Dear frds,this is my first blog on IBPS PO exam preparation .Im trying to help you all in the maximum possible way that will enable you all to prepare well for the next IBPS PO as well as for the clerical exams. Kindly help me to improve my sessions by providing ur feedbacks to my mail id
ibpshelppo@gmail.com..Today we will have a look at the very first thing which we all would like to give much importance too..And it is the General Knowledge related to the banking sector.
The topics the topics that we have to give importance while preparing for PO or clerical examination includes the following:
1) BANKING RELATED GENERAL AWARENESS
2) Reasoning
3) English
4) Quantitative Aptitude and
5) Computer awareness --
each subject 50 questions and 50 marks.
Negative marking 1/4 of eligible mark (0.25)
This is the way of mark distribution in case of Bank PO exam.
In this first blog here im writing some terms and terminologies related with Banks in India (as we are preparing for nationalized Banks in India).
What is a Bank?
Banks are financial institutions that play the role of financial intermediaries, channelling funds between deficit and surplus sources. An example of an intermediary is a banking institution which turns deposits into loans. Financial intermediation is a function of banks through which certain liabilities and assets are transformed into different kinds of liabilities and assets. In this way, banking institutions channel funding from savers, who have deposited extra money, to borrowers who need additional financing for certain objectives and planned activities.
What is an Account?
Bank accounts represent financial accounts in banks in which financial institutions hold money for account holders, resulting in a debt balance or positive balance. Alternatively, banks loan money to customers, and this leads to a credit or negative balance. Bank accounts are used to deposit savings, unlike brokerage accounts which are used to sell and buy securities. Savings and checking accounts are two main types of bank accounts.
There are different types of bank accounts, and some may work better for you than others. If you choose a checking account, you can loan or give money, pay bills, and make purchases. Checks can be used for money transfers as well. You can transfer money from your account to a bank account held at a different bank. Typically, you will be allowed to make as many withdrawals and deposits as you need to. Many bank clients also choose to deposit and withdraw money through automatic teller machines.
A savings account is another type of account that pays interest. Account holders cannot write checks or otherwise use the money directly. With this account, holders deposit some of their liquid assets and earn monetary returns in exchange for that. Money cannot be called in immediately, and you cannot free up cash without incurring a penalty fee. Banks typically limit the number of financial transactions (deposits and withdrawals) that can be made every month. At the same time, holders of savings accounts may be allowed to withdraw money and make deposits through ATMs. Passbooks are provided with savings accounts, helping account holders keep track of the transactions they make.
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.
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.
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.3
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.
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.
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.
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.
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.
What is Deposit Rate?
A: Interest Rates paid by a depository institution on the cash on deposit.
Policy Rates:
• Bank Rate: 6.00%
• Repo Rate: 5.25%
• Reverse Repo Rate: 3.75%
Reserve Ratios:
• CRR: 6.00%
• SLR: 25.0%
Lending/Deposit Rates:
• PLR: 11.00%-12.00%.
• Deposit Rate: 6.00%-7.50%.
. Savings Bank rate: 3.5%.
Note: Rates as on 14-05-10.
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.
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.
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.
What is Disinvestment?
A: The Selling of the government stake in public sector undertakings.
What is Fiscal Deficit?
A: It is the difference between the government’s total receipts (excluding borrowings) and total expenditure. Fiscal deficit in 2009-10 is proposed at 6.8% of GDP.
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 is proposed at 4.8% of GDP.
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 2008-09 is 6.7%.
What is GNP?
A: Gross National Product is measured as GDP plus income of residents from investments made abroad minus income earned by foreigners in domestic market.
What is National Income?
A: National Income is the money value of all goods and services produced in a country during the year.
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 2008-09 estimated by CSO: Rs.25, 494.
What is Vote on Account?
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.
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.
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).
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.
• Balance Sheet : It is a statement of accounts, generally of a business concern, prepared at the end of a year, showing debits and credits under broad heads, to find out the profit and loss position.
• Banker’s Cheque : A Cheque by one bank on another.
• Bank Rate : It is the rate of interest charged by the Reserve Bank of India for lending money to commercial banks.
• Bond : A legal agreement to pay a certain sum of money (called principal) at some future date and carrying a fixed rate of interest
• Buyer’s Market : An area in which the supply of certain goods exceeds the demands so that purchasers can drive hard bargains.
• Call Money : Loan made for a very short period. It carries a low rate of interest.
• Credit, Letter of : A letter from a bank or a firm authorizing payment to a third person of a specific sum for which the sender assumes full responsibility.
• Commercial Banks : Financial institutions that create credit accept deposits, give loans and perform other financial functions. They create credit by creating deposits on the basis of their cash reserve ratio.
• Deflation : It is a state in monetary market when money in circulation has decreased and is characterized by low prices, unemployment, etc.
• Depreciation : Reduction in the value of fixed assets due to wear and tear.
• Depression : A phase of the business cycle in which economic activity is at low ebb and there is mass scale unemployment and underemployment of sources. Prices, profits, consumption, etc are also at a low level.
• Devaluation : Official reduction in the foreign value of domestic currency. It is done to encourage the country’s exports and discourage imports.
• Fiscal Policy : Government’s expenditure and Tax policy.
• Foreign Exchange : Claims on a country by another, held in the form of currency of that country. Foreign exchange system enables one currency to be exchanged for another, thus facilitating trade between countries.
• Indirect Taxes : Taxes levied on goods purchased by the consumer for which the tax payer’s liabilities vary in proportion to the quantity of particular goods purchased or sold.
• Inflation : A sustained and appreciable increase in the price level over a considerable period of time.
• Value Added Tax (VAT) : A tax levied on the values that are added to goods and services turned out by the producers during stages of production and distribution.
• Zero Based Budgeting (ZBB) : The practice of justifying the utility in cost benefit terms of each government expenditure on projects. The ZBB Technique involves a critical review of every scheme before a budgetary provision is made in its favor. If ZBB is properly implemented it could help to reverse the trend of large deficits on the revenue account of the Union Government.
