==>> MONETARY POLICY

it is the policy by which monetary authority of a country controlls the supply of money, targeting a rate of interest to attain a set of objectives oriented towards the growth and stability of the economy. These goals usually include stable prices and low unemployment. Major types -:

-- EXPANSIONARY POLICY

it increases the supply of money in the economy, lowers the interest rates and combats unemployment.

-- CONTRACTIONARY POLICY

it decreases the total money supply, increases rate of interest and combats inflation.

==>> FISCAL POLICY

it is the policy which is made by the goverment for controlling government expenditure, supply of money and taxes. It is a great equipment for government to make better tax system and to manage public loan and expenditures. Techniques for making fiscal policy

-- Taxation Policy -- Public Expenditure Policy -- Deficit Financing Policy

-- Seigniorage -- Public Debt Policy

==>> CASH RESERVE RATIO

it is a bank regulation that sets the minimum reserves that each bank must hold to customer deposits and notes, these reserves are designed to satisfy withdrawal demands and would normally be in the form of fiat currency stored with the central bank authority.

==>> STATUTORY LIQUIDITY RATIO

it is a regulation that sets the minimum reserves of liquid assets such as cash, precious metals or other short term securities that a financial institution must maintain in its reserves. Its main objectives are to restrict expansion of bank credit and augment investment of banks in government securities.

==>> NON PERFORMING ASSETS

they are the loans or advances where interest and installment of principal remains overdue for a period of more than 90 days in respect of a term loan.

==>> REPO RATE

is the rate at which the RBI lends shot-term money to the banks. When the repo rate increases borrowing from RBI becomes more expensive. Therefore, we can say that in case, RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.

==>> REVERSE REPO RATE

is the interest rate earned by the banks for lending money to RBI in exchange of government securities. It is simply the same repurchase agreement from the buyer's viewpoint and not the seller's.

==>> BANK OVERDRAFT

it is the loan facility on customer current account at a bank permitting him to overdraw up to a certain agreed limit for an agreed period, interest is payable only on the amount of loan taken.

==>> 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.

==>> BANK RATE Vs REPO RATE

repo rate is an automatic tax, i.e. applicable to short-term loans and used for controlling the amount of money in the market, bank rate is a long-term measure and is governed by the long-term monetary policies of the governing bank concerned.

==>> MONEY MARKET

The money market is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames. Trading in the money markets involves Treasury bills Commercial paper Bankers' acceptances Certificates of deposit Federal funds Short-lived mortgage Asset-backed securities

==>> CAPITAL MARKET

A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year. The capital market includes the stock market (equity securities) and the bond market (debt).

==>> REAL TIME GROSS SETTLEMENT (RTGS)

funds transfer systems where transfer of money or securities takes place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not subjected to any waiting period, "Gross settlement" means the transaction is settled on one to one basis without bunching or netting with any other transaction.

==>> NATIONAL ELECTRONIC FUND TRANSFER (NEFT)

is an online system for transferring funds of Indian financial institution (especially banks).There is no minimum limit for fund transfer in NEFT system.

==>> FOREIGN EXCHANGE RESERVES

in a strict sense are only the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve positions. This broader figure is more readily available, but it is more accurately termed official international reserves or international reserves.

==>> INFLATION

is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money a loss of real value in the internal medium of exchange and unit of account in the economy.

==>> FINANCIAL INCLUSION

is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. It is argued that as banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of public policy.

==>> DEBT SERVICE COVERAGE RATIO (DSCR)

also known as "debt coverage ratio," is the ratio of cash available for debt servicing to interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity's (person or corporation) ability to produce enough cash to cover its debt (including lease) payments. The higher this ratio is, the easier it is to obtain a loan.

==>> PRIME LENDING RATE

is a reference interest rate used by banks. The term originally indicated the rate of interest at which banks lent to favored customers, i.e., those with high credibility, though this is no longer always the case. Some variable interest rates may be expressed as a percentage above or below prime rate.

==>> SUB PRIME LENDING

subprime lending (also referred to as near-prime, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule. These loans are characterized by higher interest rates and less favorable terms in order to compensate for higher credit risk.

==>> BANKING OMBUDSMAN

is a quasi judicial authority functioning under Indias Banking Ombudsman Scheme 2006, and the authority was created pursuant to the a decision by the Government of India to enable resolution of complaints of customers of banks relating to certain services rendered by the banks.

==>> LOAN TO VALUE RATIO (LTV)

expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. For instance, if a borrower borrows Rs. 1,30,000 to purchase a house worth Rs. 1,50,000, the LTV ratio is Rs. 1,30,000/Rs. 1,50,000 or 87%.

==>> BUYER'S CREDIT

is the credit availed by an Importer (Buyer) from overseas Lenders i.e. Banks and Financial Institutions for payment of his Imports on due date. The overseas Banks usually lend the Importer (Buyer) based on the Letter of comfort (a Bank Guarantee) issued by the Importers (Buyer's) Bank. Importers Bank / Buyers Credit Consultant / Importer arranges buyers credit from international branches of Indian Bank or other international bank.

==>> KNOW YOUR CUSTOMER

is the due diligence and bank regulation that financial institutions and other regulated companies must perform to identify their clients and ascertain relevant information pertinent to doing financial business with them.

==>> GROSS DOMESTIC PRODUCT

refers to the market value of all final goods and services produced within a country in a given period. It is often considered an indicator of a country's standard of living.

GDP = C + G + I + X - M

==>> GROSS NATIONAL PRODUCT

is the market value of all products and services produced in one year by labor and property supplied by the residents of a country. Unlike Gross Domestic Product (GDP), which defines production based on the geographical location of production, GNP allocates production based on ownership.

==>> GLOBAL DEPOSITORY RECEIPT

is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account. GDRs represent ownership of an underlying number of shares. Global Depository Receipts facilitate trade of shares, and are commonly used to invest in companies from developing or emerging markets.