Beruflich Dokumente
Kultur Dokumente
OVERVIEW
Machinery
Company
fundraising
Sales/Promotion Building assets
Product
development
Regulation is another aspect of the financial system (RBI, SEBI, IRDA, FMC)
Savers/Lenders Securities Borrowers
(HOUSEHOLDS) (HOUSE HOLDS)
(FIRMS) (FIRMS)
(GOVERNMENTS)
Money
(GOVERNMENTS)
(FOREIGNERS) (FOREIGNERS)
Financial System
Capital Market
Debt Market
1) Long-term
Equity Market
1) Lease Financing Instruments
Money Makret 2) Medium-term 1) Regulatory Institutions
2) Hire Purchase
Forex market Instruments 2) Banking Institutions
3) Merchant Banking
Commodities Market 3) Short-term 3) NBFCs
4) Factoring Instruments 4) Development Fin. Inst.
5) Wealth 5) Mutual Funds
Management 6) Insurance Companies
6) Credit Rating Primary Secondary 7) Others
Market Market Equity Debt
Financial markets are essential to promote economic efficiency.
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Banks can influence the quantity of demand deposits in the economy and the
money supply
Fractional-Reserve Banking System
Banks hold a fraction of the money deposited as reserves with Central Bank
and lend out the rest
This would enable banks repay depositors who withdraw their deposits
Central banks restrict the proportion of a bank's balance sheet that can be lent
out, and use this as a tool for controlling the money supply
When one bank loans money, that money is generally deposited into another
bank
This creates more deposits and more reserves to be lent out.
When a bank makes a loan from its reserves, the money supply increases
Fractional-Reserve Banking System
Deposit
$$$$$$
Central Bank
Bank A
Lends Reserve
$$$
$$
Reserve
Borrower 01 Deposit
$$$
Bank B Lends Borrower 02
Financial intermediaries that facilitate the movement of money
Money
Market Savings
Making Loans Deposit Account
& Investments Account
Consumer Loans
Payment Products & Services Specialized Products & Services
International Individual
Banking Retirement
Services Accounts
Electronic
Fund Transfer Check services
Systems
Trust Services Savings Bonds
Cash
Safe Deposit
Special Checks Management
Boxes
Services
INTEREST INCOME
Pays Interest
@ (X-Y)% Retains Spread
(Y%)
Pays Interest
@ X%
Deposits Money
Banks also charge fees for services like checking, overdraft protection, Safe
Custody, Safe Deposit Lockers, Depository Services . Service Charges, Loans
Processing charges.
Bank regulations are a form of government regulation
which subjects banks to certain requirements, restrictions
and guidelines, aiming to uphold the soundness and
integrity of the financial system.
Combination of the instability of
banks as well as their important
facilitating role in the economy
led to banking being thoroughly
regulated.
Credit Risk
The risk that those that owe money to the bank will
not repay.
Operational Risk
UK Bank of England
Repo Rate is the interest rate for
secured overnight or short term
financing involving the sale and
repurchase of securities. It is basically
the rate at which RBI lends to
commercials banks for meeting the
short term deficits. RBI varies Repo rate
from time to time to achieve its
monetary policy objectives. ( Currently
6.5%)
The reverse repo rate is the rate at which
the banks park surplus funds with reserve
bank, while the repo rate is the rate at
which the banks borrow from the central
bank. It is mostly done when there is
surplus liquidity in the market. ( Currently
6%)
http://www.youtube.com/watch?v=7I_k0tAn
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https://www.youtube.com/watch?v=rWcYj_hk
LP0
http://www.youtube.com/watch?v=GsxmwjQ
WiZs&feature=related