Skip to main content

An overview of Banking Terms

Repo Rate
Repo rate (repurchase rate) is the rate at which our banks borrow rupees from the Central Bank(RBI). Reduction in the repo rate help banks to get money at a cheaper rate and thereby increasing liquidity in market. When the repo rate increases, borrowing from the Central Bank(RBI) becomes more expensive. Repo rate is used by monetary authorities to control inflation.

Reverse Repo Rate
Reverse Repo rate is the rate at which the Central Bank(RBI) borrows money from banks.Central Bank(RBI) uses this tool when it feels there is too much money floating in the banking system. Increase in reverse repo rate results in decreasing liquidity ad banks are attracted to invest into the Central Bank(RBI).

CRR Rate
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the Central Bank(RBI). If the Central Bank(RBI) decides to increase the percent of this, the available amount with the banks comes down.Central Bank(RBI) increase CRR rate to drain out the excessive money from the banks.The purpose of CRR is to ensure that banks do not run out of cash to meet the payment demands of their depositors. Also it is used to control money supply in market. It is more effective but less flexible tool than repo rate for money control in market.

SLR Rate
SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers.Banks needs to maintain SLR along with CRR.
SLR rate is determined and maintained by the the Central Bank(RBI) in order to control the expansion of bank credit. SLR is determined as the percentage of total demand and percentage of time liabilities. Time Liabilities are the liabilities a commercial bank liable to pay to the customers on their anytime demand. SLR is used to control inflation and propel growth. Through SLR rate tuning the money supply in the system can be controlled efficiently.

Bank Rate
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the bank rate are often used by central banks to control the money supply.It represents long term out look of the Central bank(RBI).

PLR
The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). The rate is almost always the same amongst major banks. Adjustments to the prime rate are made by banks at the same time; although, the prime rate does not adjust on any regular basis. The Prime Rate is usually adjusted at the same time and in correlation to the adjustments of the Fed Funds Rate. The rates reported below are based upon the prime rates on the first day of each respective month. Some banks use the name "Reference Rate" or "Base Lending Rate" to refer to their Prime Lending Rate.

FII
FII (Foreign Institutional Investor) used to denote an investor, mostly in the form of an institution. An institution established outside India, which proposes to invest in Indian market, in other words buying Indian stocks. FII's generally buy in large volumes which has an impact on the stock markets. Institutional Investors includes pension funds, mutual funds, Insurance Companies, Banks, etc.

FDI
A: FDI (Foreign Direct Investment) occurs with the purchase of the “physical assets or a significant amount of ownership (stock) of a company in another country in order to gain a measure of management control” (Or) A foreign company having a stake in a Indian Company.

SDR
The SDR (Special Drawing Rights) is an artificial currency created by the IMF in 1969. SDRs are allocated to member countries and can be fully converted into international currencies so they serve as a supplement to the official foreign reserves of member countries. Its value is based on a basket of key international currencies (U.S. dollar, euro, yen and pound sterling).

Labels:

Comments

  1. AnonymousJuly 1, 2014 at 3:54 PM

    Please tell which will cm in to lAF? Crr or slr?

    ReplyDelete
  2. The priestJuly 1, 2014 at 6:30 PM

    IAF?

    ReplyDelete
  3. AnonymousJuly 2, 2014 at 7:59 AM

    Liquidity adjustment facility...

    ReplyDelete
  4. The priestJuly 2, 2014 at 10:17 PM

    okk u mean LAF .... Repo and Reverse Repo comes under LAF ...
    Liquidity adjustment facility (LAF) is a monetary policy tool which allows banks to borrow money through repurchase agreements.The funds under LAF are used by the banks for their day-to-day mismatches in liquidity

    Under the scheme, repo auctions (for absorption of liquidity) and reverse repo auctions (for injection of liquidity) are conducted on a daily basis (except Saturdays).

    ReplyDelete
  5. AnonymousJuly 6, 2014 at 9:40 AM

    Thanks alot...:)

    ReplyDelete
  6. AnonymousJuly 6, 2014 at 9:43 AM

    Sir can u plz share sm terms about taxation. Vat exice custom etc?

    ReplyDelete
  7. AnonymousJuly 6, 2014 at 9:57 AM

    Sir can u plz share sm terms about taxation. Vat exice custom etc?

    ReplyDelete
  8. AnonymousJuly 6, 2014 at 10:20 AM

    Crr is kept in rbi but wht abt slr?

    ReplyDelete
  9. The priestJuly 6, 2014 at 11:12 AM

    I will share soon ....
    SLR is to be kept with bank itself

    ReplyDelete
  10. The priestJuly 6, 2014 at 11:15 AM

    It will be more comfortable for me to address you if you write your name as well :)

    ReplyDelete
  11. khushiJuly 6, 2014 at 10:25 PM

    Ok thnx sir

    ReplyDelete
  12. khushiJuly 6, 2014 at 10:29 PM

    Sir one of my frnd told me abt ur blog...its really very useful..I m thnkful to u and her as well...

    ReplyDelete

Post a Comment

Popular posts from this blog

कर्ण और कृष्ण का संवाद - रामधारी सिंह 'दिनकर'

Following is excerpt from poem Rashmirathi written by Ram dhari singh dinkar. Karna reply to Krishna when he told story of his birth and ask him to join pandava side. सुन-सुन कर कर्ण अधीर हुआ, क्षण एक तनिक गंभीर हुआ,  फिर कहा "बड़ी यह माया है, जो कुछ आपने बताया है  दिनमणि से सुनकर वही कथा मैं भोग चुका हूँ ग्लानि व्यथा  मैं ध्यान जन्म का धरता हूँ, उन्मन यह सोचा करता हूँ,  कैसी होगी वह माँ कराल, निज तन से जो शिशु को निकाल  धाराओं में धर आती है, अथवा जीवित दफनाती है?  सेवती मास दस तक जिसको, पालती उदर में रख जिसको,  जीवन का अंश खिलाती है, अन्तर का रुधिर पिलाती है  आती फिर उसको फ़ेंक कहीं, नागिन होगी वह नारि नहीं  हे कृष्ण आप चुप ही रहिये, इस पर न अधिक कुछ भी कहिये  सुनना न चाहते तनिक श्रवण, जिस माँ ने मेरा किया जनन  वह नहीं नारि कुल्पाली थी, सर्पिणी परम विकराली थी  पत्थर समान उसका हिय था, सुत से समाज बढ़ कर प्रिय था  गोदी में आग लगा कर के, मेरा कुल-वंश छिपा कर के  दुश्मन का उसने काम किया, माताओं को बदनाम किया  माँ...
9 comments
Click here to read full article >>

रश्मिरथी ( सप्तम सर्ग ): कर्ण वध - रामधारी सिंह 'दिनकर'

1 निशा बीती, गगन का रूप दमका, किनारे पर किसी का चीर चमका। क्षितिज के पास लाली छा रही है, अतल से कौन ऊपर आ रही है ? संभाले शीश पर आलोक-मंडल दिशाओं में उड़ाती ज्योतिरंचल, किरण में स्निग्ध आतप फेंकती-सी, शिशिर कम्पित द्रुमों को सेंकती-सी, खगों का स्पर्श से कर पंख-मोचन कुसुम के पोंछती हिम-सिक्त लोचन, दिवस की स्वामिनी आई गगन में, उडा कुंकुम, जगा जीवन भुवन में । मगर, नर बुद्धि-मद से चूर होकर, अलग बैठा हुआ है दूर होकर, उषा पोंछे भला फिर आँख कैसे ? करे उन्मुक्त मन की पाँख कैसे ? मनुज विभ्राट् ज्ञानी हो चुका है, कुतुक का उत्स पानी हो चुका है, प्रकृति में कौन वह उत्साह खोजे ? सितारों के हृदय में राह खोजे ? विभा नर को नहीं भरमायगी यह है ? मनस्वी को कहाँ ले जायगी यह ? कभी मिलता नहीं आराम इसको, न छेड़ो, है अनेकों काम इसको । महाभारत मही पर चल रहा है, भुवन का भाग्य रण में जल रहा है। मनुज ललकारता फिरता मनुज को, मनुज ही मारता फिरता मनुज को । पुरुष की बुद्धि गौरव खो चुकी है, सहेली सर्पिणी की हो चुकी है, न छोड़ेगी किसी अपकर्म को वह, निगल ही जायगी सद्धर्म को वह । मरे अभिमन्यु अथवा भीष्म टूटें, पिता के प्राण...
1 comment
Click here to read full article >>

Scheme for creation of National Optical Fiber Network for Broadband connectivity of Panchayats

The Union Cabinet recently approved a scheme for creation of a National Optical Fiber Network (NOFN) for providing Broadband connectivity to Panchayats. The objective of the scheme is to extend the existing optical fiber network which is available up to district / block HQ’s level to the Gram Panchayat level initially by utilizing the Universal Service Obligation Fund (USOF). The cost of this initial phase of the NOFN scheme is likely to be about Rs.20,000 crore. A similar amount of investment is likely to be made by the private sector complementing the NOFN infrastructure while providing services to individual users. In economic terms, the benefits from the scheme are expected through additional employment, e-education, e-health, e-agriculture etc. and reduction in migration of rural population to urban areas. As per a study conducted by the World Bank, with every 10% increase in broadband penetration, there is an increase in GDP growth by 1.4%. NOFN will also facilitate implemen...
10 comments
Click here to read full article >>

वसुधा का नेता कौन हुआ

सच है, विपत्ति जब आती है, कायर को ही दहलाती है, शूरमा नहीं विचलित होते, क्षण एक नहीं धीरज खोते, विघ्नों को गले लगाते हैं, काँटों में राह बनाते हैं।
3 comments
Click here to read full article >>

किसको नमन करूँ मैं भारत? - Kisko Naman Karu Mein Bharat?

A poem dedicated to the nation written by Ramdhari Singh "dinkar"... तुझको या तेरे नदीश, गिरि, वन को नमन करूँ, मैं ? मेरे प्यारे देश ! देह या मन को नमन करूँ मैं ? किसको नमन करूँ मैं भारत ? किसको नमन करूँ मैं ? भू के मानचित्र पर अंकित त्रिभुज, यही क्या तू है ? नर के नभश्चरण की दृढ़ कल्पना नहीं क्या तू है ? भेदों का ज्ञाता, निगूढ़ताओं का चिर ज्ञानी है मेरे प्यारे देश ! नहीं तू पत्थर है, पानी है जड़ताओं में छिपे किसी चेतन को नमन करूँ मैं ? भारत नहीं स्थान का वाचक, गुण विशेष नर का है एक देश का नहीं, शील यह भूमंडल भर का है जहाँ कहीं एकता अखंडित, जहाँ प्रेम का स्वर है देश-देश में वहाँ खड़ा भारत जीवित भास्कर है निखिल विश्व को जन्मभूमि-वंदन को नमन करूँ मैं ! खंडित है यह मही शैल से, सरिता से सागर से पर, जब भी दो हाथ निकल मिलते आ द्वीपांतर से तब खाई को पाट शून्य में महामोद मचता है दो द्वीपों के बीच सेतु यह भारत ही रचता है मंगलमय यह महासेतु-बंधन को नमन करूँ मैं ! दो हृदय के तार जहाँ भी जो जन जोड़ रहे हैं मित्र-भाव की ओर विश्व की ...
2 comments
Click here to read full article >>