RBI CONCEPTS:PRIORITY SECTOR LENDING#14

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1. What are the different categories under priority sector?

Priority Sector includes the following categories:

(i) Agriculture
(ii) Micro, Small and Medium Enterprises
(iii) Export Credit
(iv) Education
(v) Housing
(vi) Social Infrastructure
(vii) Renewable Energy
(viii) Others Continue reading “RBI CONCEPTS:PRIORITY SECTOR LENDING#14”

RBI CONCEPTS:REGULATION OF FINANCE MARKET#13

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  • Major market segments under the regulatory ambit of the Reserve Bank are interest rate markets, including Government Securities market and money markets; foreign exchange markets; derivatives on interest rates/prices, repo, foreign exchange rates as well as credit derivatives.

Broad Regulatory  Instruments:

  • Government securities market: The Government securities market, trades securities issued by Central and State Government. It has a sizeable primary and active secondary segments.

 

  • Call money market: Uncollaterised call money market is restricted to banks and Primary Dealers subject to prudential limits. The collaterised segments include Collaterised Borrowing and Lending Facility (CBLO) and market repo transactions between banks and financial institutions. The money market also includes Commercial Paper (CP) issuances by corporates, Primary dealers and financial institutions and Certificates of Deposit (CD) issued by banks to institutional investors.

 

  • Foreign exchange market: The Foreign Exchange Management Act, 1999 (Act 42 of 1999), better known as FEMA, 1999, provides the statutory framework for the regulation of Foreign Exchange derivatives contracts. Residents can hedge their foreign exchange exposures through various products, such as, forward contracts, options involving rupee and foreign currencies, currency swaps and cost reduction option structures in the OTC market. Foreign investors can also hedge their investments in equity and/or debt in India through forwards and options. Over the years, the foreign exchange spot, as well as forward market, has expanded quite significantly.

 

  • Derivatives: In the OTC (OVER THE COUNTER) interest rate derivatives (IRD) segment, interest rate swaps (IRS) and forward rate agreements (FRA) are permitted on various benchmarks where banks and primary dealers (PD) take hedging and trading positions. Other regulated entities like insurance companies, mutual funds, Non-Banking Finance Companies can participate in IRD for the purpose of hedging. In addition, there are exchange-traded interest rate futures (IRF) which are also open to Foreign Portfolio Investors (FPI). .

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RBI CONCEPTS: ISSUER OF CURRENCY #12

Oracle IAS, the best coaching institute for RBI grade B/NABARD/SEBI in Dehradun (Uttarakhand), brings to you views on important issues.

Introduction:

  • Along with the Government of India, RBI is responsible for the design, production and overall management of the nation’s currency, with the goal of ensuring an adequate supply of clean and genuine notes.
  • The Government of India is the issuing authority of coins and supplies coins to the Reserve Bank on demand. The Reserve Bank puts the coins into circulation on behalf of the Central Government.

Continue reading “RBI CONCEPTS: ISSUER OF CURRENCY #12”

RBI CONCEPTS:INSTRUMENTS OF MONETARY POLICY #10(PART-4)

  • Oracle IAS, the best coaching institute for RBI grade B/NABARD/SEBI in Dehradun (Uttarakhand), brings to you views on important issues.

INSTRUMENTS OF MONETARY POLICY

There are several direct and indirect instruments that are used for implementing monetary policy.

  • REPO RATE: The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF).

Continue reading “RBI CONCEPTS:INSTRUMENTS OF MONETARY POLICY #10(PART-4)”

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)

Oracle IAS, the best coaching institute for RBI grade B/NABARD/SEBI in Dehradun (Uttarakhand), brings to you views on important issues.

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 Gr-B News – Role of RBI Governor #2

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==> Context

• The Reserve Bank of India governor’s unexpected resignation has created concern among the media, academicians and investors about the continuity of policy.

• Lack of appropriate transition has been covered, to some extent, by the quick appointment of the new governor. Continue reading “RBI Gr-B News – Role of RBI Governor #2”

RBI Concepts: Role and Functions of EXIM Bank and ECGC #9

Oracle IAS, the best coaching institute for RBI grade B/NABARD/SEBI in Dehradun (Uttarakhand), brings to you views on important issues.

Role and Functions of EXIM Bank(Export–Import Bank ):-
1) Line of Credit:
Line of credit refers to the credit required by the importers and exporters to carry on with their regular business. EXIM bank provides various types of pre-shipment and post-shipment finance especially to exporters to ensure that they are able to fulfil their export orders as planned. Continue reading “RBI Concepts: Role and Functions of EXIM Bank and ECGC #9”

RBI Concepts: Types of Bank Deposits and Advances for NRIs/NRIs/PIOs/OCBs #8

Oracle IAS, the best coaching institute for RBI grade B/NABARD/SEBI in Dehradun (Uttarakhand), brings to you views on important issues.

1) Ordinary Non-Resident Rupee Accounts (NRO Accounts):
These are Rupee denominated non-repatriable accounts and can be in the form of savings, current recurring or fixed deposits. These accounts can be opened jointly with residents in India. When an Indian National / PIO resident in India leaves for taking up employment, etc. outside the country, his bank account in India gets designated as NRO account. Continue reading “RBI Concepts: Types of Bank Deposits and Advances for NRIs/NRIs/PIOs/OCBs #8”

RBI CONCEPTS: Role of commercial banks #7

Oracle IAS, the best coaching institute for RBI grade B//NABARD/SEBI in Dehradun (Uttarakhand), brings to you views on important issues..

1) Credit Creation:
Commercial banks have to ensure that enough credit is available for people to borrow from the bank to carry out their daily business activities. Wherever a shortage of credit is observed, the commercial banks are expected to provide additional funds and make sure that the shortage gap is filled. Continue reading “RBI CONCEPTS: Role of commercial banks #7”