RBI CONCEPTS:The Monetary Policy Committee #9(PART-3)

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What is Monetary Policy Committee?
  • It is the committee which will decide India’s Monetary Policy.
  • The formation of the monetary policy committee was mooted by the Urjit Patel committee(2016). The current mandate of the committee is to maintain 4% annual inflation until March 31, 2021, with an upper tolerance of 6% and a lower tolerance of 2%.
  • The committee suggested that monetary policy be rule-based and not discretion-based. The final decision on monetary policy should not lie with the RBI governor alone but on a group of people.

 

  • Composition of MPC
    MPC will be a 6 member committee:
    • 3 members will be from RBI. These 3 members would include the governor who will also be the ex-officio chairperson of the committee.
    • 3 members will be appointed by the central govt. These members should be experts in the field of finance or banking or economics or monetary policy. They will have a tenure of 4 years and will not be eligible for reappointment.

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RBI CONCEPTS:The Monetary Policy Framework #8 (part 2)

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The Monetary Policy Framework Continue reading “RBI CONCEPTS:The Monetary Policy Framework #8 (part 2)”

RBI CONCEPTS: MONETARY POLICY #7(Part-1)

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What is monetary policy?

Monetary policy refers to the use of monetary instruments under the control of the central bank to regulate magnitudes such as interest rates, money supply and availability of credit with a view to achieving the ultimate objective of economic policy. Continue reading “RBI CONCEPTS: MONETARY POLICY #7(Part-1)”

RBI CONCEPTS:CARD TRANSACTION #6

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  1. What are various types of cards?

Ans: Cards can be classified on the basis of their issuance, usage and payment by the card holder. There are three types of cards (a) debit cards (b) credit cards and (c) prepaid cards.

  1. Who issues these cards?

Ans: Debit cards are issued by banks and are linked to a bank account. Credit cards are generally issued by banks and a couple of non-banks, but can also be issued by other approved entities. Prepaid cards are issued by banks / non-banks against the value paid in advance by the cardholder and stored in such cards which can be issued in the form of cards or wallets. Continue reading “RBI CONCEPTS:CARD TRANSACTION #6”

RBI CONCEPTS:NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT) #5

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Q.1. What is NEFT?

Ans: National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme. Continue reading “RBI CONCEPTS:NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT) #5”

RBI CONCEPTS: CHEQUE TRUNCATION #4

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  • What is Cheque Truncation?

Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point by the presenting bank en-route to the paying bank branch. In its place, an electronic image of the cheque is transmitted to the paying branch through the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc. Cheque truncation thus obviates the need to move the physical instruments across bank branches, other than in exceptional circumstances for clearing purposes. This effectively eliminates the associated cost of movement of the physical cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing. Continue reading “RBI CONCEPTS: CHEQUE TRUNCATION #4”

RBI concept:Sovereign Gold Bond Scheme #2

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  • What is Sovereign Gold Bond (SGB)? Who is the issuer?

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India. Continue reading “RBI concept:Sovereign Gold Bond Scheme #2”

RBI concept: ATM/White Label ATM #1

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Q.1. What is an Automated Teller Machine (ATM)?

Ans 1. Automated Teller Machine is a computerized machine that provides the customers of banks the facility of accessing their account for dispensing cash and to carry out other financial & non-financial transactions without the need to actually visit their bank branch.

Q.2. What are White Label ATMs (WLAs)?

Ans 2. ATMs set up, owned and operated by non-banks are called White Label ATMs. Non-bank ATM operators are authorized under the Payment & Settlement Systems Act, 2007 by the Reserve Bank of India.

Example-Indicash

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