A) Some facts about- Domestic Systemically Important Banks (D-SIBs) The Reserve Bank of India said ,Banks having size as a percentage of GDP equal to or more than 2 per cent will be designated as domestic systemically important banks (D-SIBs) .Five largest foreign banks, based on their size, will also be added to the sample for identification of D-SIBs. D-SIBs are perceived as banks that are ‘Too Big To Fail (TBTF)’. These banks enjoy certain advantages in the funding markets. However, the perceived expectation of government support amplifies risk-taking, reduces market discipline, creates competitive distortions, and increases the probability of distress in the future. These considerations require that D-SIBs should be subjected to additional policy measures to deal with the systemic risks and moral hazard issues posed by them. The RBI said banks having systemic importance above a threshold will be designated as D-SIBs. D-SIBs would be segregated into five different buckets based on their systemic importance scores, and subject to loss absorbency capital surcharge in a graded manner depending on the buckets, in which they are placed. The RBI said the higher capital requirements applicable to D-SIBs will be applicable from April 1, 2016 in a phased manner and would become fully effective from April 1, 2019. SHADOW BANKING a major concern of RBI shadow banking , refer to the large number of unregulated companies that act as financial intermediaries providing credit and generating liquidity in the system. For instance, companies engaged in multi-level marketing, offering prize chits and money circulation schemes are currently not regulated by RBI. B) Certificate of Deposit (CD) : Certificate of Deposit (CD) is a negotiable money market instrument and issued in dematerialized form or as a Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period. Guidelines for issue of CDs are governed by Reserve Bank of India, and is being amended from time to time. CDs can be issued by (i) scheduled commercial banks {excluding Regional Rural Banks and Local Area Banks} and (ii) selected All-India Financial Institutions that have been permitted by RBI to raise short-term resources within a limit fixed by RBI. Maturity: The maturity period of CDs issued by banks should be between 7- 365 Days (both days included) The FIs can issue CDs for a period not less than 1 year and not exceeding 3 years from the date of issue C ) C Rangarajan Committee on Poverty C Rangrajan Committee to review the Methodology for Measurement of Poverty presented its report to the Union Planning Minister Rao Inderjit Singh in the first week of July 2014. The report retained consumption expenditure estimates of NSSO as the basis for determining poverty. On the basis of this, it pegged the total number of poor in India at 363 million or 29.6 percent of the population. This is higher than 269.8 million poor people or 21.9 percent pegged by the Suresh Tendulkar committee. Highlights of the Report 1) The daily per capita expenditure is pegged at 32 rupees for the rural poor and at 47 rupees for the urban poor. 2) Poverty line based on the average monthly per capita expenditure is pegged at 972 rupees for rural India and 1407 rupees for urban India. 3) The all-India poverty line in terms of consumption expenditure for a family of five is estimated at 4760 rupees per month in rural areas and 7035 rupees per month in urban areas in 2011-12. 4) The percentage of people below the poverty line in 2011-12 was 30.95 in rural areas and 26.4 in urban areas. 5) The respective ratios for the rural and urban areas were 41.8 percent and 25.7 percent, respectively, and 37.2 percent for the country as a whole in 2004-05. In 1993-94, it was 50.1 percent in rural areas, 31.8 percent in urban areas and 45.3 per cent for the country as a whole. D) Some Facts About BSBDA 1. BSBDA stands for – Basic Saving Bank Deposit Account 2. BSBDA scheme is launched by – RBI 3. As per guidelines issued by RBI, all the existing No-frill accounts opened by the banks are now converted into – BSBDA 4. Any individual, including poor or those from weaker section of the society can open BSBDS 5. Initial minimum deposit required while opening a Basic saving bank deposit accounts – Zero Balance. 6. BSBDA guidelines are applicable to -all scheduled commercial banks in India including foreign banks having branches in India. What is difference between Bank Rate & Repo Rate Answer- Bank rate, also referred to as the discount rate, is the rate of interest which a central bank(RBI) charges on the loans and advances to a commercial bank. Whenever a bank has a shortage of funds, they can typically borrow from the central bank based on the monetary policy of the country. The borrowing is commonly done via repos, where the repo rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases, borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Posted on: Fri, 17 Oct 2014 06:07:11 +0000
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