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Statutory liquidity ratio (SLR) is the Indian government term for reserve requirement
that the commercial banks in India require to maintain in the form of gold or government
approved securities before providing credit to the customers.
Cash Reserve Ratio (CRR) is a specified minimum percentage of the total deposits of
customers, which commercial banks have to hold as reserves either in cash or as deposits
with the central bank.
REPO is the sale of securities together with an agreement for the seller to buy back the
securities at a later date. The repurchase price should be greater than the original sale
price, the difference effectively representing interest, sometimes called the repo rate.
Reverse repo rate is the rate at which the Reserve Bank of India borrows money from
commercial banks. It is a monetary policy instrument which can be used to control the
money supply in the country.
State any 4 tools used by RBI to control supply of money in the economy.
REPO AND REVERSE REPO RATE.
CASH RESERVE RATIO (CRR)
OPEN MARKET OPERATIONS.
STATUTORY LIQUIDITY RATIO.
BANK RATE.
What is Bank Rate?
Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system
which includes commercial / cooperative banks, development banks etc.
State the components of Balance of Payments?
o Current Account
o Capital Account
o Balancing Account
What are the components Current Account?
i. Export and import of goods and services
ii. Unilateral transfers
iii. Investment income (Income from bonds, shares abroad).
What is current account Convertibility?
Capital Account Convertibility means that rupee can now be freely convertible into any
foreign currencies for the acquisition of assets like shares, properties and assets
abroad.
Current account convertibility allows free inflows and outflows for all purposes other
than for capital purposes such as investments and loans.
A debt obligation where the borrower has not paid any previously agreed upon interest
and/or principal repayments to the designated lender for an extended period of time.
The non performing asset is therefore not yielding any income to the lender in the form
of principal and interest payments.
a sub standard asset is one which has been classified as NPA for a period not exceeding 12
months.
What do you mean by Doubtful Assets?
Doubtful Assets: a doubtful asset is one which has remained NPA for a period exceeding
12 months.
Insurance is the transfer of the risk of a loss, from one entity to another in exchange for payment. It
is a form of risk management primarily used to hedge against the risk of a uncertain loss.
Insurance works on the basic principle of risk-sharing. A great advantage of insurance is that it spreads
the risk of a few people over a large group of people exposed to risk of similar type.
Insurance that pays out a sum of money either on the death of the insured person or after a
set period.
5. Define Risk.
A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is
caused by external or internal factors, and that may be avoided through pre-emptive action.
Risk management refers to the practice of identifying potential risks in advance, analysing them and
taking precautionary steps to reduce/curb the risk.
Specifying requisite qualifications, code of conduct and practical training for insurance
intermediaries and agents.
5 Marks