Banking and Insurance

Monetary Policy

The term monetary policy refers to actions taken by central banks to affect monetary magnitudes or other financial conditions.

Bank Rate

Bank rate is the rate at which the central bank of a country provides loan to the commercial banks.

Open Market Operations

Open market operation consists of purchase and sale of securities by the central bank of the country.

Cash Reserve Ratio

Cash Reserve Ratio is a certain percentage of bank deposits which banks are required to keep with RBI in the form of reserves or balances.

Selective Credit Control

Selective Credit Controls are aimed at regulating the distribution of credit amongst sectors or purposes.

Repo Rate

Repo (Repurchase) rate is the rate at which the RBI lends short-term money to the banks against securities.

Reverse Repo Rate

Reverse Repo rate is the rate at which banks park their short-term excess liquidity with the RBI.

Financial inclusion

Financial inclusion is the process of ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost in a fair and transparent manner by mainstream institutional players.

Non-Performing Asset

An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank. A non-performing asset (NPA) is a loan or an advance where interest and/or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan.

Call Money Market

The call money market is an important segment of the money market where uncollateralised borrowing and lending of funds take place on overnight basis.

Liquidity Adjustment Facility

RBI stands ready, on daily basis, to lend or borrow money from the banking system, as per the latter�s requirement, at fixed interest rates. The primary aim of such an operation is to assist banks to adjust to their day-to-day mismatches in liquidity, via repo and reverse repo operations.

General Credit Card

With a view to helping the poor and the disadvantaged with access to easy credit, banks have been asked to consider introduction of a general purpose credit card facility up to Rs 25,000 at their rural and semi-urban branches.

Lead Bank Scheme

Lead Bank Scheme emphasizes making specific banks in each district the key instruments of local development by entrusting them with the responsibility of locating growth centers, assessing deposit potential, identifying credit gaps and evolving a co-ordinated approach to credit deployment in each district, in concert with other banks and credit agencies.

Development banks

Specialized public and private financial intermediaries providing medium and long- term credit for development projects.

Written by princy