What Do You Understand by The GDP of The Country?

Download as docx, pdf, or txt
Download as docx, pdf, or txt
You are on page 1of 5

What do you understand by the GDP of the country?

The final value of all the goods and services produced under the geographical area of a
country is the Gross Domestic Product of that country. GDP is calculated at
consumption, investment and exports and imports are subtracted from the sum of these
three.
What are the various risks that banks face?
Sir, there are mainly three types of risks faced by banks:- Credit Risk: - loan or NPA.
- Market Risk: - Money invested in the market.
- Operational risk: - Day-to-Day working risks.
What are the parts of banks capital?
Bank has following parts of capital:- Tier 1 capital: - Paid up capital (core capital) + Reserves (owners or promoters fund)
- Tier 2 capital: - Secondary Capital (borrowed funds) + general loss reserves +
subordinated term debts + undisclosed reserves (cant be maintained in India)
- Tier 3 capital: - Same as tier 2 capital but with a higher amount in order to face the
market risks of the bank.

Tell us something about BSBDA.


BSBDA stands for Basic Savings Bank deposit account. BSBDA is the new name for
no-frill accounts under which anyone can open a bank account with even zero balance
in it or zero balance account. This BSBDA is aimed at providing banking facilities to
weaker section of the society and improve financial inclusion.
What is Para Banking?
Para Banking includes all the services provided by banks apart from day to day
banking. For example: - Debit cards, Credit cards, Life Insurance products, Cash
Management services etc.
What is a Non -banking Financial Company (NBFC)?
Difference between NBFC and banks?A NBFC is a company registered under the
companies act, 1956 which is involved in the business of loans, shares/stocks, etc.
Non-banking financial companies are financial institutions that provide banking services,
but do not hold a banking license. These institutions are not allowed to take deposits
from the public. NBFCs do offer all sorts of banking services, such as loans and credit

facilities, retirement planning, money markets, underwriting, and merger activities. The
basic difference between bank and NBFC is:- They cant accept demand deposits.
- They are not a part of the payment and settlement system and cant issue cheques
drawn on themselves
- They are not registered in the banking act and dont have a banking license.
- They dont have to maintain CRR, SLR or CASA like banks.
What are the components of the monetary policy of RBI?
The components of monetary policy include CRR, Repo rate, reverse repo rate, SLR,
MSF and Bank Rate.

What is REPO rate and reverse REPO rate?


Repo rate is the rate at which banks borrow from RBI during shortage of funds. This is a
short term loan provided for upto 90 days by selling securities to RBI and receiving
money in lieu of it. Reverse repo rate is the rate at which banks deposit their excess
liquidity with the RBI. In other words, the rate at which RBI borrows from banks by
selling securities in order to control excess liquidity in the market is reverse repo rate.

What is Cash Reserve Ratio (CRR)?


CRR is the part of Net Demand and Time Liabilities (NDTL) or cash of the bank
deposited with the RBI. A higher CRR makes loans expensive as liquidity is controlled
by RBI. NDTL is the deposits of the customers with the bank. Net demand liabilities are
deposits payable on the demand on customer, or when the customer wants. Ex:-current
account, savings account. Time liabilities are the deposits which are payable only on a
specific time or after a period of maturity. For ex:- Fixed deposits, Recurring Deposits.
Current CRR is 4%.
What is Statutory Liquidity Ratio (SLR)?
SLR is the amount of NDTL which a bank needs to maintain in the form of cash, gold or
govt. securities before providing credit to its customers. Through SLR, RBI makes sure
that bank always have a reserve amount out of their deposits to meet any future
contingencies. Current SLR is 21.50%.
What is Marginal Standing facility (MSF)?

In MSF, banks borrow money from RBI for upto 24 hours. MSF is always 1% above the
repo rate and banks can draw only upto 25 of their NDTL from RBI. Current MSF is
7.75%.
What is white label ATM?
It refers to ATMs owned by corporate or private operators seeking to earn a commission
by banks for transactions performed by their customers. For ex:- INDICASH by TATA
group.
What is brown label ATM?
It refers to the ATMs where investment, installation and maintenance is by a private
operator but the license and branding is by a commercial bank.
What is banking ombudsman scheme?
The banking ombudsman scheme is a scheme to listen to customers grievances and
complaints regarding certain services provided by the bank. It was introduced under the
Section 35 A of banking regulation act, 1949 by RBI with effect from 1995 which was
later amended and became the banking ombudsman scheme, 2006. Customer can
appeal against the decision of ombudsman to deputy governor of RBI. He is the highest
authority of appeal. All banks in India are covered under the scheme.

What is the difference between FII and FDI?


FDI or foreign direct investment is an investment that a parent company makes in a
foreign country. FII or Foreign Institutional Investor is an investment made by an
investor in the markets of a foreign nation. FII can enter the stock market easily and
also withdraw from it easily. But FDI cannot enter and exit that easily as FDI only targets
a specific sector.

What is the CAD? What is Fiscal deficit?


CAD or current account deficit is the difference between the imports and exports of a
nation in one financial year whereas fiscal deficit is the difference between total revenue
and expenditure of a nation.

What is inflation and deflation?

Inflation is the increase in the price of goods and services due to more demand and less
supply. In inflation, there is more liquidity in market which has to be controlled to reduce
the purchasing power of customers. Deflation is the decrease in prices of goods and
services due to more supply and very less demand. In deflation, there is lack of liquidity
in market which results in very weak purchasing power of people.
What is DEMAT account?
Shares and securities are held electronically in a dematarlised form instead of the
physical form is called Dematarilisation.
Benefit:1. Easy and convenient way to handle electronically
2. Funds are immediately credited in account
3. Less paper work
4. More Safety
5. To save from loss of transit
6. Fast process
7. More Secrecy

What is working capital?


Working capital is the amount of liquid assets a company has on hand. It amounts to
current assets and cash minus current liabilities.
What is paripassu charge?
A paripassu charge gives lenders a right to the property on which a charge is created
in proportion to the amount lent to the debtor. Let us assume two banks X and Y have
lent to a company with the outstanding at Rs 70 lakh and Rs 30 lakh respectively and
have paripassu charge over the assets hypothecated. In case of liquidation of that
company, the lenders X and Y will share the proceeds from liquidation in proportion to
the outstanding loan amount, that is, 70:30.

DIFFERENCE BETWEEN GUARANTEE AND INDEMNITY


GUARANTEE: A contract of guarantee is covered by Indian Contract Act 1872. Section
126 of the act defines contract of guarantee as contract to perform the promise or
discharge the liability of a third person in case of his default. The person who
undertakes to discharge of third party is called guarantor or surety. The person on
whose behalf guarantee is given is called Creditor. Guarantee is generally obtained by
banks when there is deficit in security or value of security falls below the advance

granted. The contract of guarantee is secondary contract, primary contract being


between the borrower and the guarantor. The contract of guarantee can be entered into
only if there is primary contract between two parties.
Contract of Indemnity: is defined as contract by which one party promises to save
other party from loss caused to him by the conduct of the promisor himself or by the
conduct of any other person. The person who gives this assurance is called indemnifier
and the person for whom the indemnity is given is called beneficiary. Contract of general
insurance is contract of indemnity.

You might also like