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finance > Rbi subsidiaries > Flashcards

Rbi subsidiaries Flashcards

1
Q

subsidiaries of rbi

A

DICGC
BRBNMPL
ReBIT
IFTAS

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2
Q

DICGC

A

deposit insurance credit guarantee corporation

combining 2 entities

 deposit insurance corporation 1968
 credit guarantee corporation of india 1971

1978

both merged in DICGC

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3
Q

banks covered under DICGC

A

all commercial banks
including branches of foreign banks functioning in india
local area banks
regional rural banks

cooperative banks -
defined in section 2(gg)

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4
Q

deposits not approved by DICGC

A

deposit of foreign govt
deposit of central or state govt
inter bank deposit
deposit of state land development banks with the state cooperative bank
deposit received outside india
specifically exempted by the corporation with the previous approval by the rbi

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5
Q

Insurance coverage

A

upto 5 lakh for both principal and interest
one for different branches with the same bank
separate for accountts in different accounts
if they have different types of ownership then it will be insured separately

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6
Q

insurance coverage

meaning of same right and same capacity

A 
partner of a firm
guardian of a minor
director of a company 
trustee of a trust
joint account

all will have insurance of 5 lakhs

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7
Q

insurance premium

A

borne entirely by the insured bank

it is compulsory

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8
Q

BRBNMPL

A

bharat reserve bank note mudran private limited

before 1928, indian currency gott printed from Thomas De La Rye Giori of UK
STARTED in 1928 with the establishment of indian security press at nashik by GOI
THE SECOND note printing press was established in dewas (mp) in 1975 by GOI
RBI established BRBNMPL on 3 rd feb 1995 as a wholly owned subsidiary
registered as a private limited company under the companies act, 1956

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9
Q

BRBNMPL 2 press

A

mysore in karnataka
salboni in west bengal
16 billion note pieces per year on a 2 shift basis

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10
Q

ReBIT

A

reserve bank information technology
established in 2016 by RBI
to serve its IT and cybersecurity needs and to improve the cyber resilience of the indian banking industry
deliver and manage IT projects of RBI
assit RBI in risk based supervision of regulated entities through security audits
safeguard RBI assets by detecting and responding to cyber threats

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11
Q

Functions of RBI

A

factors determining success of monetary policy:

inflation targeting
usage of monetary policy instruments
monetary policy transmission

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12
Q

Inflation

A

Rbi
decreases the money supply in the economy through monetary policy

govt
increase supply of goods in the economy through fiscal policy

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13
Q

Quantitative tools Reserve Ratio

CRR SLR

A

as a % of NDTL (net demand and time liabilities)
CRR is kept with RBI
SLR is money kept in terms of liquid assets like cash ,gold,RBI approved securities.
SLR is maintained so as banks have liquid reserves
inflationary situation-
CRR and SLR are increased to reduce money supply in the economy
SLR also contributes to fiscal deficit financing

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14
Q

why SLR is reduced even in inflationary times

A

govt uses the SLR money for subsidies and work like this
as RBI does not want that to happen
even in inflationary times RBI reduces SLR

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15
Q

open market operations

A

purchase and sale of govt securities to banks
banks invest in OMOs using idle money
inflation- RBI will sell govt securities to reduce money supply in the economy

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16
Q

Bank rate

A

loan term loan
no collateral
inflation- higher bank rate

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17
Q

LAF

A 
liquidity adjustment facility 
consists of repo and reverse repo
Repo - repurchase agreement between RBI and banks.
govt securities kept as collateral 
Reverse Repo - 
borrowing by RBI from banks
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18
Q

MSF

A

marginal standing facility
banks can borrow from RBI by using SLR quota securities (1% of NDTL)
subject to higher interest rate ( repo + 1%)
minimum borrowing can be 1 crore
only scheduled commercial banks can use this facility

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19
Q

term repo rates

A

allows RBI to supply funds from time to time, with banks bidding for the rates at which they will borrow this money

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20
Q

MSS

A

market stabilisation scheme
also called sterilisation
reducing the supply from the economy
GOI borrows from RBI and issues T bills /
dated securities that are utilised for absorbing excess liquidity from the market

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21
Q

Qualitative tools
loan to value ratio /
margin requirements

A

inflation

LTV ratio is reduced money supply in the economy

22
Q

Qualitative tools
consumer credit control/
down payment

A

RBI can reduce down payment requirements to counter deflation
RBI can also decrease or increase the minimum instalments for loans

23
Q

Qualitative tools

Moral Suasion

A

moral suasion is done through seminars, conferences etc.,

24
Q

Direct Action

A

selective direct action on banks not complying with requirements is referred to as direct action

25
Q

Qualitative tools

credit rationing

A

PSL , so there is balance in the growth and areas / sectors having high inflation / deflation can be targeted

26
Q

unconventional quantitative easing

A

used by USA after the crisis

  1. central banks creates money( printing)
  2. buy bonds from financial institutions
  3. which reduces interest rates
  4. leading businesses and people to borrow more
  5. so they spend more and create jobs
  6. to boost the economy
27
Q

tapering

A

opposite of quantitative easing
increase the interest rates
does not impact the economy as the economy is on the stable side

28
Q

banker and debt manager of govt

A

Ad hoc T bills

was of less than 91 days
not marketable

29
Q

ways and means advances

A

April 1 1997
to meet temporary mismatches in the receipts and payments of the government
it can be availed to meet immediate cash from the RBI
the WMA is to be vacated after 90 days
currently interest rate is same as repo rate
limits are mutually decided by the government and the RBI
Special and normal WMA for SG (state government)

30
Q

banker to banks

A

facilitating inter bank transactions

lender of last resort

31
Q

financial regulation

A

licensing of commercial banks
monitoring statutory pre emptions
provisioning norms
secured. insecured
sub stand. 15% outstanding 25% of outs
doubtful 25% (1 yr). 100%
40% (1-3 yrs)
loss assets. 100%. 100%

32
Q

financial regulation

A

para banking
KYC norms
currency management and issuance

33
Q

monetary policy committee

A

objective
deciding benchmark policy rates
inflation under control

34
Q

MPC history of recommendations

A 
2002 - Y v reddy
2006 - tarapore committee 
2007- percy mitry committee 
2009- rajan committee 
2013- FSLRC,Urjit patel committee
35
Q

members of MPC

A 
6 members
Rbi governor 
Rbi deputy governor in charge of monetary policy 
one official nominated by the RBI board 
remaining 3 members would represe GOI
36
Q

GOI members are selected by a committee

A

search cum selection committee
cabinet secretary ( chair person)
the RBI governor
secretary of the department of economic affairs, ministry of finance
3 experts in the field of economics or banking as nominated by the central government

37
Q

functions of MPC

A

inflation targeting 4+-2 %
the central government determines the inflation target in terms of the CPI, once in every 5 yrs in consultation with RBI
Give an explanation to the central government, if it failed to reach the specified inflation targets
to publish a monetary policy report every 2 months,
explaining the sources of inflation and the forecasts of the inflation for the coming period of 6 to 18 months

38
Q

why was SEBI formed

A

controller of capital issues not effective in regulationn

demutualisation and dematerialisation of stock market

39
Q

when was SEBI formed

A

in 1988 formed as a non statutory body to regulate the securities market
in 1992 converted into a statutory body

40
Q

regulation scope of SEBI

A 
capital market 
capital market intermediaries 
bond market 
mutual funds 
UTI
Venture capital 
FIIs - foreign institutional investors
41
Q

responsibilities of SEBI

A

issuer of securities
investors
market intermediaries

42
Q

power of SEBI

A

quasi judicial - grievance redressal mechanism
quasi legislative - creation of rules and regulations
quasi executive

43
Q

Meaning of T+2 rolling cycle

A

money will be debited on monday account will be settled ob thursday
reduces the amount of speculation and increases the confidence of the investors

44
Q

intermediaries registered with Sebi

A 
stock exchanges
brokers
merchant bankers
underwriters 
depositories 
credit rating agencies 
FIIs
mutual funds 
venture capital funds
45
Q

SEBI amendment act 2014

A

any CIS taking more than 100 crores automatically comes under SEBI
EVEN NIDHI, chit funds and cooperatives will come under SEBI if they finance more than 100 crores
Now SEBI can arrest people for non compliance
they carry out raids to generate back the funds
fast track courts are to be established to settle cases at the earliest
a mechanism for information exchange with similar agencies of other countries is to be created

46
Q

types of brokers

A

circuit breaker - comes into play when the rise or fall in a stock exchange is beyond the range specified by the SEBI
Merchant banker - helps retail and institutional investors to invest in financial markets

47
Q

categories of investors in the market

A

retail individual investors
qualified institutional investors
non institutional investors

48
Q

retail individual investor

A

investor who applies or bid for securities for a value of not more than rs 2,00,000

49
Q

qualified institutional investor

part 1

A

mutual fund,venture capital fund and foreign venture registered with the board
a foreign institutional investor and sub account, registered with the board
a public financial institution as defined in section 4A of the companies act, 1956
a scheduled commercial bank
a multilateral and bilateral development financial institution
a state industrial development corporation

50
Q

qualified institutional investor

part 2

A

an insurance company registered with the insurance regulatory and development authority
a provident fund with minimum corpus of 25 crores
a pension fund with minimum corpus of 25 crore
national investment fund
insurance funds set up and managed by army navy or air force of union of india
insurance funds set up and managed by the department of posts, india

finance (8 decks)

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