Sunday, 29 April 2012
Friday, 20 April 2012
Key Rates as per 20-04-2012
| Bank Rate | 9.00% |
|---|---|
| Repo Rate | 8.00% |
| Reverse Repo Rate | 7.00% |
| Cash Reserve Ratio (CRR) | 4.75% |
| Statutory Liquidity Ratio (SLR) | 24.0% |
| Base Rate | 10.00%–10.75% |
| Reserve Bank Rate | 4% |
Wednesday, 11 April 2012
CURRENCY OF MAJOR COUNTRIES
Rupya- India, Morishus, Sri Lanka, Pakistan, Maldiu
Rupiyah- Indoneshiya
Dollar- Australia, USA, Canada, Newziland, Zamaica, Liberiya, Singapur, Fizi, Zimbabwey, Taivan
Riyal- Iran, Qatar, Saudi Arab,
Dinar- Alziriya, Libya, Yugoslavia, Iraq, Jordan
Lira- Turkey, Italy
Peso- Bolivia, Chili, Columbia, Mexico, Portugal,
Pesa- Argentina
Frank- Belgium, Congo, Luxemburg, Malagasy, Rwanda, Senegal, Switzerland, France
Krona- Iceland, Norvey, Sweden
Crone- Denmark
Shilling- Kenya, Iran, Austria, Uganda, Tanzania
Pound- Ireland, Lebanon, Sypris, Egypt
Taka- Bangladesh
Yen- Japan
Yuan-China
Won- Korea
South Africa- Rand
Add More.......................................................Cabinet of Ministers
1 Dr. Manmohan Singh--Prime Minister
2 Shri Pranab Mukherjee---Minister of Finance.
3 Shri Sharad Pawar---Minister of Agriculture and Minister of Food Processing Industries.
4 Shri A.K. Antony---Minister of Defence.
5 Shri P. Chidambaram--- Minister of Home Affairs
6 Shri S.M. Krishna --- Minister of External Affairs
7 Shri Virbhadra Singh --- Minister of Micro, Small and Medium Enterprises.
8 Shri Vilasrao Deshmukh ---Minister of Science and Technology and Minister of Earth Sciences.
9 Shri Ghulam Nabi Azad --- Minister of Health and Family Welfare
10 Shri Sushilkumar Shinde Minister of Power
11 Shri M. Veerappa Moily--- Minister of Corporate Affairs
12 Dr. Farooq Abdullah---Minister of New and Renewable Energy
13 Shri S. Jaipal Reddy ----Minister of Petroleum and Natural Gas
14 Shri Kamal Nath--- Minister of Urban Development.
15 Shri Ajit Singh ---Minister of Civil Aviation
16 Shri Vayalar Ravi ---Minister of Overseas Indian Affairs
17 Smt. Ambika Soni--- Minister of Information and Broadcasting.
18 Shri Mallikarjun Kharge---- Minister of Labour and Employment.
19 Shri Kapil Sibal ----Minister of Human Resource Development and Minister of Communications and Information Technology
20 Shri Anand Sharma ----Minister of Commerce and Industry and Minister of Textiles.
21 Shri C.P. Joshi ----Minister of Road Transport and Highways.
22 Kumari Shelja ---Minister of Housing and Urban Poverty Alleviation and Minister of Culture.
23 Shri Subodh Kant Sahay ---Minister of Tourism
24 Shri G.K. Vasan--- Minister of Shipping.
25 Shri Pawan Kumar Bansal--- Minister of Parliamentary Affairs and Minister of Water Resources.
26 Shri Mukul Wasnik ---Minister of Social Justice and Empowerment.
27 Shri M.K. Alagiri--- Minister of Chemicals and Fertilizers.
28 Shri Praful Patel--- Minister of Heavy Industries and Public Enterprises.
29 Shri Shriprakash Jaiswal--- Minister of Coal.
30 Shri Salman Khursheed--- Minister of Law and Justice and Minister of Minority Affairs.
31 Shri V. Kishore Chandra Deo--- Minister of Tribal Affairs and Minister of Panchayati Raj.
32 Shri Beni Prasad Verma-- Minister of Steel.
33 Shri Jairam Ramesh--- Minister of Rural Development and Minister of Drinking Water and Sanitation.
34 Shri Mukul Roy---- Minister of Railways.***************
Repo Rate & Reverse Repo Rate
A repo or repurchase Agreement is an instrument of money market. Usually reserve bank (federal bank in U.S) and commercial banks involve in repo transactions but not restricted to these two. Individuals, banks, financial institutes can also participate in repurchase agreement.
Repo is a collateralized lending i.e. the banks which borrow money from Reserve Bank to meet short term needs have to sell securities, usually bonds to Reserve Bank with an agreement to repurchase the same at a predetermined rate and date. In this way for the lender of the cash (usually Reserve Bank) the securities sold by the borrower are the collateral against default risk and for the borrower of cash (usually commercial banks) cash received from the lender is the collateral.
Reserve bank charges some interest rate on the cash borrowed by banks. This rate is usually less than the interest rate on bonds as the borrowing is collateral. This interest rate is called ‘repo rate’. The lender of securities is said to be doing repo whereas the lender of cash is said to be doing ‘reverse repo’.
In a reverse repo Reserve Bank borrows money from banks by lending securities. The interest paid by Reserve Bank in this case is called reverse repo rate.
Borrower of funds is called as seller of repo and lender of funds is called as buyer of repo. When the term of the loan is for one day it is known as an overnight repo and if it is for more than one day it is called a term repo.
The forward clean price of bonds is set at a level which is different from the spot clean price by adjusting the difference between repo rate and coupon earned on the security.
Difference between cheque and draft
An important difference between the two is that a draft can
be issued only when the amount of the draft is submitted to
the bank. Whereas a cheque can be issued irrespective of
whether there is balance in the issuer's account or not.
Incase there is no balance in the issuer's account at the
time when the cheque is presented to the bank for
encashment, the cheque will get bounced.Difference between BANK DRAFT and DEMAND DRAFT
Bank Draft
a check drawn by one bank against funds deposited into its account at another bank, authorizing the second bank to make payments to the individual named in the draft
&
Demand Draft
A method used by individuals to make transfer payments from one bank account to another. Demand drafts are marketed as a relatively secure method for cashing checks. The major difference between demand drafts and normal checks is that demand drafts do not require a signature in order to be cashed.
&
Demand Draft
A method used by individuals to make transfer payments from one bank account to another. Demand drafts are marketed as a relatively secure method for cashing checks. The major difference between demand drafts and normal checks is that demand drafts do not require a signature in order to be cashed.
Banking in India
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Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790; both are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India in 1955.
Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that issues stock and requires shareholders to be held liable for the company's debt) It was not the first though. That honor belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to theAlliance Bank of Simla.
When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States, promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures, most of the banks opened in India during that period fey and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century.
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed. HSBC established itself inBengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center.
The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was thePunjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India.
Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities.
The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments."
The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.
The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina Kannada and Udupi district which were unified earlier and known by the name South Canara ( South Kanara ) district. Four nationalised banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking".
During the First World War (1914–1918) through the end of the Second World War (1939–1945), and two years thereafter until theindependence of India were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table:
| Years | Number of banks that failed | Authorised capital (Rs. Lakhs) | Paid-up Capital (Rs. Lakhs) |
|---|---|---|---|
| 1913 | 12 | 274 | 35 |
| 1914 | 42 | 710 | 109 |
| 1915 | 11 | 56 | 5 |
| 1916 | 13 | 231 | 4 |
| 1917 | 9 | 76 | 25 |
| 1918 | 7 | 209 | 1 |
[edit]Post-Independence
The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India'sindependence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included:
- The Reserve Bank of India, India's central banking authority, was established in April 1934, but was nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).[Reference www.rbi.org.in]
- In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India."
- The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.
[edit]Nationalisation
Despite the provisions, control and regulations of Reserve Bank of India, banks in India except theState Bank of India or SBI, continued to be owned and operated by private persons. By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the nationalization of the banking industry. Indira Gandhi, then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The meeting received the paper with enthusiasm.
Thereafter, her move was swift and sudden. The Government of India issued an ordinance andnationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969.Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969.
A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the Government of India controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.
[edit]Liberalisation
In the early 1990s, the then Narasimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.
The next stage for the Indian banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 74% with some restrictions.
The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks.All this led to the retail boom in India. People not just demanded more from their banks but also received more.
Currently (2010), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true.
With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales.
In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them.
In recent years critics have charged that the non-government owned banks are too aggressive in their loan recovery efforts in connection with housing, vehicle and personal loans. There are press reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide.[1][2][3]
[edit]Adoption of banking technology
The IT revolution had a great impact in the Indian banking system. The use of computers had led to introduction of online banking in India. The use of the modern innovation and computerisation of the banking sector of India has increased many fold after the economic liberalisation of 1991 as the country's banking sector has been exposed to the world's market. The Indian banks were finding it difficult to compete with the international banks in terms of the customer service without the use of the information technology and computers.
The RBI in 1984 formed Committee on Mechanisation in the Banking Industry (1984)[4] whose chairman was Dr C Rangarajan, Deputy Governor, Reserve Bank of India. The major recommendations of this committee was introducing MICR[5] Technology in all the banks in the metropolis in India.This provided use of standardized cheque forms and encoders.
In 1988, the RBI set up Committee on Computerisation in Banks (1988)[6] headed by Dr. C.R. Rangarajan which emphasized that settlement operation must be computerized in the clearing houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram.It further stated that there should be National Clearing of inter-city cheques at Kolkata,Mumbai,Delhi,Chennai and MICR should be made Operational.It also focused on computerisation of branches and increasing connectivity among branches through computers.It also suggested modalities for implementing on-line banking.The committee submitted its reports in 1989 and computerisation began form 1993 with the settlement between IBA and bank employees' association.[7]
In 1994, Committee on Technology Issues relating to Payments System, Cheque Clearing and Securities Settlement in the Banking Industry (1994)[8] was set up with chairman Shri WS Saraf, Executive Director, Reserve Bank of India. It emphasized on Electronic Funds Transfer (EFT) system, with the BANKNET communications network as its carrier. It also said that MICR clearing should be set up in all branches of all banks with more than 100 branches.
Committee for proposing Legislation On Electronic Funds Transfer and other Electronic Payments (1995)[9] emphasized on EFT system. Electronic banking refers to DOING BANKING by using technologies like computers, internet and networking,MICR,EFT so as to increase efficiency, quick service,productivity and transparency in the transaction.
In 1988, the RBI set up Committee on Computerisation in Banks (1988)[6] headed by Dr. C.R. Rangarajan which emphasized that settlement operation must be computerized in the clearing houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram.It further stated that there should be National Clearing of inter-city cheques at Kolkata,Mumbai,Delhi,Chennai and MICR should be made Operational.It also focused on computerisation of branches and increasing connectivity among branches through computers.It also suggested modalities for implementing on-line banking.The committee submitted its reports in 1989 and computerisation began form 1993 with the settlement between IBA and bank employees' association.[7]
In 1994, Committee on Technology Issues relating to Payments System, Cheque Clearing and Securities Settlement in the Banking Industry (1994)[8] was set up with chairman Shri WS Saraf, Executive Director, Reserve Bank of India. It emphasized on Electronic Funds Transfer (EFT) system, with the BANKNET communications network as its carrier. It also said that MICR clearing should be set up in all branches of all banks with more than 100 branches.
Committee for proposing Legislation On Electronic Funds Transfer and other Electronic Payments (1995)[9] emphasized on EFT system. Electronic banking refers to DOING BANKING by using technologies like computers, internet and networking,MICR,EFT so as to increase efficiency, quick service,productivity and transparency in the transaction.
Apart from the above mentioned innovations the banks have been selling the third party products like Mutual Funds, insurances to its clients.Total numbers of ATMs installed in India by various banks as on end March 2005 is 17,642.[10]The New Private Sector Banks in India is having the largest numbers of ATMs which is fol off site ATM is highest for the SBI and its subsidiaries and then it is followed by New Private Banks, Nationalised banks and Foreign banks. While on site is highest for the Nationalised banks of India.[7]
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