BASIC BANKING TERMINOLOGY ************************ 11. Inflation, Deflation and Recession ? A. Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy. An increase in inflation figures occurs when there is an increase in the average level of prices in 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. 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. 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 suppose u r a manufacturer of pen u mark ur pen cost price is rs 10 if u get 12 on selling it is called inflation if u get exactly ur cost price ie 10 then its deflation and if u get below ur cost price ie rs 8 then its recession so inflation is a situation when demand exceeds supply and hence producers charge more recession is a situtaion when producers are not even able to get their cost price and hence after some time forced to shut down their loss making company.. 12. Merchant Banking ? A. Merchant banking is concerned with ipo and fpo for issuing shares in market company has to appoint a merchant banker who is responsible for all types approvals ,communications like from sebi, rbi etc and merchant banker have to fulfill all roc (registrar of companies ) filling also..... 13. Money Laundering ? A. basically it means converting black money into white money by depositing it into bank........now what happens is the money earned by drug trafficking or by some other such kind of process are referred as black money ...........so money launderers deposit this amount in banks ............now there are chances that they may be caught by banks as amount involved is too much...........so they deposit money in small amounts and later on withdraw the same or they invest in some small investment schemes...... for getting rid of this KYC NORMS came into play ........ which means know your customer .......in this customer ahve to deposit their verification ids and some like details with banks............ 14. SEBI--SECURITIES AND EXCHANGE BOARD OF INDIA its functions ? A. SEBI is a capital market regulator means all the capital transactions are goverened by sebi---- its major functions are--- a---protecting the interest of investor in securities market b--promoting development of securities market c---regulating the securities market...... 15. IRDA---INSURANCE REGULATORY DEVELOPMENT AUTHORITY its functions ? A. IRDA is the regulatory authority of insurance business its functions are a--protectinginterest of policy holders b--specifing proper training,qualification etc to insurance people c--levying fees ,commision etc for conducting insurance business d--specifing the manner in which insurance company maintain their books of accounts e--specifing margin of solvency f--specifing general and life insurance business which company can take 16.Shadow Banking ? A.shadow banking means those financial transactions which are not regulated ..... hence the risk involoved in these are very high..........shadow banking deals in money market instruments......and hence need money for early repayment .......... now what happens is they invest for long term .....and borrow for short term.......so this match creates problem coz of lack of liquidity...........and second thing as they are not regulated so they cant take help from any other organisation like for eg central banks.........the crisis which world faced during was coz of shadow banking also. 17. Shadow clearance ? A. m explaining it by way of example suppose sbi got 5 cheques from its customers for clearance and these cheques are of uco bank ...........no what sbi will do is they make a bundle of these cheques and send it to uco bank for clearance ......meanwhile sbi will make entry in their customer account that cheques are being sent for clearance and this entry is termed as shadow clearance..............and when uco bank makes payment then sbi will regularise this shadow clearance and transfer the payment in customers account........ 18. types of bank audit and appointment of auditor ? A. broadly banks have 3 types of audit--- 1--internal audit 2--external audit 3--audit conducted by banks when some person takes loan to check whether he actually own the property which he is going to mortgage or not now coming to their appointment external auditors or u can say statutory auditors are appointed by banks itself but there is some process means banks have to get the list of auditors from CAG and then have to get consent from auditors whether they are willing to work or not and they must not be disqualified to act as such .........and once they get consent banks have to send their names to rbi for approval ..... in case of RRB bank have to get approval from central government internal auditors are appointed by board of directors........ 19. Double taxation avoidance agreement ? A. double taxation aviodance agreement ie dtaa is concerned with international taxation for eg--- a person from india wants to setup his induatry in mauritus so now he have to pay tax as per indian law and as per mauritus law ..... so he is paying tax twice ..... so to avoid this double taxation dtaa is signed by various countries......now he dont have to pay tax to the tax twice for same income.... 20. Hedging ? A. hedging is a tool by which risk can be minimised in forex market........ by taking money from low interest rate country and investing where interest rate is high............for eg---- suppose mr.a wants a loan of 1 lkh and in india he is getting loan at 5% and in america at 7% ...... so what he will do is he will take loan from india and invest in america...... by this he will minimise risk and make profit
Posted on: Mon, 08 Dec 2014 13:54:59 +0000
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