1. What is
rtgs and neft?
Answer:
RTGS: Real Time Gross Settlement.
NEFT: National Electronic Fund Transfer.
These two are the two methods through
which funds can be transferred from one bank to another bank.
2. What is
the ‘cost of debt’?
Answer: When any company borrows funds, from a
financial institution (bank) or other resources the interest paid on that
amount is known as ‘cost of debt’.
3. Types of
Accounts in Banks?
Answer:
Saving bank
account [SB a/c]: The main
purpose of SB a/c is to encourage small savings from the public. Interest paid
on SB a/c is 3 percent. Any individual can open SB a/c. An Indian residing at
abroad can open a NRI a/c. NRI represents non-resident Indians.
Current
account: It is a
running and active account. No interest is paid on current a/c.
Current accounts can be opened on firm
names. Even individuals can also open current a/cs. However, on firm names you
cannot open SB a/c.
Fixed Deposit
account: Amount
is kept for a fixed period. Higher rate of interest will be paid on this a/c.
Recurring
deposit [RD a/c]: A fixed
amount can be deposited in monthly installments.
Interest rate is same as fixed deposits.
4. What is
‘prime Rate’?
Answer: Basically, ‘prime rate’ is the rate of
interest that is decided by nations (U.S.A) largest banks for their preferred
customers, having a good credit score. Much ‘variable’ interest depends on the
‘prime rates’. For example, the ‘APR’ (Annual Percentage Rate) on a credit card
is 10% plus prime rate, and if the prime rate were 3%, the current ‘APR’ on
that credit card would be 13%.
5. What are
industrial banks?
Answer: The main purpose of industrial banks is
to provide big loans to large-scale industries.
Examples: IDBI bank, Industrial bank of India
etc.
6. What is
The Treasury Stock Method?
Answer: The treasury stock method is used to
calculate the net increase in shares outstanding if in-the-money options and
warrants were to be exercised.
7. How Do You
Boost Returns In An LBO?
Answer: The key levers are:
A lower purchase price, a higher exit
price (when the company is sold on), increased advantage. Improving the way the
company operations, or getting cheap financing.
8. Why Should
A Company Prefer Equity Finance To Debt Finance?
Answer: Equity financing is less risky (you will
not have to pay it back). You will have more cash on hand. You will not have to
channel profits into loan repayment. Your equity investors will have a longer-term
view. Your company will have more credibility. In addition, you might get to
tap your investors’ network to help you develop the business.
9. What is
accretion and dilution?
Answer: Accretion is asset growth through
addition or expansion. Accretion can occur through a company’s internal
development or by way of mergers and acquisitions. Dilution is a reduction in
earnings per share of stock that occurs when additional shares are issued or
the stock changes into convertible securities.
10. Define
capm?
Answer: CAPM is the capital asset pricing model,
and it is a model designed to find the expected return on an investment and
therefore the appropriate discount rate for a company’s cash flows. It provides
the required rate of return given the riskiness of the asset.
11. Name a
few poverty eradication schemes of govt. Of India?
Answer: Food Security bill, MNREGA, Sarva Shiksha
Abhiyan, Antyodaya Yojana, JNNURM, Swavalamban Yojana, Nirmal Gram Yojana,
Rajiv Awas Yojana, Indira Gandhi Pension plan etc.
12. What is
capital adequacy ratio? What is demat account?
Answer: CAR is the proportion of capital to the
banks’ risk. DEMAT accounts are those in which shares, securities and insurance
policies are kept in electronic form.
13. What is
inflation and deflation?
Answer: Inflation: is the increase in
the price of goods and services due to more demand and less supply. In
inflation, there is more liquidity in market, which has to be controlled to
reduce the purchasing power of customers.
Deflation: is the decrease in prices of goods
and services due to more supply and very less demand. In deflation, there is
lack of liquidity in market, which results in very weak purchasing power of
people.
14. What is
the cad? What is fiscal deficit?
Answer: CAD or current account deficit is the
difference between the imports and exports of a nation in one financial year
whereas fiscal deficit is the difference between total revenue and expenditure
of a nation.
15. What is
the difference between fii and fdi?
Answer: FDI or foreign direct investment is an
investment that a parent company makes in a foreign country. FII or Foreign
Institutional Investor is an investment made by an investor in the markets of a
foreign nation. FII can enter the stock market easily and withdraw from it
easily. However, FDI cannot enter and exit that easily as FDI only targets a
specific sector.
16. What is
banking ombudsman scheme?
Answer: The banking ombudsman scheme is a scheme
to listen to customer’s grievances and complaints regarding certain services
provided by the bank. It was introduced under the Section 35 A of banking
regulation act, 1949 by RBI with effect from 1995, which was later amended and
became the banking ombudsman scheme, 2006.
Customer can appeal against the decision
of ombudsman to deputy governor of RBI. He is the highest authority of appeal.
All banks in India are covered under the scheme.
17. Tell us
something about nabard and its functions?
Answer: NABARD was established by an act of
Parliament on 12 July 1976 as National Bank for Agricultural and Rural
Development. It is the apex bank to provide rural credit and monitor the RRBs.
The main
functions of NABARD are-
o Provide
refinance to RRBs and other banks in rural areas for lending.
o Acts as a
subsidiary for RRBs and co-operative banks.
18. What is
brown label Atm?
Answer: It refers to the ATMs where investment,
installation and maintenance is by a private operator but the license and
branding is by a commercial bank.
19. What is
white label atm?
Answer: It refers to ATMs owned by corporate or
private operators seeking to earn a commission by banks for transactions
performed by their customers.
For ex: - INDICASH by TATA group.
20. What is
term repo?
Answer: Under term repo, RBI lends to banks
through auction of funds. The minimum interest charged has to be above the repo
rate and there is no limit for maximum interest rate because auction is made on
the rate of interest.
21. What is
marginal standing facility (msf)?
Answer: In MSF, banks borrow money from RBI for
upto 24 hours. MSF is always 1% above the repo rate and banks can draw only
upto 25 of their NDTL from RBI.
22. What is
statutory liquidity ratio (SLR)?
Answer: SLR is the amount of NDTL, which a bank
needs to maintain in the form of cash, gold or govt. securities before
providing credit to its customers. Through SLR, RBI makes sure that bank always
have a reserve amount out of their deposits to meet any future contingencies.
23. What is
cash reserve ratio (crr)?
Answer: CRR is the part of Net Demand and Time
Liabilities (NDTL) or cash of the bank deposited with the RBI. A higher CRR
makes loans expensive as liquidity is controlled by RBI. NDTL is the deposits
of the customers with the bank.
24. What is
bank rate?
Answer: It is same as repo rate but here the time
is for more than 90 days.
25. What is
repo rate and reverse repo rate?
Answer: Repo rate is the rate: at which
banks borrow from RBI during shortage of funds. This is a short-term loan
provided for upto 90 days by selling securities to RBI and receiving money in
lieu of it.
Reverse repo rate: is the rate at which banks deposit their
excess liquidity with the RBI. In other words, the rate at which RBI borrows
from banks by selling securities in order to control excess liquidity in the
market is reverse repo rate.
26. What are
the steps taken by banks to promote financial inclusion?
Answer:
o Publicity of
banks so that more and more people open the accounts.
o BSBDA so that
poor people can also open their account.
o People with
agriculture land are being provided with Kisan Credit Card.
o General
Purpose Credit card provided to people with no agricultural land where maximum
limit of withdrawal is Rs.15,000 and rate of interest is 4%.
o Ultra small
banking and banking correspondents.
CRISIL has made an index to calculate
financial inclusion named as “CRISIL INCLUSIX” and in June 2013, there was 40%
financial inclusion as per the index.
Comments
Post a Comment