What is Basel Norms

Bureau of International Settlement (BIS) headquarters at Basel, Switzerland has appointed a committee to supervise and to set some standards for International Banks. This committee is known as Basel Committee on Bank Supervision (BCBS). The rules and regulations for Banks issued by this committee were called Basel Norms / Accords. There are three Basel Norms, namely Basel I, II and III.

Basel I Accord : This was issued in 1988. This accord focused on the capital adequacy of financial institutions. Banks that operate internationally are required to have a risk weight of 8% or less. India adopted Basel I Norms in the year 1999.

Basel II Acord : This is the second of the Basel Accords, published in the year 2004. This consists of the recommendations on Banking Laws and Regulations issued by BCBS.

Basel III Accord : Basel III guidelines were released in the year 2010. This is to enhance the banking regulatory framework. It builds on the Basel I and Basel II documents and seeks to improve the banking sector's ability to deal with financial and economic stress, improve risk management and strengthen the banks' transparency.

What Are Bitcoins

The Bitcoin is a form of currency without notes and coins, it is a digital currency.

In this era of Internet and digitization, we’ve moved from phone to VoIP calls, face-to-face meeting to video conferencing, fax to email, cable television to IP TV, and the list goes on.

The concept of Bitcoins was developed by Satoshi Nakamoto and belongs to Japan.
The world’s first insured bitcoin storage service has launched in the UK (London).

What is FDI & FII

FDI: Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.

FII: Foreign institutional investors (FIIs) are those institutional investors which invest in the assets belonging to a different country other than that where these organizations are based.

Note: Foreign institutional investors play a very important role in any economy. These are the big companies such as investment banks, mutual funds etc, who invest considerable amount of money in the Indian markets. With the buying of securities by these big players, markets trend to move upward and vice-versa. They exert strong influence on the total inflows coming into the economy.

Difference b/w FDI & FII:
1. FDI or Foreign Direct Investment is an investment that a parent company makes in a foreign country. On the contrary, FII or Foreign Institutional Investor is an investment made by an investor in the markets of a foreign nation.

2. In FII, the companies only need to get registered in the stock exchange to make investments. But FDI is quite different from it as they invest in a foreign nation.

3. FDI is more preferred to the FII as they are considered to be the most beneficial kind of foreign investment for the whole economy.

4. The Foreign Institutional Investor is also known as hot money as the investors have the liberty to sell it and take it back. But in Foreign Direct Investment, this is not possible. In simple words, FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily. This difference is what makes nations to choose FDI’s more than then FIIs.

5. While the FDI flows into the primary market, the FII flows into secondary market. While FIIs are short-term investments, the FDI’s are long term.

What is Government Bonds

A government bond, which is also known as a government security, is basically any security that is held with the government and has the highest possible rate of interest.

SDR - Special Drawing Rights

SDR are new form of International reserve assets, created by the International Monetary Fund in 1967. The value of SDR is based on the portfolio of widely used countries and they are maintained as accounting entries and not as hard currency or physical assets like Gold.

What is Direct & Indirect Tax

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

Indirect Tax: This type of tax is not paid by someone 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, Entertainment tax are indirect taxes.

What is 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 require by the government to meet its expenditures completely.