the country Why Countries Seek FDI ? (a) Domestic capital is inadequate for purpose of economic growth; (b) Foreign capital is usually essential, at least as a temporary measure, during the period when the capital market is in the process of development; (c) Foreign capital usually brings it with other scarce productive factors like technical know how, business expertise and knowledge What are the major benefits of FDI : Improves forex position of the country; Employment generation and increase in production ; Help in capital formation by bringing fresh capital; Helps in transfer of new technologies, management skills, intellectual property Increases competition within the local market and this brings higher efficiencies Helps in increasing exports; Increases tax revenues

(a) (b) (c) (d) (e) (f) (g)

Why FDI is Opposed by Local People or Disadvantages of FDI : (a) Domestic companies fear that they may lose their ownership to overseas company (b) Small enterprises fear that they may not be able to compete with world class large companies and may ultimately be edged out of business; (c) Large giants of the world try to monopolise and take over the highly profitable sectors; (d) Such foreign companies invest more in machinery and intellectual property than in wages of the local people; (e) Government has less control over the functioning of such companies as they usually work as wholly owned subsidiary of an overseas company;

What is Scope of FDI in India? Why World is looking towards India for Foreign Direct Investments : India is the 3rd largest economy of the world in terms of purchasing power parity and thus looks attractive to the world for FDI. Even Government of India, has been trying hard to do away with the FDI caps for majority of the sectors, but there are still critical areas like retailing and insurance where there is lot of opposition from local Indians / Indian companies. Some of the major economic sectors where India can attract investment are as follows:Telecommunications

Pharma Auto parts Jewelry Chemicals

What is Bank rate? Bank Rate is the rate at which central bank of the country (in India it is RBI) allows finance to commercial banks. Bank Rate is a tool, which central bank uses for short-term purposes. Any upward revision in Bank Rate by central bank is an indication that banks should also increase deposit rates as well as Base Rate / Benchmark Prime Lending Rate. Thus any revision in the Bank rate indicates that it is likely that interest rates on your deposits are likely to either go up or go down, and it can also indicate an increase or decrease in your EMI.

What is Bank Rate ? (For Non Bankers) : This is the rate at which central bank (RBI)
lends money to other banks or financial institutions. If the bank rate goes up, long-term interest rates also tend to move up, and vice-versa. Thus, it can said that in case bank rate is hiked, in all likelihood banks will hikes their own lending rates to ensure that they continue to make profit.

What is CRR?

The Reserve Bank of India (Amendment) Bill, 2006 has been

enacted and has come into force with its gazette notification. Consequent upon amendment to sub-Section 42(1), the Reserve Bank, having regard to the needs of securing the monetary stability in the country, RBI can prescribe Cash Reserve Ratio (CRR) for scheduled banks without any floor rate or ceiling rate. [Before the enactment of this amendment, in terms of Section 42(1) of the RBI Act, the Reserve Bank could prescribe CRR for scheduled banks between 3 per cent and 20 per cent of total of their demand and time liabilities].

RBI uses CRR either to drain excess liquidity or to release funds needed for the growth of the economy from time to time. Increase in CRR means that banks have less funds available and money is sucked out of circulation. Thus we can say that this
serves duel purposes i.e.(a) ensures that a portion of bank deposits is kept with RBI and is totally risk-free, (b) enables RBI to control liquidity in the system, and thereby, inflation by tying the hands of the banks in lending money.

What is CRR (For Non Bankers): CRR means Cash Reserve Ratio.

Banks in India

are required to hold a certain proportion of their deposits in the form of cash. However, actually Banks dont hold these as cash with themselves, but deposit such case with Reserve Bank of India (RBI) / currency chests, which is considered as equivlanet to holding cash with RBI. This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio. Thus, When a banks deposits increase by Rs100, and if the cash reserve ratio is 6%, the banks will have to hold additional Rs 6 with RBI and Bank will be able to

use only Rs 94 for investments and lending / credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that banks will be able to use for lending and investment. This power of RBI to reduce the lendable amount by increasing the CRR, makes it an instrument in the hands of a central bank through which it can control the amount that banks lend. Thus, it is a tool used by RBI to control liquidity in the banking system.

How it effects us
Having understood the meaning of these banking terms, let us now see how we are affected by increase/decrease of these rates. The central bank uses these rates to control inflation. All About Inflation Inflation and Types of Inflation Banks earn profit by borrowing at a lower rate of interest from the central bank, and lending the same amount at a higher rate to the customers. If the repo rate or the bank rate is increased, bank has to pay more interest to the central bank. So in order to make profit, banks in turn increase their interest rate at which they take deposit from the customer and lend money to the customer. So the demand for loan decreases, and people start putting more and more money in bank accounts to earn higher rate of interest. This helps in controlling inflation. An increase in Reverse repo rate causes the banks to transfer more funds to the central bank, because banks earn attractive interest rates and also their money is in safe hands. This results in the money being drawn out of the banking system, thus banks are left with lesser funds.

Thus, by lowering repo rate, central bank injects liquidity in the banking system and by increasing reverse repo rate it absorbs liquidity from the banking system. Increase in SLR and CRR rate means that banks will have less power to give loans (see our example above), which again controls amount of money floating in the market; thereby controlling inflation. It also makes banks safer to keep money because banks will have a higher liquidity to meet the demand of customers. As we learnt from the recession, giving loans expose banks to great risks. So if banks have lesser funds to give as loan, they become relatively safer

SLR (Statutory Liquidity Ratio)

Apart from keeping a portion of deposits with the RBI as cash, banks are also required to maintain a minimum percentage of deposits with them at the end of every business day, in the form of gold, cash, government bonds or other approved securities. This minimum percentage is called Statutory Liquidity Ratio.ExampleIf you deposit Rs. 100/- in bank, CRR being 6% and SLR being 8%, then bank can use 100-6-8= Rs.84/- 86/- for giving loan or for investment purposeCRR- 5.75% SLR- 25% Bank Rate- 6% Repo Rate- 5% Reverse Repo Rate- 3.5%
There are different types inflation which are explained below: Creeping Inflation: This is also known as mild inflation or moderate inflation. This type of inflation occurs when the price level persistently rises over a period of time at a mild rate. When the rate of inflation is less than 10 per cent annually, or it is a single digit inflation rate, it is considered to be a moderate inflation. Galloping Inflation: If mild inflation is not checked and if it is uncontrollable, it may assume the character of galloping inflation. Inflation in the double or triple digit range of 20, 100 or 200 percent a year is called galloping inflation . Many Latin American countries such as Argentina, Brazil had inflation rates of 50 to 700 percent per year in the 1970s and 1980s.

Hyperinflation: It is a stage of very high rate of inflation. While economies seem to survive under galloping inflation, a third and deadly strain takes hold when the cancer of hyperinflation strikes. Nothing good can be said about a market economy in which prices are rising a million or even a trillion percent per year . Hyperinflation occurs when the prices go out of control and the monetary authorities are unable to impose any check on it. Germany had witnessed hyperinflation in 1920s. Stagflation: It is an economic situation in which inflation and economic stagnation or recession occur simultaneously and remain unchecked for a period of time. Stagflation was witnessed by developed countries in 1970s, when world oil prices rose dramatically. Deflation: Deflation is the reverse of inflation. It refers to a sustained decline in the price level of goods and services. It occurs when the annual inflation rate falls below zero percent (a negative inflation rate), resulting in an increase in the real value of money. Japan suffered from deflation for almost a decade in 1990s. Inflation means a considerable and persistent rise in the general level of prices of goods and services in an economy over a period of time. There are broadly two ways of controlling inflation in an economy: 1). Monetary measures and 2). Fiscal measures I).Monetary Measures The most important and commonly used method to control inflation is monetary policy of the Central Bank. Most central banks use high interest rates as the traditional way to fight or prevent inflation. Monetary measures used to control inflation include: (i) bank rate policy (ii) cash reserve ratio and (iii) open market operations. Bank rate policy is used as the main instrument of monetary control during the period of inflation. When the central bank raises the bank rate, it is said to have adopted a dear money policy. The increase in bank rate increases the cost of borrowing which reduces commercial banks borrowing from the central bank. Consequently, the flow of money from the commercial banks to the public gets reduced. Therefore, inflation is controlled to the extent it is caused by the bank credit. Cash Reserve Ratio (CRR) : To control inflation, the central bank raises the CRR which reduces the lending capacity of the commercial banks. Consequently, flow of money from commercial banks to public decreases. In the process, it halts the rise in prices to the extent it is caused by banks credits to the public.

Open Market Operations: Open market operations refer to sale and purchase of government securities and bonds by the central bank. To control inflation, central bank sells the government securities to the public through the banks. This results in transfer of a part of bank deposits to central bank account and reduces credit creation capacity of the commercial banks. II). Fiscal Measures Fiscal measures to control inflation include taxation, government expenditure and public borrowings. The government can also take some protectionist measures (such as banning the export of essential items such as pulses, cereals and oils to support the domestic consumption, encourage imports by lowering duties on import items etc.).

Keys for windows professional

D699H-6T3DG-MC2TX-7PB2B-WVY2R 3W3MQ-H7M6X-3WYP7-TPCH6-8G8T2 D72XJ-24RQ4-3V3QR-W4M4V-QD2R2 9CJRX-D98XB-PWFDC-TWTXJ-4XTXD PW7MF-WBHYD-CVJQV-GWX82-RHMPY 49CGJ-4MTTF-WCM4W-K8WMG-3G2VT GRPWH-7CDHQ-K3G3C-JH2KX-C88H8 BDD3G-XM7FB-BD2HM-YK63V-VQFDK GCXQJ-KFYBG-XR77F-XF3K8-WT7QW QY89T-88PV8-FD7H7-CJVCQ-GJ492 23TGP-FTKV6-HTHGD-PDWWP-MWCRQ GDQ98-KW37Y-MVR84-246FH-3T6BG FGVT2-GBV2M-YG4BD-JM823-XJYRY TTWC8-Y8KD3-YD77J-RGWTF-DTG2V GFWF2-R8H99-P4YWF-D2HY9-6PPXJ