Friday, November 17, 2017

What do you mean by term deposits?

·         Fixed deposits, recurring deposits and reinvestment deposits are called as term deposits since these deposits are opened for a specific period
·         The minimum period for which the term deposit can be opened is 7 days and the maximum period is 10 years.
·         Interest is paid according to the period of deposit. Interest is decided by the respective banks only.
·         Reserve Bank of India has no control over the interest payable in term deposits by the banks

What do you mean by KYC guidelines?

·         KYC means “Know Your Customer” guidelines. According to the guidelines issued by RBI, banks insist certain documents
·         KYC as an antimoney laundering tool and the main purpose of KYC is to permit genuine public open accounts with the banks.
·         According to KYC guidelines, the bank demands address proof and identity proof from the public when they open deposit accounts with the bank.
·         For address proof copies of anyone of the following namely;  Driving licence,  Voter ID card, AATHAAR card, Passport etc. are obtained.
·         For identity proof, copies of identity cards issued by the employers, voter ID card, driving licence, AATHAAR card, PAN Card etc. are obtained by the bankers.

What do you know by demand deposits?

·         Current deposit account and savings deposit account are called as demand deposits. In the case of demand deposits, money can be deposited at any time and at the same time it can be withdrawn from the account using cheques or debit cards.
·         Current and savings accounts are collectively called as CASA accounts in the case of fully computerized bank branches.
·         Current account is opened for business purposes carrying no interest
·         Savings account is opened for the purpose of saving the personal money and it carries interest. The interest is at present decided by respective banks and RBI is not exercising any control over such rates.
·         Interest earned in savings deposit account for more than Rs. 10000.00 is taxable  according to Income Tax guidelines as at present.

How many subsidiary banks of State Bank of India are available in our country as at present?

As on 01.04.2017, there are no subsidary banks for State Bank of India]
The subsidiaries of State Bank of India were established during different period
Initially there were eight subsidiary banks for SBI as mentioned below:
- State Bank of Hyderabad
- State Bank of Mysore
- State Bank of Saurashtra
- State Bank of Bikaneer
- State Bank of Jaipur
- State Bank of Indore
- State Bank of Patiala
- State Bank of Travancore

The following subsidary banks merged with SBI earlier
- State Bank of Saurashtra
- State Bank of Indore

The following subsidiary banks merged together and they had formed as a single bank
- State Bank of Bikaneer and Jaipur

The following five subsidiary banks merged with SBI as on 01.04.2017 along with Bharathiya Mahila Bank
- State Bank of Hyderabad
- State Bank of Mysore
- State Bank of Bikaneer and Jaipur
- State Bank of Pariala
- State Bank of Travancore

As on date only SBI exists

02. Which are called as public sector banks in our country?

The commercial banks which are owned by Government of India are known as public sector banks
In the case of such banks, the government shareholding will not be less than 51 percent of the total shareholdings
The public sector banks in our country can be classified into three categories
- State Bank of India
- Nationalised banks comprising of twenty banks
- Regional Rural Banks 

What are the functions of any bank?

·     The basic function of any bank is to accept deposits from the public for the purpose of lending loans to the public and invest the amount in securities.

·         Acceptance of deposits and lending loans are called as the primary functions of any bank
·         The secondary functions at present are – selling gold coins, insurance products and mutual fund products. Apart from the above  the banks open demat accounts and undertake remittance services namely; issue of demand drafts, online remittance facilities  like RTGS and NEFT etc., 

·    The banks also provide safe deposit locker facilities and safe custody services to the customer 

Nowadays on account of introduction of core banking solution in commercial banks in India, a large number of secondary functions are carried out by the banks in India
The following are some examples:
Real time gross settlement
National electronic funds transfer
RTGS and NEFT are online remittance facilities and a customer can send money from his account with one branch of one bank to the account of another person with another branch of the same bank or some other bank.

Thursday, November 16, 2017

What do you mean by an actionable claim?

.ACTIONABLE CLAIM: It means a claim to any debt other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

02. ACTUARY: An employee of an insurance company or similar institution who is qualified and deals with life expectancy, and the average proportion of losses by time and other accidents.

03. ADVERSE SELECTION: It refers to situations, typically in credit market, in which higher rates of interest, the relatively safer borrowers drop out of the credit market and borrowers with higher risks undertake investment activity leading to deterioration of the quality of the bank’s portfolios.

04. ADJUSTABLE PEG: An exchange rate system where a country’s exchange rate is “pegged” in relation to another currency. The official rate may be changed from time to time.

05. AMERICAN OPTION: An option which may be exercised at any valid business date through out the life of the option.

06. ANTE DATE: The placing of the date on a document prior to that on which it is signed. A bill of exchange/cheque is not invalid by reason of it being ante dated.

07. ANNUITY: A payment made by an Insurance company to a person who has paid in a lump sum or has in some other way purchased an annuity so that he/she may receive at regular intervals a sum of money.

08. APPROPRIATION BILL: It is presented to Parliament for approval, so that the government can withdraw from the Consolidated Fund the amounts required for meeting the expenditure charged on the Consolidated Fund. No amount can be withdrawn from the Consolidated Fund till the appropriation bill is voted and enacted.
09. ARBITRAGE: A risk-free type of trading where the same instrument is bought and sold simultaneously in two different markets in order to cash in on the difference in these markets.

10. ASK PRICE: It is the lowest price acceptable to the buyer

11. AT BEST: An instruction given to a dealer to buy or sell at the best rate that is currently available in the market

12. AT CALL: This describes a deposit by a bank or financial institution with the money market (discount house) on condition that the funds are repayable on demand.

13. AT PAR FORWARD SPREAD: When the forward price is equivalent to the spot price

14. AT THE PRICE STOP-LOSS ORDER: A stop loss order that must be executed at the requested level regardless of market conditions

15. AVERAGE RATE OPTION: A contract where the exercise price is based on the difference between the strike price and the average spot rate over the contract period. Sometimes called an “Asian Option”

16. BACK END LOAD: A fee charged by a Mutual Fund from the unitholders at the time of redemption of units

17. BALANCE OF PAYMENTS: The balance of all financial exchanges between one country and the rest of the world, made up of visible and invisible trade (the current account) and capital movements (capital account)

18. BALANCE OF TRADE: The balance of trade is the difference between the value of a nation’s exports (goods sold) and the value of its imports (goods purchased). It is an important component of the balance of payment.

19. BANKEX: An index comprising of key banking stocks on Bombay Stock Exchange – BSE

20. BARTER: The exchange of goods for goods; to give (anything but money) in exchange for some other commodity. It is a characteristic of a primitive community, but today barter is accepted on an international scale to facilitate trading with countries of Eastern block and others which are short of hard, convertible currencies.

21. BEAR: A person who believes that prices will decline

22. BEAR MARKET: A market in which prices decline sharply against a background of widespread pessimism (opposite to bull market)

23. BANK GIRO: It is merely a name given for the transfer of credits between banks. It covers the transfers of such items as Hire Purchase Debts, rent payments, etc. Such items are passed through the credit clearing system and balance are settled between banks in the usual way.

24. BENEFICIAL OWNER: A person entitled to the benefits of any property of which the legal title rests with a trustee

25. BID PRICE: Bid is the highest price that the seller is offering for the particular currency at the moment; the difference between the ask and the bid price is the spread. Together, the two prices constitute a quotation; the difference between the two is the spread. The bid-ask spread is stated as a percentage cost of transacting in the foreign currency.

26. BLUE CHIP: Originally “blue chip” was a gambling term, chips with the highest value being coloured blue. Over the years, however, the term has been acceptedas denoting the ordinary shares of the highest class of company.

27. BREAKEVEN ANALYSIS: The presentation of information either by a chart or statement of figures showing the management at what point the amount or volume of sales need to be in order to equal the sum of fixed and variable costs. That is the point where neither a loss nor a profit is made on trading.

28. BTQ: It is the maximum entitlement in cash and travellers’cheques that is allowed to be taken to a foreign country

29. BULL: A speculator on the Stock Exchange who anticipates a rise in the value of a certain security and therefore buys such stocks, not intending to pay for the purchase, but hoping to sell them later, at a profit, before the settlement date.

30. CALL: It is an option that gives the holder the right to buy the underlying instrument at a specified price during a fixed period.