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General Awareness for Bank PO's and Clerks: Banking and Finance terms in India - 2010

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General Awareness for Bank PO's and Clerks
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Wednesday, February 17, 2010

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Banking and Finance terms in India - 2010
· What is Open Market operations(OMO)? The buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system by RBI. Open market operations are the principal tools of monetary policy. · What is Micro Credit? It is a term used to extend small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families. · What is Liquidity Adjustment Facility(LAF)? A tool used in monetary policy that allows banks to borrow money through repurchase agreements. This arrangement allows banks to respond to liquidity pressures and is used by governments to assure basic stability in the financial markets. · What is RTGS System?
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2010 Largest Producers in the World 2010 General Knowledge Quiz 2010 52 Current Affairs Quiz 2010 . · What is Wholesale Price Index(WPI)? The Wholesale Price Index (WPI) is the index used to measure the changes in the average price level of goods traded in wholesale market.html ▼ 2010 (134) ► December 2010 (4) ► November 2010 (5) ► September 2010 (3) ► August 2010 (3) ► July 2010 (8) ► June 2010 (19) ► May 2010 (17) ► April 2010 (18) ► March 2010 (19) ▼ February 2010 (16) Highlights of the Union budget 2010-11 Highlights of Economic Survey 2009-10 What is a Budget SBI Associates PO Pattern 2010 Allahabad Bank PO GK Paper 2010 January Current Affairs 2010 General Knowledge Quiz 2010 53 Banking and Finance terms in India . RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis.in/2010/02/banking-and-finance-terms-in-india-2010. It is generally taken as an indicator of the inflation rate in the Indian economy. and was used by policy makers until it was replaced by the Producer Price Index (PPI) in 1978. Settlement in 'real time' means payment transaction is not subjected to any waiting period. A total of 435 commodity prices make up the index. The transactions are settled as soon as they are processed. 'Gross settlement' means the transaction is settled on one to one basis without bunching with any other transaction. · What is Bancassurance? It is the term used to describe the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products.51 Allahabad Bank PO Pattern 2010 2/14 . It is available on a weekly basis. · What is Venture Capital? currentaffairsbankpo. The Indian Wholesale Price Index (WPI) was first published in 1902. This is the fastest possible money transfer system through the banking channel.2010 The acronym 'RTGS' stands for Real Time Gross Settlement.blogspot. · What is Consumer price Index(CPI)? It is a measure estimating the average price of consumer goods and services purchased by households.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India .

· What is Subsidy? A subsidy is a form of financial assistance paid to a business or economic sector. 182-day and 364-day. and the investor hopes the investment will yield a better-than-average return.html December Current Affairs -2009 Part 2 General Awareness Quiz 2010 50 Current Affairs PTR II .2010 General Knowledge Quiz 2010 49 ► January 2010 (22) ► 2009 (121) Total Pageviews 2. 91-day. The Banking Ombudsman Scheme was first introduced in India in 1995. The venture capitalist provides the funding knowing that there’s a significant risk associated with the company’s future profits and cash flow.610. Capital is invested in exchange for an equity stake in the business rather than given as a loan. Rupee denominated obligations issued by the Reserve Bank of India (RBI) on behalf of the Government of India. the Government of India issues three types of treasury bills through auctions. At present. growing. and replaced and superseded the banking Ombudsman Scheme 2002.2010 Venture capital is money provided by an outside investor to finance a new. The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services. There are no treasury bills issued by State Governments. or troubled business.455 Unq Vsits (1507-09) Online Contributors Harivanam Varun Reddy 3/14 . · What is a Treasury Bills? Treasury Bills (T-Bills) are short term. The current scheme became operative from the 1 January 2006. · What is Banking Ombudsmen Scheme? The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks.in/2010/02/banking-and-finance-terms-in-india-2010. They are thus useful in managing short-term liquidity. and was revised in 2002. namely.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India .blogspot. currentaffairsbankpo.

8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India . It is important to note that hedging is actually the practice of attempting to reduce risk. · What is a hedge fund? ‘Hedge’ means to reduce financial risk. A hedge fund is an investment fund open to a limited range of investors and requires a very large initial minimum investment. ii)Non-Convertibility Debentures(NCB): Non Convertible Debentures are those that cannot be converted into equity shares of the issuing company.html 4/14 . i)Convertible Debentures: Any type of debenture that can be converted into some other security or it can be converted into stock.in/2010/02/banking-and-finance-terms-in-india-2010.2010 Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or to encourage it to hire more labor. A type of debt instrument that is not secured by physical asset. Non-convertible debentures normally earn a higher interest rate than convertible debentures do. Debentures are backed only by the general creditworthiness and reputation of the issuer. the money currentaffairsbankpo. In other words. but the goal of most hedge funds is to maximize return on investment. as opposed to Convertible debentures. · What is FCCB? A Foreign Currency Convertible Bond (FCCB) is a type of convertible bond issued in a currency different than the issuer’s domestic currency. · What is a Debenture? How many types of debentures are there? What are they? A debenture is basically an unsecured loan to a corporation.blogspot..

· What is Arbitrage? The opportunity to buy an asset at a low price then immediately selling it on a different market for a higher price.2010 being raised by the issuing company is in the form of a foreign currency.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India .in/2010/02/banking-and-finance-terms-in-india-2010.blogspot. It helps attract foreign investment. The Reserve Bank of India has appointed a committee to set out the framework for fuller Capital Account Convertibility. investments and borrowings are restricted. where businesses are privately owned and operated for profit. in currentaffairsbankpo.html 5/14 . A company may issue an FCCB if it intends to make a large investment in a country using that foreign currency. Capital account convertibility is considered to be one of the major features of a developed economy. capital account convertibility makes it easier for domestic companies to tap foreign markets. This means that capital account convertibility allows anyone to freely move from local currency into foreign currency and back. · What is Capital Account Convertibility(CAC)? It is the freedom to convert local financial assets into foreign financial assets and vice versa at market determined rates of exchange. · What is Capitalism? Capitalism as an economy is based on a democratic political ideology and produces a free market economy. However. · What is Current Account Convertibility? It defines at one can import and export goods or receive or make payments for services rendered.

2010 capitalism. Financial Services.in/2010/02/banking-and-finance-terms-in-india-2010. Monetary policy. distribution. SOME MORE BANKING TERMS CERTIFICATE OF DEPOSITS This scheme was introduced in July 1989. which they can have at competitive rates of interest.html 6/14 . to enable the banking system to mobilise bulk deposits from the market. Posted by Varun Reddy at 13:53 Labels: bank. and labor.blogspot. currentaffairsbankpo. Wholesale Price Index 2 Ratings No rating Reactions: Interesting (4) Usefull (2) Excellent (6) 12 comments: Aditya said. are determined in the free market and affected by the forces of supply and demand. and the prices of goods.. Business. · What is Socialism? Socialism as an economy is based on a collectivist type of political ideology and involves the running of businesses to benefit the common good of a vast majority of people rather than of a small upper class segment of society. services. Real Time Gross Settlement. Repurchase agreement..8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India . For more banking and finance terms visit this link. all of the capital investments and decisions about production. Financial market.

Any time Nature Usance Promissory note.html 7/14 .in/2010/02/banking-and-finance-terms-in-india-2010. income. beyond which in multiple of Rs. it could be for the all the operations or for limited operations.1 lac Intt. currentaffairsbankpo. a no.2010 The major features are: Who can issue Scheduled commercial banks (except RRBs) and All India Financial Institutions within their `Umbrella limit’.1 lac. ATM that offers him anytime anywhere banking facility.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India .e. profession. financial dealings. Due to its benefits. CRR/SLR Applicable on the issue price in case of banks Investors Individuals (other than minors). Can be issued in Dematerialisation form only only wef June 30. rate Market related. family members etc. under which the information relating to the customer’s account (i. funds. corporations. This task is carried through an advance software by making use of the services provided by specialized agencies. Advantages: The CBS process is advantageous both to the customers and the banks in the following manner: Customer: • Transaction of business from any branch. Depending upon the size and needs of a bank. companies.blogspot. the customised financial products according to their need. to be paid on next preceding business day • Issued at a discount to face value • Duplicate can be issued after giving a public notice & obtaining indemnity CORE BANKING SOLUTIONS Core Banking Solutions (CBS) or Centralised Banking Solutions is the process which is completed in a centralized environment i.e. Fixed or floating Loan Against collateral of CD not permitted Pre-mature cancellation Not allowed Transfer Endorsement & delivery. • Lower incidence of errors. 2002 Other conditions • If payment day is holiday. trusts. of banks in India in recent years have taken steps to implement the CBS with a view to build relationship with the customer based on the information captured and offering to the customer. Amount Min: Rs. associations etc Maturity Min: 7 days Max : 12 Months (in case of FIs minimum 1 year and maximum 3 years). Hence accuracy in transactions.) is stored in the Central Server of the bank (that is available to all the networked branches) instead of the branch server.

profits from favourable movement of prices say of shares or foreign exchange. DERIVATIVES A derivative is a financial contract that derives its value from another financial product/commodity (say spot rate) called underlying (that may be a stock.in/2010/02/banking-and-finance-terms-in-india-2010. Options offer the buyers. options. forwards. 2010 4:16:00 PM Aditya said. European (where the holder can exercise his right on the expiry date) and American (where the holder can exercise the right. Option writers on the other hand have high risk and they cover their risk through counter buying. a commodity). is a simple form of a derivative. mutual funds. a commodity or an individual stocks. The players in option market include development finance institutions. a foreign currency. the speculators (who undertake risk for realization of profit) and the arbitrageurs (who make purchase and sales simultaneously but in different market to take benefit of price differentials). Operators in the derivative market : There are various kinds of operators in the derivative market such as hedgers (which manage the risk). a foreign currency. Banks: • Standardisation of process within the bank. RBI etc... • Increased business volume with better asset liability management and risk management. Forward contract in foreign exchange transaction. who has limited liability but possibility of realization of profits from favourable movement in the rates. who has the right to buy or sell). call option and put option. Objectives and instruments of derivates: The major purpose that is served by derivatives is to hedge the risk. say a share or security.. brokers. anytime between purchase date and the expiry date). are the common instruments of derivatives. • Availability of accurate data & Better use of available infrastructure • Better MIS and reporting to external agencies such as Govt. stock index.e. The derivatives do not have any independent existent and are based on the underlying assets that could be a stock index. retail investors. The owner’s liability is restricted to the premium he is to pay. Option It is contract that provides a right but does not impose any obligation to buy or sell a financial instrument.e. institutional investors. Components: The derivatives have components such as Options. • Better customer service leading to retention of customer and increased customer traffic.html 8/14 . Futures-forwards and Swaps. Futures.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India . February 17. It is important to note that option can be exercised by the owner (the buyer. Components of options: Options have two components i. It can be exercised by the owner.2010 • Better funds management due to immediate availability of funds. Wednesday.blogspot. currentaffairsbankpo. swaps etc. Variants of option: There are two variants of options i.

both the parties have to perform the contract and no premium is required to be paid by either party. Futures and forwards The futures are the contracts between sellers and buyers under which the sellers (termed ‘short’) have to deliver. off-balance sheet) through which the transferor can transfer the credit risk to another party without actually selling the asset.. The forward on the other hand is a contract that is traded off-the-stock exchange. Credit derivatives. price determination and allocation of resources. in futures the contract is to be performed on the settlement date and not before that whereas in case of option the buyer can exercise the option any time prior to the expiry date. at a pre-fixed price.e. Futures contract are made primarily for hedging. 2010 4:19:00 PM Aditya said.e. to the buyers (known as ‘long’).in/2010/02/banking-and-finance-terms-in-india-2010. RBI or other agencies.html 9/14 . The future positions can be closed easily.blogspot. where as in case of option. they need only margin payment on a daily basis. a specified no.. a pre-fixed quantity.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India . In addition. speculation. do not have flexibility of quantity and quality of commodity to be delivered and these are regulated by SEBI. of instruments say shares at a specified price during the time prior to expiry date. February 17. has the right to purchase and the seller has to obligation to sell. regulated by institutions such as SEBI. The main features of a futures contract are that these are traded in organised exchanges. Wednesday. at a pre-fixed time in future. the buyer. only the writer has to perform while the buyers makes payment of the premium to the seller in consideration for his performance.2010 Call option : The owner i. It is a legally binding obligation between two parties to give/take delivery at a certain point of time in future. is self regulatory and has certain flexibility unlike future which are traded at stock exchange only. Futures and options. It can be defined as a contract on the basis of which one party has to make payment to another party currentaffairsbankpo. Futures can also be distinguished from options because in futures. Credit derivatives are over the counter financial contracts (i. Put option : Owner or the buyer has the right to sell and the seller has the obligation to buy during a particular period.

The satisfied customers always help in improving the toplines (i. Wednesday.in/2010/02/banking-and-finance-terms-in-india-2010. Emergence of CRM Hence. of the underlying asset) taking place. the longer relationship of a customer brings better returns to the business. CUSTOMER RELATIONSHIP MANAGEMENT Customer satisfaction is the degree of happiness a customer realises with a product or service and is the most important driving force for retention of an existing customer which in turn results in growth of any business organisation including banks. while the business organisations have to retain their existing customers... Protection seller assumes the credit risk in consideration of premium that the protection buyer pays.e. Under the arrangement. the protection seller makes the payment to the protection buyer on credit event (such as failure to pay. a segment called customer relationship management or CRM and eCRM. New vis-à-vis old customer It needs to be borne in mind that to attract new customers involves huge cost in terms of set up costs. location currentaffairsbankpo. insolvency. every deregulated market has to veer around to retaining existing customers besides identifying and attracting new customers. price decline etc.e. repudiation. The technological innovation like data warehouses and call centres allowed a micro approach i. In order to maintain their position. This led to a finer segmentation of the market. In a credit derivative there are two parties i. Due to these costs the operating cost for new customer is generally higher for new customers. advertising cost. As a result. fresh customers are also required to be added. higher would be the rate of reduction in profits. Protection buyer on the other hand transfer the risk to the protection seller for a premium. bankruptcy. The defection by customers is a major factor for loss of revenue to the business and it should be appreciated that higher the rate of defection causing lower average length of relationship. With the size. February 17. business turnover) through referrals and positive publicity which lead to improvement in bottomlines. since it determines the size of cash flows into the business. protection seller and protection buyer. follow up cost etc.2010 on the basis of performance of a specified underlying credit assets.e. 2010 4:19:00 PM Aditya said.html 10/14 .blogspot. In US decreasing interest in traditional marketing was witnessed as early as 1980s when returns dipped to 3%. but for better growth in future.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India . companies had to look for an alternative to mass marketing through ads and promos. promotion costs.

2010 or past history not being that relevant which it used to be in the past and the market forces being in favour of the customer. whereas some could choose to concentrate on particular segments of business system. Specialisation : Some players might emerge as specialists in mortgage products. the organisations caring for customers are likely to be the winners. BANKING VISION 2010 An IBA’s Committee prepared a vision report in the backdrop of globalisation of Indian economy. agility and real time response to customers or markets through the new tools such as eMail. Some other banks may concentrate on SME segments or currentaffairsbankpo. while outsourcing all other functions. anticipate and manage the needs of the customer. Customer Relationship Management (CRM) refers to the ability to understand. Financial services system could see the emergence of highly varied financial products. Wednesday. expected Basel II needs and the expected pace of expansion in the balance sheets of banks.in/2010/02/banking-and-finance-terms-in-india-2010. the on-going reforms measures. customization. eCRM can address other factors like personalisation. February 17. chat facility etc.. It permit business speed. interaction and relationship resulting in increased profitability through revenue and margin growth and operational efficiencies.blogspot.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India . The advent of new technologies could see the emergence of new financial players doing financial intermediation (such as utility service providers offering bill payment services or supermarkets or retailers doing basic lending operations). The availability of information technology tools are arousing additional expectations of the customer which these organisation can think of ignoring. as the increase in productivity would determine the winners and laggards. The cost will have to be determined as revenue minus profit which would necessitate efficient use of resources including manpower resources with proper reconfiguration of human minds. credit cards etc. developments taking place in and around the globe and those that are expected as per the projections made in the Planning Commission’s India Vision Document 2020 & 10th Five Year Plan. one to many and many to many transactions. It reduces the cost of customer contract.html 11/14 .. internet telephony. 2010 4:22:00 PM Aditya said. Focus of banking: The focus of banking has to move in favour of cost control as that would be the key factor to higher profits in future. tailored to meet specific needs of the customers in the retail as well as corporate segments.

in/2010/02/banking-and-finance-terms-in-india-2010. Growth with quality : The future growth of banking business has to focus on the qualitative aspects rather than quantitative only. are not ruled out This could see the emergence of 4-5 world class Indian Banks. Need for consolidation: Consolidation of banking institutions is expected through mergers and acquisitions. 14.e.7% increase during 1995-2003 period. The risk management has to be given substantial attention and this has to be initiated at the branch level instead of corporate offices.000 cr. the ability of the banking institutions to perceive risk and take suitable steps to manage the risk.html 12/14 .1356000 cr to Rs. Deposits are expected to grow from Rs. globalisation of their operations.2010 high net worth individuals by providing specially tailored services beyond traditional banking offerings to satisfy the needs of customers they understand better than a more generalist competitor.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India .blogspot.6%. February 17. Large-scale efforts are needed to upgrade skills in credit risk measuring.5% CAGR and investments with a CAGR of 23. Risk and reward : For success of banking transactions. 2010 4:25:00 PM Aditya said. The market led mergers between private banks and also between public sector banks. controlling and currentaffairsbankpo.. Continued from Banking vision 2010: Credit delivery : The most significant challenge before banks is the maintenance of rigorous credit standards. especially in an environment of increased competition for new and existing clients. Bank assets are expected to increase at annual compounded rate of 13. will have to be ensured..3500000 cr i. Wednesday.90.4% till March 2010 compared with 16. Information technology: Faster decision making and faster appraisal are likely to be in place with faster information and data flow. may emerge as global players since there are opportunities available to Indian banks abroad to expand their business. This could help banks to improve their credit management effectively in addition to reduction in transaction cost and improved revenues. The risk managers could prosper and the risk takers are likely to survive. Some of the leading Indian banks.40. There would be greater presence of international players in the Indian financial system. development of new technology and universalisation of banking. Total assets of the Scheduled Commercial Banks by March 2010 would be at Rs.

. 2010 6:03:00 PM Anonymous said. However. Thank you verymuch for such a wonderful article.. Wednesday. February 17. April 22. more disclosures and tighter norms for enlisting the confidence of global investors and international market players. Thank u guys :) Saturday. The concept of social lending would undergo a change and instead of being seen as directed lending.blogspot. February 26.8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India .i also request you to post regarding the marketting terms also in this blog to be familiar with them as marketting has become a section in SBI po exams Wednesday. ThankU guys :) you ppl are awesome/ thanks for such a useful info . Banks are likely to migrate to the global accounting standards which would require greater transparency.. its grt ! Tuesday.. With rural market comprising big size of the population and disposable surplus.. there is likely to be greater emphasis on rural and semi-urban areas for business growth.in/2010/02/banking-and-finance-terms-in-india-2010. February 17. so that the state of readiness of Indian banks for Basle II regime improves.. 2010 4:58:00 PM Kannan said. the emphasis would be on self regulation instead of regulatory prescriptions based on putting in practice the best practices... Hi Varun. There have to be various legislative changes to enable the banking system to remain contemporary/competitive. June 01. the priority sector lending would be business driven. 2010 8:49:00 AM Chinna533 said. Retail lending and Social banking: Retail banking is expected to receive greater attention. Very useful information. Regulatory framework: The expected integration of various intermediaries in the financial system would require a strong regulatory frame work. Thursday. 2010 4:25:00 PM Krishna said. 2011 4:26:00 PM currentaffairsbankpo.html 13/14 .2010 monitoring as also revamp operating procedures. Credit evaluation may have to shift from cash flow based analysis to “borrower account behaviour”.

.. February 26.html 14/14 .2010 Anonymous said. 2011 3:01:00 PM Post a Comment Newer Post Home Subscribe to: Post Comments (Atom) Older Post Powered by Blogger. currentaffairsbankpo. 2011 4:28:00 PM saurav said. March 06..blogspot. thanks dear i m gona to face interview i tnk it s very good tng to find all tng under a umbrela Sunday..8/6/13 General Awareness for Bank PO's and Clerks: Banking and Finance terms in India . Thank u guys :) Saturday.in/2010/02/banking-and-finance-terms-in-india-2010.

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