Money and Banking
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What are the main functions of Reserve Bank of India
Reserve Bank of India (RBI) is the supreme monetary authority of India. This organization is responsible for printing of currency notes and managing the supply of money in the Indian economy. RBI works as a custodian of foreign reserve, banker’s bank, banker to the government of India and controller of credit.
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What is the Meaning and Purposes of Deficit Financing?
When the revenue of the government is shorter than its expenditure then this situation is dealt by printing more currency, buying from public and foreign institution. This temporary arrangement of the money is known as the deficit financing.
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The Monetary Policy Committee (MPC): Composition and Objectives
The 6 member Monetary Policy Committee (MPC) constituted by the Central Government as per the Section 45ZB of the amended RBI Act, 1934. The first meeting of the MPC was held on October 3 and 4, 2016. This committee decides various policy rates like Repo rate, Reverse repo rate, MSF and Liquidity Adjustment Facility etc.
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Why Rupee is falling against Dollar currently?
At the time of India's independence, the value of one dollar was equal to one rupee but in the June 2018, the value of Indian rupee against the US dollar has reached its lowest level at Rs.72.51 per dollar. In this article, we explained the reasons behind the depreciation of Indian Rupee in the current months.
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What is RBI's Monetary Policy: Objectives & Instruments
The monetary policy refers to a regulatory policy whereby the central bank (RBI in case of India) maintains its control over the supply of money to achieve the general economic goals. Reserve Bank of India (RBI) is the sole authority which prints and supplies the currency in the whole country. Coins are minted by the ministry of Finance but supplied by the RBI. Main instruments of the monetary policy are: Cash Reserve Ratio, Statutory Liquidity Ratio, Bank Rate, Repo Rate, Reverse Repo Rate, and Open Market Operations.
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Structure of Banking Sector in India
Reserve Bank of India is the Central Bank of our country. It was established on 1st April 1935 under the RBI Act of 1934. It holds the apex position in the banking structure. RBI performs various developmental and promotional functions. As of now 26 public sector banks in India out of which 21 are Nationalised banks and 5 are State Bank of India and its associate banks. There are total 92 commercial banks in India. Public sector banks hold near about 75% of the total bank deposits in India.
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Microfinance Institutions in India:Salient Features
Reserve bank of India defines NBFC-MFI as a non-deposit taking NBFC (other than a company licensed under Section 25 of the Indian Companies Act, 1956) with Minimum Net Owned Funds of Rs.5 crore (for NBFC-MFIs registered in the North Eastern Region of the country, it will be Rs. 2 crore) and having not less than 85% of its net assets as “qualifying assets”. Ultimate goal of microfinance is to give low income people an opportunity to become self-sufficient by providing a means of saving money, borrowing money and insurance.
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Classification and Operations of Commercial Banks in India
Government banks (at present 20) form a prominent part of the country’s Financial Institution System. Commercial Banks are those profit making institutions which accept deposits from general public and gives money (loan) to individuals like household, entrepreneurs, businessmen etc. The prime objective of these banks is to earn profit in the form of interest, commission etc. The operations of all these commercial banks are regulated by the Reserve Bank of India, which is the central bank and supreme financial authority in India.
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All about Goods and Services Tax (GST)
GST stands for Goods and services tax. It’s an indirect tax, imposed on the sale of goods and services. In India, GST model will be dual GST, having both central and state GST. All the services except a few will be brought into GST base. There will be no distinction between goods and services for the purpose of taxation. GST will be a destination-based tax. This implies that all State GST collected will ordinarily accrue to the State where the consumer of the goods or services sold resides.
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Money Supply and Inflation
Supplying the money in the market is the sole responsibility of the central bank of the country (Reserve Bank of India in case of India). RBI prints the currency and supplies money in the economy. Coins are minted by the Ministry of Finance but circulated by the RBI in the whole country. Supply of money decides the rate of inflation in the economy. If supply of money increases in the economy then inflation starts rising and vice versa.
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Public Debt and Deficit Financing
India's external debt stock stood at US$ 475.8 billion at end-March 2015 as against US$ 446.3 billion at end-March 2014. Notwithstanding the increasing external debt stock during 2014-15, crucial debt indicators such as external debt-GDP ratio and debt service ratio remained in the comfort zone. External debt of the country continues to be dominated by the long term borrowings. Government arranges money from deficit financing (borrowing from general public, printing new currency and borrowing from external sources) if its expenditure exceeds revenue.
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Basel III Norms in India: Meaning, Requirement and Impacts on Indian Banking system
Basel III or Basel 3 released in December, 2010 is the third in the series of Basel Accords. These accords deal with risk management aspects for the banking sector. These Norms to be partially implemented from March 31, 2015 in phases and would be fully implemented as on March 31, 2018.
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Can Indian Government repay the External Debt by Printing New Currency?
Indian government had debt of 529 billion dollar by March 2018 which further reduced to 510.4 billion dollar in December 2018. Now the question arises whether the government of India can print more money to repay this debt or not? Let’s read this article and know the all consequences of printing more money.
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Cess: Meaning and Types in India
CESS is tax on tax and usually levied for the specific purposes. Once its purpose is solved they are stopped. Unlike the other taxes that have to be shared with other Indian states, the centre keeps the entire amount raised from the Cess. The collection through the CESS is kept in the Consolidated Fund of India. As of now there are 6 types of Cess imposed in India.
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List of Governors of Reserve Bank of India
Since its establishment in 1935, by the British colonial government, 25 people have worked as the governor of the Reserve Bank of India. The first Governor of the Reserve Bank of India was British banker Osborn Smith, while C.D. Deshmukh was the first Indian Governor of Reserve Bank of India. At present, the Governor of Reserve Bank of India is Shashikant Das, who took charge on 12 Dec. 2018.
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What is Chit Fund and how does it work?
Chit fund is defined as per the Section 2(b) of the Chit Fund Act, 1982. According to this act; A chit fund is a type of rotating savings and agreement among different persons i.e. friends, relatives, neighbours and family members to subscribe a certain sum of money for a specified period of time. Chit funds are often microfinance organizations. Chit Funds are also known as the Chitty, Kuree, chit.
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6 Amazing Questions on Indian Budget You Never Knew
The Union Budget of India, which is known also as the ‘Annual financial statement’ in the Article 112 of the Indian Constitution. The first Union budget of independent India was presented by R. K. Shanmukham Chetty on November 26, 1947. Former Prime Minister Manmohan Singh and former finance minister Yashwant Sinha are the only two leaders who presented the Union Budget of India 5 times consecutively.
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Union Budget of India: Definition and different types
‘Budget’ is a systematic list of items of revenue and expenditure of the government of a defined duration or we can say it’s a plan for the income and expenditure of the government for the present, past and future financial years.
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What is the significance of the images on the reverse side of Indian Currencies?
There will hardly be a country in the world that does not have its own currency. Almost every country puts image of important person/monuments on its currency notes. India is also not behind in this practice. Indian currency note have images of Mahatma Gandhi, the Red Fort, the Sanchi Stupa, farmers, tiger and elephants etc.
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What are the main Security Features of the Currency Notes of India?
An estimation done by the RBI says that the number of the counterfeit notes in the FY 2017 has increased by 20% and the number reached up to 7.62 lac. The maximum numbers of fake notes were in the denomination of 500 and 2000 rupees. To aware the general public we are publishing some security features of the currency notes so that, fake notes can be detected by the general public.
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