. What is a Repo Rate?

A: Repo rate is the rate at which our banks borrow rupees from RBI. Whenever the banks have any

shortage of funds they can borrow it from RBI. A reduction in the repo rate will help banks to get money at

a cheaper rate. When the repo rate increases, borrowing from RBI becomes more expensive.

2. What is Reverse Repo Rate?

A: This is exact opposite of Repo rate. Reverse Repo rate is the rate at which Reserve Bank of India (RBI)

borrows money from banks. RBI uses this tool when it feels there is too much money floating in the

banking system. Banks are always happy to lend money to RBI since their money is in safe hands with a

good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to

this attractive interest rates.

3. What is CRR Rate?

A: Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI

decides to increase the percent of this, the available amount with the banks comes down. RBI is using this

method (increase of CRR rate), to drain out the excessive money from the banks.

4. What is SLR Rate?

A: SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash,

or gold or govt. approved securities (Bonds) before providing credit to its customers.

SLR rate is determined and maintained by the RBI (Reserve Bank of India) in order to control the

expansion of bank credit. SLR is determined as the percentage of total demand and percentage of time

liabilities. Time Liabilities are the liabilities a commercial bank liable to pay to the customers on their

anytime demand. SLR is used to control inflation and propel growth. Through SLR rate tuning the money

supply in the system can be controlled efficiently.

5. What is Bank Rate?

A: Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the

loans and advances that it extends to commercial banks and other financial intermediaries. Changes in the

bank rate are often used by central banks to control the money supply.

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6. What is Inflation?

A: Inflation is as an increase in the price of bunch of Goods and services that projects the Indian economy.

An increase in inflation figures occurs when there is an increase in the average level of prices in

Goods and services. Inflation happens when there are fewer Goods and more buyers; this will result in

increase in the price of Goods, since there is more demand and less supply of the goods.

7. What is Deflation?

A: Deflation is the continuous decrease in prices of goods and services. Deflation occurs when the inflation

rate becomes negative (below zero) and stays there for a longer period.

8. What is PLR?

A: The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers

(usually the most prominent and stable business customers). The rate is almost always the same amongst

major banks. Adjustments to the prime rate are made by banks at the same time; although, the prime rate

does not adjust on any regular basis. The Prime Rate is usually adjusted at the same time and in correlation

to the adjustments of the Fed Funds Rate. The rates reported below are based upon the prime rates on the

first day of each respective month. Some banks use the name "Reference Rate" or "Base Lending Rate"

to refer to their Prime Lending Rate.

9. What is Deposit Rate?

A: Interest Rates paid by a depository institution on the cash on deposit.

10. What is FII?

A: FII (Foreign Institutional Investor) used to denote an investor, mostly in the form of an institution. An

institution established outside India, which proposes to invest in Indian market, in other words buying

Indian stocks. FII's generally buy in large volumes which has an impact on the stock markets. Institutional

Investors includes pension funds, mutual funds, Insurance Companies, Banks, etc.

11. What is FDI?

A: FDI (Foreign Direct Investment) occurs with the purchase of the “physical assets or a significant amount

of ownership (stock) of a company in another country in order to gain a measure of management control”

(Or) A foreign company having a stake in a Indian Company. Maurises

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12. What is IPO?

A: IPO is Initial Public Offering. This is the first offering of shares to the general public from a company

wishes to list on the stock exchanges.

13. What is Disinvestment?

A: The Selling of the government stake in public sector undertakings.

14. What is Fiscal Deficit?

A: It is the difference between the government’s total receipts (excluding borrowings) and total

expenditure. Fiscal deficit in 2010-11 is proposed at 6.9% of GDP.

15. What is Revenue deficit?

A: It defines that, where the net amount received (by taxes & other forms) fails to meet the predicted net

amount to be received by the government. Revenue deficit in 2009-10 deficit of 5.5 per cent of GDP in

2010-1116.

What is GDP?

A: The Gross Domestic Product or GDP is a measure of all of the services and goods produced in a country

over a specific period; classically a year. GDP during 2009-10 is 8%.

17. What is GNP? $3.76 Trillion

A: Gross National Product is measured as GDP plus income of residents from investments made abroad

minus income earned by foreigners in domestic market.

GNP=GDP+INCOME MADE IN FOREIGN-INCOME BY FOREIGNER

18. What is National Income?

A: National Income is the money value of all goods and services produced in a country during the year.

19. What is Per Capita Income?

A: The national income of a country, or region, divided by its population. Per capita income is often used to

measure a country's standard of living. Per capita income during 2009-10 estimated by CSO:.RS.46492

#20. What is Vote on Account?

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 A: A vote-on account is basically a statement ,where the government presents an estimate of a sum required

to meet the expenditure that it incurs during the first three to four months of an election financial year until

a new government is in place, to keep the machinery running.

#21. Difference between Vote on Account and Interim Budget?

A: Vote-on-account deals only with the expenditure side of the government's budget, an interim Budget is a

complete set of accounts, including both expenditure and receipts.

22. What is SDR?

A: The SDR (Special Drawing Rights) is an artificial currency created by the IMF in 1969. SDRs are

allocated to member countries and can be fully converted into international currencies so they serve as a

supplement to the official foreign reserves of member countries. Its value is based on a basket of key

international currencies (U.S. dollar, euro, yen and pound sterling).

23. What is SEZ?

A: SEZ means Special Economic Zone is the one of the part of government’s policies in India. A special

Economic zone is a geographical region that economic laws which are more liberal than the usual

economic laws in the country. The basic motto behind this is to increase foreign investment,

development of infrastructure, job opportunities and increase the income level of the people.

What is corporate governance?

The way in which a company is governed and how it deals with the various interests of its

customers,shareholders,employees and society at large. Corporate governance is the set of processes,

customs, policies, laws, and institutions affecting the way a corporation (or company) is directed,

administered or controlled. Is defined as the general set of customs, regulations, habits, and laws that

determine to what end a firm should be run.

• Functions of RBI?

The Reserve Bank of India is the central bank of India, was established on April 1, 1935 in accordance with

the provisions of the Reserve Bank of India Act, 1934. The Reserve Bank of India was set up on the

recommendations of the Hilton Young Commission. The commission submitted its report in the year

1926, though the bank was not set up for nine years. To regulate the issue of Bank Notes and keeping of

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 reserves with a view to securing monetary stability in India and generally to operate the currency and

credit system of the country to its advantage." Banker to the Government: performs merchant banking

function for the central and the state governments; also acts as their banker. Banker to banks: maintains

banking accounts of all scheduled banks.

• What is monetary policy?

A Monetary policy is the process by which the government, central bank, of a country controls (i) the

supply of money, (ii) availability of money, and (iii) cost of money or rate of interest, in order to attain a set

of objectives oriented towards the growth and stability of the economy. SAC (SUPPLY, Availability,

Cost)

• What is Fiscal Policy?

Fiscal policy is the use of government spending and revenue collection to influence the economy.

These policies affect tax rates, interest rates and government spending, in an effort to control the

economy. Fiscal policy is an additional method to determine public revenue and public expenditure.

∼• What is Core Banking Solutions?

Core banking is the heart of banking. Core banking is a general term used to describe the services

provided by a group of networked bank branches. Bank customers may access their funds and other

simple transactions from any of the member branch offices. It will cut down time, working simultaneously

on different issues and increasing efficiency. The platform where communication technology and

information technology are merged to suit core needs of banking is known as Core Banking Solutions.

• What is bank and its features and types?

A bank is a financial organization that accepts deposits and channels those deposits into lending activities,

either directly or through capital markets. A bank connects customers with capital deficits to customers

with capital surpluses. Banks play an important role in the financial system and the economy. As a key

component of the financial system, banks allocate funds from savers to borrowers in an efficient manner.

ii. Banking services for individual customers is known as retail banking.

iii. A bank that deals mostly in but international finance, long-term loans for

companies and underwriting. Merchant banks do not provide regular banking

services to the general public

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 iv. Online banking (or Internet banking) allows customers to conduct financial

transactions on a secure website operated by their retail or virtual bank.

v. Mobile Banking is a service that allows you to do banking transactions on your

mobile phone without making a call , using the SMS facility. Is a term used for

performing balance checks, account transactions, payments etc. via a mobile

device such as a mobile phone.

vi. Traditional banking is the normal bank accounts we have. Like, put your money in the bank and they

act as a security and you will get only the normal interests (decided by RBI in our case, FED bank in US).

vii. Investment banking is entirely different. Here, people who are having so much money (money in

excess which will yield only less interest if in Banks) will invest their money and get higher returns. For

example, If i have more money instead of taking the pain of investing in share market, buying properties

etc. I will give to investment banks and they will do the money management and give me higher returns

when compared to traditional banks.

• What is E-Governance?

E-Governance is the public sector’s use of information and communication technologies with the aim

of improving information and service delivery, encouraging citizen participation in the decision-making

process and making government more accountable, transparent and effective.

• What is Right to information Act?

The Right to Information act is a law enacted by the Parliament of India giving citizens of India access to

records of the Central Government and State Governments. The Act applies to all States and Union

Territories of India, except the State of Jammu and Kashmir - which is covered under a State-level law.

This law was passed by Parliament on 15 June 2005 and came fully into force on 13 October 2005.

• Credit Rating Agencies in India?

The credit rating agencies in India mainly include ICRA and CRISIL. ICRA was formerly referred to the

Investment Information and Credit Rating Agency of India Limited. Their main function is to grade

the different sector and companies in terms of performance and offer solutions for up gradation. The

credit rating agencies in India mainly include ICRA and CRISIL(Credit Rating Information Services of

India Limited)

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• What is Cheque?

Cheque is a negotiable instrument instructing a Bank to pay a specific amount from a specified account

held in the maker/depositor's name with that Bank.A bill of exchange drawn on a specified banker and

payable on demand.“Written order directing a bank to pay money”.

• What is demand Draft?

A demand draft is an instrument used for effecting transfer of money. It is a Negotiable Instrument. Cheque

and Demand-Draft both are used for Transfer of money. You can 100% trust a DD. It is a banker's

check. A check may be dishonored for lack of funds a DD can not. Cheque is written by an individual and

Demand draft is issued by a bank. People believe banks more than individuals.

• What is a NBFC?

A non-banking financial company (NBFC) is a company registered under the

Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of

shares/stock/bonds/debentures/securities issued by government, but does not include any institution whose

principal business is that of agriculture activity, industrial activity, sale/purchase/construction of

immovable property.

NBFCs are doing functions akin to that of banks; however there are a few differences:

(i)A NBFC cannot accept demand deposits (demand deposits are funds deposited at a depository

institution that are payable on demand -- immediately or within a very short period -- like your current or

savings accounts.)

(ii) it is not a part of the payment and settlement system and as such cannot issue cheques to its

customers; and

(iii) Deposit insurance facility of DICGC is not available for NBFC depositors unlike in case of banks.

• Diff between banking & Finance?

Finance is generally related to all types of financial, this could be accounting, insurances and policies.

Whereas banking is everything that happens in a bank only.The term Banking and Finance are two very

different terms but are often associated together. These two terms are often used to denote services that a

bank and other financial institutions provide to its customers.

#• What is NASSCOM ?

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 The National Association of Software and Services Companies (NASSCOM), the Indian chamber of

commerce is a consortium that serves as an interface to the Indian software industry and Indian BPO

industry. Maintaining close interaction with the Government of India in formulating National IT policies

with specific focus on IT software and services maintaining a state of the art information database of IT

software and services related activities for use of both the software developers as well as interested

companies overseas. Mr. Som Mittal – President. Chairman-Pramod Bhasin

#• What is ASSOCHAM?

The Associated Chambers of Commerce and Industry of India (ASSOCHAM), India's premier apex

chamber covers a membership of over 2 lakh companies and professionals across the country. It was

established in 1920 by promoter chambers, representing all regions of India. As an apex industry body,

ASSOCHAM represents the interests of industry and trade, interfaces with Government on policy issues

and interacts with counterpart international organizations to promote bilateral economic issues. President-

Swati Piramal

• What is NABARD?

NABARD was established by an act of Parliament on 12 July 1982 to implement the National Bank for

Agriculture and Rural Development Act 1981. NABARD is set up as an apex Development Bank with a

mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries,

cottage and village industries, handicrafts and other rural crafts.

• What is SIDBI?

The Small Industries Development Bank of India is a state-run bank aimed to aid the growth and

development of micro, small and medium scale industries in India. Set up in 1990 through an act of

parliament, it was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of

India.

• What is SENSEX and NIFTY?

SENSEX is the short term for the words "Sensitive Index" and is associated with the Bombay (Mumbai)

Stock Exchange (BSE). The SENSEX was first formed +on 1-1-1986 and used the market capitalization

of the 30 most traded stocks of BSE. Where as NSE has 50 most traded stocks of NSE.SENSEX IS THE

INDEX OF BSE. AND NIFTY IS THE INDEX OF NSE.BOTH WILL SHOW DAILY TRADING

8
 MARKS. Sensex and Nifty both are an "index”. An index is basically an indicator it indicates whether most

of the stocks have gone up or most of the stocks have gone down.

• What is SEBI?

SEBI is the regulator for the Securities Market in India. Originally set up by the

Government of India in 1988, it acquired statutory form in 1992 with SEBI Act 1992 being passed by the

Indian Parliament. Chaired by C B Bhave.

• What is Mutual funds?

Mutual funds are investment companies that pool money from investors at large and offer to sell and buy

back its shares on a continuous basis and use the capital thus raised to invest in securities of different

companies. The mutual fund will have a fund manager that trades the pooled money on a regular basis.

The net proceeds or losses are then typically distributed to the investors annually.

• What is Asset Management Companies?

A company that invests its clients' pooled fund into securities that match its declared financial

objectives. Asset management companies provide investors with more diversification and investing options

than they would have by themselves. Mutual funds, hedge funds and pension plans are all run by asset

management companies. These companies earn income by charging service fees to their clients.

• What are non-perfoming assets?

Non-performing assets, also called non-performing loans, are loans,made by a bank or finance company, on

which repayments or interest payments are not being made on time.. The nonperforming asset is therefore

not yielding any income to the lender in the form of principal and interest payments.

• What is Recession?

A recession is a business cycle contraction, a general slowdown in economic activity. A true economic

recession can only be confirmed if GDP (Gross Domestic Product) growth is negative for a period of two

or more consecutive quarters.

• What is foreign exchange reservers?

9
 Foreign exchange reserves (also called Forex reserves) are only the foreign currency deposits and bonds

held by central banks and monetary authorities.However, the term in popular usage commonly includes

foreign exchange and gold, SDRs and IMF reserve positions.

• Special Drawing Rights (SDRs) are international foreign exchange reserve assets.[1] Allocated to
nations by the International Monetary Fund (IMF), a SDR represents a claim to foreign
currencies for which it may be exchanged in times of need.[1].Today, the US Dollar is the world's
primary foreign exchange reserve asset, Some nations, notably China and Russia (as well as the
UN[2]), favour increasing the substance and function of the SDR.[6][7]

What is an Open Market operation (OMO)?

The buying and selling of government securities in the open market in order to expand or contract the

amount of money in the banking system by RBI. Open market operations are the principal tools of

monetary policy.

• What is Micro Credit?

It is a term used to extend small loans to very poor people for self-employment projects that generate

income, allowing them to care for themselves and their families.

• What is Liquidity Adjustment Facility (LAF)?

A tool used in monetary policy that allows banks to borrow money through repurchase agreements.

This arrangement allows banks to respond to liquidity pressures and is used by governments to assure basic

stability in the financial markets.

What is RTGS System?

The acronym 'RTGS' stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism

where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis. This is

the fastest possible money transfer system through the banking channel. Settlement in 'real time' means

payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are

processed. 'Gross settlement' means the transaction is settled on one to one basis without bunching with

any other transaction.

• What is Bancassurance?

It is the term used to describe the partnership or relationship between a bank and an insurance company

whereby the insurance company uses the bank sales channel in order to sell insurance products.

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• What is Wholesale Price Index (WPI)?

The Wholesale Price Index (WPI) is the index used to measure the changes in the average price level of

goods traded in wholesale market. A total of 435 commodity prices make up the index. It is available on a

weekly basis. It is generally taken as an indicator of the inflation rate in the Indian economy.

The Indian Wholesale Price Index (WPI) was first published in 1902, and was used by policy makers until

it was replaced by the Producer Price Index (PPI) in 1978.

• What is Consumer price Index(CPI)?

It is a measure estimating the average price of consumer goods and services purchased by households.

• What is Venture Capital?

Venture capital is money provided by an outside investor to finance a new, growing, or troubled

business. The venture capitalist provides the funding knowing that there’s a significant risk associated

with the company’s future profits and cash flow. Capital is invested in exchange for an equity stake in

the business rather than given as a loan, and the investor hopes the investment will yield a better-than-

average return.

• What is a Treasury Bills?

Treasury Bills (T-Bills) are short term, Rupee denominated obligations issued by the Reserve Bank of

India (RBI) on behalf of the Government of India. They are thus useful in managing short-term liquidity.

At present, the Government of India issues three types of treasury bills through auctions, namely, 91-day,

182-day and 364-day. There are no treasury bills issued by State Governments.

• What is Banking Ombudsmen Scheme?

The Banking Ombudsman, promoted by Reserve Bank of India (RBI) provides speedy solutions to the

grievances faced by the customers from various banks. It addresses grievances by way of its legal

framework and redressal is done accordingly. It is set up specifically for handling grievances related to

banking services and related matters under its purview.

The Banking Ombudsman Scheme enables an expeditious (speedy) and inexpensive forum to bank

customers for resolution of complaints relating to certain services rendered by banks.

The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer

complaints against deficiency in certain banking services.

11
 The Banking Ombudsman Scheme was first introduced in India in 1995, and was revised in 2002. The

current scheme became operative from the 1 January 2006, and replaced and superseded the banking

Ombudsman Scheme 2002.

• What is Subsidy?

A subsidy is a form of financial assistance paid to a business or economic sector. Most subsidies are made

by the government to producers or distributors in an industry to prevent the decline of that industry or to

encourage it

• What is a Debenture? How many types of debentures are there? What are they?

A debenture is basically an unsecured loan to a corporation. Debentures are backed only by the

general creditworthiness and reputation of the issuer.

i)Convertible Debentures: Any type of debenture that can be converted into some other security or it can be

converted into stock..

ii)Non-Convertibility Debentures(NCB): Non Convertible Debentures are those that cannot be converted

into equity shares of the issuing company, as opposed to Convertible debentures. Non-convertible

debentures normally earn a higher interest rate than convertible debentures do.

• What is a hedge fund?

‘Hedge’ means to reduce financial risk.

A hedge fund is an investment fund open to a limited range of investors and requires a very

large initial minimum investment. It is important to note that hedging is actually the practice of

attempting to reduce risk, but the goal of most hedge funds is to maximize return on investment.

• What is FCCB?

A Foreign Currency Convertible Bond (FCCB) is a type of convertible bond issued in a currency

different than the issuer’s domestic currency. In other words, the money being raised by the issuing

company is in the form of a foreign currency. A company may issue an FCCB if it intends to make a

large investment in a country using that foreign currency.

#• What is Capital Account Convertibility (CAC)?

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 It is the freedom to convert local financial assets into foreign financial assets and vice versa at market

determined rates of exchange. This means that capital account convertibility allows anyone to freely move

from local currency into foreign currency and back.

The Reserve Bank of India has appointed a committee to set out the framework for fuller Capital Account

Convertibility.

Capital account convertibility is considered to be one of the major features of a developed economy.

It helps attract foreign investment. capital account convertibility makes it easier for domestic companies to

tap foreign markets.

#• What is Current Account Convertibility?

It defines at one can import and export goods or receive or make payments for services rendered. However,

investments and borrowings are restricted.

• What is Arbitrage?

The opportunity to buy an asset at a low price then immediately selling it on a different market for a
higher price. The method on the stock exchange of buying something in one place and selling it
in another place at the same time in order to make a profit from the difference in price in the
two places

• What is Capitalism?

Capitalism as an economy is based on a democratic political ideology and produces a free market economy,

where businesses are privately owned and operated for profit; in capitalism, all of the capital investments

and decisions about production, distribution, and the prices of goods, services, and labor, are determined in

the free market and affected by the forces of supply and demand.

• What is Socialism?

Socialism as an economy is based on a collectivist type of political ideology and involves the running of

businesses to benefit the common good of a vast majority of people rather than of a small upper class

segment of society.

What is Open Market operations(OMO)?

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 The buying and selling of government securities in the open market in order to expand or contract the

amount of money in the banking system by RBI. Open market operations are the principal tools of

monetary policy.

• What is Micro Credit?

It is a term used to extend small loans to very poor people for self-employment projects that generate

income, allowing them to care for themselves and their families.

CORE BANKING SOLUTIONS

Core Banking Solutions (CBS) or Centralised Banking Solutions is the process which is

completed in a centralized environment i.e. under which the information relating to the

customer’s account is stored in the Central Server of the bank instead of the branch server. Advantages:

The CBS process is advantageous both to the customers and the banks in the

following manner:

Customer:

• Transaction of business from any branch, ATM that offers him anytime anywhere banking facility.

• Lower incidence of errors. Hence accuracy in transactions.

• Better funds management due to immediate availability of funds.

Banks:

• Standardisation of process within the bank.

• Better customer service leading to retention of customer and increased customer traffic.

• Availability of accurate data & Better use of available infrastructure

• Better MIS and reporting to external agencies such as Govt., RBI etc.

• Increased business volume with better asset liability management and risk management.

** Customer Relationship Management (CRM) refers to the ability to understand, anticipate and manage

the needs of the customer, interaction and relationship resulting in increased profitabilitythrough revenue

and margin growth and operational efficiencies. eCRM can address otherfactors like personalisation,

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customization, one to many and many to many transactions. It permit business speed, agility and real time

response to customers or markets through the new

tools such as eMail, internet telephony, chat facility etc. It reduces the cost of customer contract.

1.What is Balance of Trade?

The value of a country’s exports minus the value of its imports. Unless specified as the balance of
merchandise trade, it normally incorporates trade in services, including earnings (interest, dividends, etc.)
on financial assets.

2. What is Balanced Trade?

When A balance of trade equal to zero. (exports-imports=0)

3. What is Balance of merchandise trade?

The value of a country’s merchandise exports minus the value of its merchandise imports.

4. What is a favorable balance of trade?

It is the difference between exports and imports. Debit items include imports, foreign aid, domestic
spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the
domestic economy and foreign investments in the domestic economy. A country has a trade deficit if it
imports more than it exports; the opposite scenario is a trade surplus.

5. What is Balance of Payments?

A list, or accounting, of all of a country’s international transactions for a given time period, usually one
year. Payments into the country (receipts) are entered as positive numbers, called credits; payments out of
the country (payments) are entered as negative numbers called debits. A single number summarizing all
of a country’s international transactions: the balance of payments surplus.

6. What is Balance of payments adjustment mechanism?

Any process, especially any automatic one, by which a country with a payments imbalance moves toward
balance of payments equilibrium

7. What is Monopolistic Competition?

A market structure in which there are many sellers each producing a differentiated product. Each can set its
own price and quantity, but is too small for that to matter for prices and quantities of other producers in the
industry.

8. What is MFN?
MFN stands for Most Favoured Nation. The principle, fundamental to the GATT, of treating imports from
a country on the same basis as that given to the most favored other nation. That is, and with some
exceptions, every country gets the lowest tariff that any country gets, and reductions in tariffs to one
country are provided also to others.

9 What is Gold Standard?

A monetary system in which both the value of a unit of the currency and the quantity of it in circulation are
specified in terms of gold. If two currencies are both on the gold standard, then the exchange rate between
them is approximately determined by their two prices in terms of gold.

10. What is Balance on capital account?

15
A country’s receipts minus payments for capital account transactions.

11. What is Balance on current account ?

A country’s receipts minus payments for current account transactions. Equals the balance of trade plus
net inflows of transfer payments.

12. What is a Balanced budget?

A government budget surplus that is zero, thus with net tax revenue equaling expenditure. A balanced
budget change in policy or behavior is one in which a component of the government budget, usually taxes,
is adjusted as necessary to maintain a balanced budget.

13. What is balanced growth of an Economy?

Growth of an economy in which all aspects of it, especially factors of production, grow at the same rate.

15. What is a Repo?

Repo is “Repurchase Agreement. An agreement to sell a security for a specified price and to buy it back
later at another specified price. A repo is essentially a secured loan.

16. What is Repo Rate?

Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which
our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get money at a cheaper
rate. When the repo rate increases borrowing from RBI becomes more expensive.
17. What is CRR Rate in India?
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to
increase the percent of this, the available amount with the banks comes down. RBI is using this method
(increase of CRR rate), to drain out the excessive money from the banks.
20. How is SLR determined?
SLR is determined as the percentage of total demand and percentage of time liabilities. Time Liabilities are
the liabilities a commercial bank liable to pay to the customers on their anytime demand. .
21. What is the Need of SLR?
With the SLR (Statutory Liquidity Ratio), the RBI can ensure the solvency a commercial bank. It is also
helpful to control the expansion of Bank Credits. By changing the SLR rates, RBI can increase or decrease
bank credit expansion. Also through SLR, RBI compels the commercial banks to invest in government
securities like government bonds..

22. What is the main use of SLR?

SLR is used to control inflation and propel growth. Through SLR rate tuning the money supply in the
system can be controlled efficiently.

23. What is Inflation in India?

Increase in the overall price level of an economy, usually as measured by the CPI /WPI or by the implicit
price deflator. Inflation is as an increase in the price of bunch of Goods and services that projects the Indian
economy. An increase in inflation figures occurs when there is an increase in the average level of prices in
Goods and services. Inflation happens when there are less Goods and more buyers, this will result in
increase in the price of Goods, since there is more demand and less supply of the goods..

24. What is Deflation?

A fall in the general level of prices. Unlikely unless the rate of inflation is already low, it may then be due
either to a surge in productivity or, less favorably, to a recession. Deflation is the continuous decrease
in prices of goods and services. Deflation occurs when the inflation rate becomes negative (below zero) and
stays there for a longer period.

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25. What is a Barter economy?
An economic model of international trade in which goods are exchanged for goods without the existence of
money. Most theoretical trade models take this form in order to abstract from macroeconomic and
monetary considerations.

26. What is Basel I?

Also known at Basel Capital Accord, this was an agreement in 1988 by the Basel Committee of central
bankers to measure the credit risk of commercial banks and set minimum standards for bank capital in
order to reduce the likelihood of international repercussions (BAD EFFECT)due to bank failures.

27.What is Basel II?

The Basel II Framework describes a more comprehensive measure and minimum standard for capital
adequacy that national supervisory authorities are now working to implement through domestic rule-
making and adoption procedures. It seeks to improve on the existing rules by aligning regulatory capital
requirements more closely to the underlying risks that banks face. In addition, the Basel II Framework is
intended to promote a more forward-looking approach to capital supervision, one that encourages banks to
identify the risks they may face, today and in the future, and to develop or improve their ability to manage
those risks. As a result, it is intended to be more flexible and better able to evolve with advances in markets
and risk management practices.
The efforts of the Basel Committee on Banking Supervision to revise the standards governing the capital
adequacy of internationally active banks achieved a critical milestone in the publication of an agreed text in
June 2004.

28.What is a Beggar thy neighbor policy?

For a country to use a policy for its own benefit that harms other countries. Examples
are optimal tariffs and, in a recession, tariffs and/or devaluation to create employment.

29. What is a Bill of Lading?

This term is normally used in shipping industry. The receipt given by a transportation company to an
exporter when the former accepts goods for transport. It includes the contract specifying what transport
service will be provided and the limits of liability.

30. What is the use of color boxes in WTO category of subsidies?

Used with a color, a category of subsidies based on status in WTO: red=forbidden, amber or orange=go
slow, green=permitted, blue=subsidies tied to production limits. Terminology seems only to be used in
agriculture, where in fact there is no red box.

31. What is a fiscal deficit?

A deficit in the government budget of a country and represents the excess of expenditure over income. So
this is the amount of borrowed funds required by the government to meet its expenditures completely.
India's fiscal deficit soared by 34 per cent to Rs 3.5 lakh crore in the first ten months of the financial year
against Rs 2.62 lakh crore a year ago.

32. What is Black Money ?

Black Money is the unaccounted money concealed from the tax authorities. The black money runs a
parallel economy adversely affecting the distribution of wealth & income in the economy.

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The total amount of black money globally is estimated between $2.1 and 2.5 trillion. This is roughly about
seven percent of the world’s GDP.
33. What is a Black Market?
A black market is an illegal market, in which something is bought and sold outside of official government-
sanctioned channels. Black markets tend to arise when a government tries to fix a price without itself
providing all of the necessary supply or demand. Black markets in foreign exchange almost always exist
when there are exchange controls.

34.What is a blue chip company? Why it is blue color only used in such companies?
A blue chip is concerned with stocks & shares of company, which are well established and whose purchase
is considered extremely safe. Due to stable earnings and no extensive liabilities these companies are called
blue chip companies.
The term blue chip comes from casinos, where blue chips stand for counters of the highest value. Most
blue chip stocks pay regular dividends, even when business is faring worse than usual.

35.What is a direct Tax?

A direct tax is that which is paid directly by someone to taxing authority. Income tax and property tax are
examples of direct tax. They are not shifted to somebody else.

36.What is an Indirect Tax?

This type of tax is not paid by someone directly to the authorities and it is actually passed on to the other in
the form of increased cost. They are levied on goods and services produced or purchased. Excise tax, Sales
tax, VAT are indirect taxes.

37.What are LDCs or Least Developed Countries?

Least Developed Countries (LDCs) are countries which as per United Nations show the lowest indicators of
socioeconomic development.
They have lowest Human Development Index ratings of all countries in the world.
A country which has three-year average Gross national Income per capita of less than US $750 is tagged as
LDC. a LDC must have an income of $ 900 to escape this tag. Besides if thse countries show human
resource weakness based on indicators of nutrition, health, education and adult literacy and also or
economic vulnerability based on instability of economy . Currently UN has tagged 49 countries in LDC.
India is not an LDC.

38.What are Middle Income Countries ?

Middle-income countries (MICs) are the 86 countries that fall into the middle-income range set by the
Bank’s World Development Indicators. They account for just under half of the world’s population; are
home to one-third of people across the globe living on less than $2 per day; and are found in all six of the
Bank’s geographical regions. They cover a wide income range, with the highest income MIC having a per
capita income 10 times that of the lowest.

39.What is Policy of Laissez Faire?

Laissez Faire is a French term and means no interference. It is a doctrine that states that government
generally should not intervene in the marketplace.

40.What is the difference between Monopoly and Monopsony ?

In monopsony only one buyer faces many sellers. So this is called Buyer’s Monopoly. It is a rare situation
in today’s economy.
In monopoly one seller faces many buyers. As the only purchaser of a good or service, the “monopsonist”
may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers.

41.What is the main function of Competition Commission of India?

CCI is an independent body which become operational w.e.f. May 20, 2009 and is responsible for

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investigating the mergers, market shares & conditions besides regulating firms. CCI will ultimately replace
the Monopolies and Restrictive Trade Practices Commission (MRTPC) ofIndia.

42.What is Lead Bank Scheme?

Lead bank scheme was introduced around 40 years ago and recently it was in the news as a high level
committee chaired by RBI Deputy Governor Usha Thorat was constituted to review and revitalize this
scheme. The scheme aims at facilitating credit delivery to the farfetched areas ofIndia. There are members
of the committee from NABARD and SIDBI. Thus the scheme focuses upon financial inclusion.
The Opinion of this committee is that full financial inclusion is possible only if it makes a facility of
opening of no frill accounts backed by other specialized services.

43. What are Nostro & Vostro Accounts?

A nostro account is maintained by an Indian Bank in the foreign countries for a facility of easy clearing of
their transactions. For instance, if the bank pays a demand drawn on it by its correspondent bank, there is
no delay because the foreign corresponded bank would already have credited the nostro account of the
paying bank while issuing the demand draft.
A vostro account is maintained by a foreign bank in India with their corresponding bank.

44. From which country India imports maximum?

From China. Import from China was $ 24.16 billion in 2008-09, which got doubled in 3 years. This is 10.3
% of all the imports of India.

45. What is Gold Standard?

A system of setting currency values whereby the participating countries commit to fix the prices of their
domestic currencies in terms of a specified amount of gold.

46.What is a Free Float Exchange Rate system?

An exchange rate system characterized by the absence of government intervention. Also known as a clean
float.

1.
48.What are the requirements to open a New Branch in Rural Area?
Since 2006, RBI has approved the opening of new branches only on the condition that at least half
of such branches are opened in under-banked areas as notified by the regulator.
The opening of branches by banks is governed by the provisions of Section 23 of the Banking
Regulation Act, 1949. In terms of these provisions, banks cannot open a new place of business
inIndia or abroad or change otherwise than within the same city, town or village, the location of
the existing place of business without the prior approval of the ReserveBank of India (RBI). Thus,
it is mandatory for RRBs to seek prior approval/ license from Rural Planning and Credit
Department (RPCD) of RBI before opening of new branches/offices.
RRB should fulfill the following conditions to become eligible for opening of new branch/es.
1. It should not have defaulted in maintenance of SLR and CRR during the last two years.
2. The RRB should be making operational profits; its net worth should show improvement 3. Its
net NPA ratio should not exceed 8 per cent.

49.What is concept sustainable Development?

Meeting the needs of the present without compromising the ability of future generations to meet

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their needs is called sustainable development. This concept is popular in present context of
development.

50.What is the meaning of Financial Inclusion?

Today is is well recognized that large population of India is out of reach of the formal banking
services. Financial inclusion is the concept which has been floated to bring the most of the rural
population / area under the net of the financial and banking services.

51. What is SATMO?

SATMO is Satellite Money Order Service introduced by Postal Department Govt. of India on
December 16, 1994. However this scheme could not make its headway due to functional
complicacies.

52. What is “Vande Mataram Scheme” ?

Vande mataram schem is a nationwide programme aimed at improving ante and post-natal care–
which was launched on February 9, 2004. The scheme envisages free ante and post-natal check-
ups, tips to avoid nutritional problems and anemia and counseling on small family norm and is a
major initiative in Public Private partnerships during emergency.

53. What is Golden Handshake Scheme?

Golden handshake scheme is a Govt. of India scheme introduced as a Voluntary retirement
Scheme (VRS) in Industrial Policy Resolution 1991 for reducing the pressure of extra employees
on public sector enterprises.

54. What is India Brand Equity Fund?

This is a scheme to promote Indian Brands in Overseas Markets with the primary objective of
brand promotion and not export promotion. To make the “Made in India” label a symbol of
quality, competitive price, reliability and service to the customer & to project India as a reliable
supplier of quality goods and services. It was established on July 11, 1996.

55. What is Jago Grahak Jago”?

The Consumer Awareness Scheme for the XI Plan amounting to a total of Rs. 409 crores has
been approved by the Cabinet Committee on Economic Affairs on 24.01.08. This scheme has been
formulated to give an increased thrust to a multi media publicity campaign to make consumers
aware of their rights. The slogan ‘Jago Grahak Jago’ is part of the publicity campaign undertaken
in the last few years.
‘Jago Grahak Jago’ has become the focal theme through which issues concerning the functioning
of almost all Government Departments having a consumer interface can been addressed. To
achieve this objective joint campaigns have been undertaken/are being undertaken with a number
of Government Departments.

56. What is a revolving credit?

Revolving credit is a type of credit that does not have a fixed number of payments. Corporate
revolving credit facilities are typically used to provide liquidity for a company’s day-to-day
operations.The credit cards are examples of revolving credit. They are renewed automatically
until the notice of cancellation is receieved. The time of repayment is specified.

57. What is Gender Budgeting?

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 Gender budgeting is the process of conceiving, planning, approving, executing, monitoring,
analyzing and auditing budgets in a gender-sensitive way. Gender Budgeting is actually an attempt
to women upliftment without any sex discrimination while formulating the policies and making
allocation for them.
Gender Budgeting is a process that entails incorporating a gender perspective at various stages-
planning/ policy/ programme formulation, assessment of needs of target groups, allocation of
resources, implementation, impact assessment, reprioritization of resources.
Gender Responsive Budget and Gender Mainstreaming are outcomes of Gender Budgeting.

58. What is Soft Currency?

Soft currency is opposite of hard currency and it indicates a type of currency whose value may
depreciate rapidly or that is difficult to convert into other currencies. Soft currency can be in
the form of paper, electronic or debt-based “IOUs” which have in the past been used in place of
hard currency. This currency has limited convertibility into gold and other currencies.

59. What are factors of production?

The resources and the inputs which are required to produce a good or service is called factor of
production. The basic categories are land labor and capital.

60. What is the principle of Diminishing returns?

This principle says that if one factor of production is fixed and constant additions of other factors
are combined with this, the marginal productivity of variable factors will eventually decline.
According to this relationship, in a production system with fixed and variable inputs (say factory
size and labor), beyond some point, each additional unit of the variable input yields smaller and
smaller increases in output. Conversely, producing one more unit of output costs more and more in
variable inputs.

what are the different channels of Banking you use in your daily life ?

Banks offer many different channels to access their banking and other services:
* A branch, banking centre or financial centre is a retail location where a bank or financial institution offers
a wide array of face-to-face service to its customers.

* ATM is a computerized telecommunications device that provides a financial institution's customers a

method of financial transactions in a public space without the need for a human clerk or bank teller. Most
banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider
range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of
the bank's account by feeding in the notes and entering the account number to be credited. Also, most
ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the
card is issued by a foreign bank.

* Mail is part of the postal system which itself is a system wherein written documents typically enclosed in
envelopes, and also small packages containing other matter, are delivered to destinations around the world.
This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks
also normally use mail to deliver periodic account statements to customers.

* Telephone banking is a service provided by a financial institution which allows its customers to perform
transactions over the telephone. This normally includes bill payments for bills from major billers (e.g.
for electricity).

* Online banking is a term used for performing transactions, payments etc. over the Internet through a
bank, credit union or building society's secure website.

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Re: What are the good qualities for a Probationary Officer ? Answer

He also needs to develop a humane and intelligent knd of

leadership,communication, and authorityu responsibility and
accountability related aspects. In short he should be having an
attractive sincere and industrious personality.

0 a probationary officer should maintain good relations with

his/her co-workers and seniors and try to learn all details
of the work moderately.by introducing him as a co-operative
officer he may also attract clients..he should encourage co-
workers for team work ,mutual support etc like a leader for
achieving targets..n another important thing is he must
have ability to take decision in a challenging and critical
situation.
Probationary Officer ? Answer
#8
PROBATIONARY OFFICER SHOULD POSSES ALL THOSE ALL QUALITIES
WHICH ARE REQUIRED BY BANK.FOLLOWING ARE THE QUALITIES-
LEADERSHIP- HE SHOULD HAVE THE ABILITY TO INFLUENCE PEOPLE
LIKE CUSTOMER,EMPLOYEES,STAFF.
MOTIVATION-HE SHOULD HAVE THE ABILITY TO PERSUADE THE
EMPLOYEES SO THAT THEY CAN ACHIEVE THEIR GOAL AND HELPS IN
INCREASING EFFICIENCY AND ENHANCING PERSONALITY.
SYNCHRONISATION-HE SHOULD COORDINATE WITH THE EMPLOYEES AND
COOPERATIVE.HE SHOULD DEAL WITH THE GRIEVANCES AND PROBLEMS
AND TRIES TO SATISFY THEM WITH THIER SOLUTION.
AWARENESS-HE SHOULD BE AWARE ABOUT THE HAPPENINGS OF THE
SURROUNDINGS OF THE OFFICE.SO THAT HE CAN PLAN OUT FOR
PREVENTING FROM THE RISKS .

Re: What are the good qualities for a Probationary Officer ? Answer
# 13
PO is the officer who should know all types of work done for banks AND
also done by our banks
HE/SHE should be co-operative with staff as well as NON STAFF.
HE/SHE sh have knowledge of bank work and also banking terms like COC,
Remittance etc
HE/SHE sh not processes any attitude, they sh be flexible in their work
.
HE/SHE always have learning ability also from lower ends or staff may
be he has more knowledge then your.
Problem solving skill sh be must.
Time mgt sh be inbuilt.
Always updated in there field.
Bank PO sh have knowledge about ADMIN,MARKETING,PLANNING, ORGAN SING
AND ALSO MGT CONCEPTS.
HE/SHE SHOULD HAVE THAT BOOK KNOWLEDGE THAT CAN BE USE IN PIRATICAL
LIFE.
ALL PROFESSIONAL Probationary Officer's DON'T KEEP "ME" ATTITUDE Keep
"WE" FOR YOUR PROGRESS & SUCCESS

Most important qualities for probationary officer are:

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1.should be good knowledge of his/her responsibilities.
2.should be efficient,have accuracy.
3.should have good written and verbal communication skills.
4.should be good administrator.
5.should be acquainted with customer requirements.
6.as an head,he is responsible to management.

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