Dear readers, here we are posting some notes on General Knowledge (Banking), which will be helpful in the upcoming RBI and SBI exams.
Quick Notes
Quick Notes
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FII:
Foreign Institutional Investment
- The term is used most commonly in India to refer to outside companies
investing in the financial markets of India. International institutional
investors must register with the Securities and Exchange Board of India to
participate in the market.
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FDI:
Foreign Direct Investment - It is
a direct investment into production or business in a country by an individual
or company of another country, either by buying a company in the target country
or by expanding operations of an existing business in that country.
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MSF:
Marginal Standing Facility - Under this scheme, banks will be able to
borrow upto 1% of their respective net demand and time liabilities. The rate of
interest on the amount accessed from this facility will be 100 basis points
(i.e. 1%) above the repo rate. This scheme is likely to reduce volatility in
the overnight rates and improve monetary transmission.
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FIU:
Financial Intelligence Unit set by the Government of India on 18
November 2004 as the central national agency responsible for receiving, processing,
analysing and disseminating information relating to suspect financial
transactions.
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SEBI:
Securities and Exchange Board of India - SEBI is the primary governing/regulatory body
for the securities market in India. All transactions in the securities market
in India are governed and regulated by SEBI. Its main functions are:
1. New issues (Initial Public Offering or IPO)
2. Listing agreement of companies with stock exchanges
3. Trading mechanisms
4. Investor protection
5. Corporate disclosure by listed companies etc.
Note: SEBI is also known as capital regulator or
mutual funds regulator or market regulator. SEBI also created investors
protection fund and SEBI is the only organization which regulates the credit
rating agencies in India. (CRISIL and CIBIL).
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IRDA:
Insurance Regulatory and Development Authority - It is an autonomous apex statutory body
which regulates and develops the insurance industry in India.
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FINANCIAL
REGULATORS IN INDIA - RBI, SEBI, FMCI (Forward Market Commission of
India), IRDA etc.
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ASBA: Application Supported by Blocked Amount - It
is a process developed by the SEBI for applying to IPO. In ASBA, an IPO
applicant’s account doesn’t get debited until shares are allotted to him.
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DEPB
Scheme: Duty Entitlement Pass Book - It is a scheme which is offered by
the Indian government to encourage exports from the country. DEPB means Duty
Entitlement Pass Book to neutralise the incidence of basic and special customs
duty on import content of export product.
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LLP:
Limited Liability Partnership, is a partnership in which some or all
partners (depending on the jurisdiction) have limited liability.
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Balance
sheet: A financial statement
that summarises a company’s assets, liabilities and shareholders’ equity at a
specific point in time.
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TAN:
Tax Account Number, is a unique 10-digit alphanumeric code allotted by
the Income Tax Department to all those persons who are required to deduct tax
at the source of income.
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PAN:
Permanent Account Number, as per section 139A of the Act obtaining PAN is
a must for the following persons:-
1. Any person whose total income or the total income of any
other person in respect of which he is assessable under the Act exceeds the
maximum amount which is not chargeable to tax.
2. Any person who is carrying on any business or profession
whose total sales, turnover or gross receipts are or are likely to exceed Rs. 5
lakh in any previous year.
3. Any person who is required to furnish a return of income
under section 139(4) of the Act.
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JLG:
Joint Liability Group, when two or more persons are both responsible
for a debt, claim or judgment.
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IRR:
Internal Rate of Return, is a rate of return used in capital budgeting
to measure and compare the profitability of investments.
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MICR:
Magnetic Ink Character Recognition - A 9-digit code which actually shows whether
the cheque is real or fake.
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UTR
Number: Unique Transaction Reference number - A unique number which is generated for
every transaction in RTGS system. UTR is a 16-digit alphanumeric code. The
first 4 digits are a bank code in alphabets, the 5th one is the message code,
the 6th and 7th mention the year, the 8th to 10th mentions the date and the
last 6 digits mention the day’s serial number of the message.
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RRBs:
Regional Rural Banks - As its
name signifies, RRBs are specially meant for rural areas, capital share being
50% by the central government, 15% by the state government and 35% by the
scheduled bank.
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MFI:
Micro Finance Institutions
- Micro Finance means providing
credit/loan (micro credit) to the weaker sections of the society. A
microfinance institution (MFI) is an organisation that provides financial
services to the poor.
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PRIME
LENDING RATE: PLR is the rate at which commercial banks give loans to
its prime customers (most creditworthy customers).
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BASE
RATE: A minimum rate that a bank is allowed to charge from the
customer. Base rate differs from bank to bank. It is actually a minimum rate
below which the bank cannot give loan to any customer. Earlier base rate was
known as BPLR (Base Prime Lending Rate).
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EMI:
Equated Monthly Installment - It
is nothing but a repayment of the loan taken. A loan could be a home loan, car
loan or personal loan. The monthly payment is in the form of post dated cheques
drawn in favour of the lender. EMI is directly proportional to the loan taken
and inversely proportional to time period. That is, if the loan amount
increases the EMI amount also increases and if the time period increases the
EMI amount decreases.
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Basis
points (bps): A basis point is a unit equal to 1/100th of a percentage
point. i.e. 1 bps = 0.01%. Basis points are often used to measure changes in or
differences between yields on fixed income securities, since these often change
by very small amounts.
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Liquidity:
It refers to how quickly and cheaply an asset can be converted into cash. Money
(in the form of cash) is the most liquid asset.
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P-NOTES:
“P” means participatory notes.
These are the instruments issued by registered foreign institutional
investors (FII) to overseas investors, who wish to invest in the Indian stock
markets without registering themselves with the market regulator, the
Securities and Exchange Board of India - SEBI.
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Certificate
of Deposit (CD) is a negotiable money market instrument and issued in
dematerialised form for funds deposited at a bank or other eligible financial
institution for a specified time period.
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Commercial
Paper (CP) is an unsecured money market instrument issued in the form
of a promissory note. It was introduced in India in 1990. Corporates and the
All-India Financial Institutions are eligible to issue CP.
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REER:
Real Effective Exchange Rate.
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NEER:
Nominal Effective Exchange Rate.
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LIBOR:
London Inter Bank Offer Rate.
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MIBOR:
Mumbai Inter Bank Offer Rate.
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EFT –
Electronic Fund Transfer
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NEFT –
National Electronic Funds Transfer
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RTGS – Real Time Gross Settlement
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ATM
– Automated Teller Machine
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CBS –
Core Banking Solution
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CORE in
CBS stands for “Centralized
Online Real-time Exchange.”
